Nike was afraid of competitive disadvantage as a result of its own socially responsible behaviour. Would competitive disadvantage be likely?Case 15A.2 Sweatshop wars: Nike and its opponents in the 1990s76 In the 1990s, US-based Nike Inc., the largest athletic shoe company in the world, was accused by labour and human rights activists of operating sweatshops in Indonesia, Vietnam and China. Nike initially viewed such accusations as public relations problems, but finally changed its defensive tactics to a more proactive approach after serious damage was inflicted to its reputation in the late 1990s.

In the new millennium, Nike has tried to distance itself from its tainted image associated with worker exploitation, by monitoring its contractors more closely, integrating its supply chain through lean manufacturing and pushing for consistent global standards in the apparel industry. Ultimately, Nike had to learn the lesson of corporate social responsibility in a very hard way.