Organizational change management : multinational enterprises in the spotlight of human rights activism

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Master Thesis

Organizational Change Management:

Multinational Enterprises in the Spotlight of

Human Rights Activism

Victoria Marie Wolpers, 11186658

Master of Science in Business Administration

– International Management –

Supervisor: Dr. Michelle Westermann-Behaylo

Second Reader: Dr. Lori DiVito

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Statement of originality

This document is written by Student Victoria Marie Wolpers, who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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List of Tables and Appendices

TABLE 1:FIVE STAGES OF ORGANIZATIONAL LEARNING ... 20

TABLE 3:CASE SELECTION ... 32

TABLE 4:CODING STRUCTURE ... 33

TABLE 5:WITHIN-CASE ANALYSIS ... 34

TABLE 6:RESULTS NIKE ... 38

TABLE 7:RESULTS GAP ... 42

TABLE 8:RESULTS CHARMING SHOPPES ... 45

TABLE 9:RESULTS ADIDAS ... 49

TABLE 10:RESULTS PUMA ... 52

TABLE 11:LEVEL OF ATTENTION -COMPARISON OF INVOLVED GERMAN COMPANIES ... 54

TABLE 12:RESULTS KARL RIEKER ... 56

TABLE 13:RESULTS CROSS-CASE ANALYSIS ... 57

APPENDIX A:NIKE ... 81

APPENDIX B:GAP ... 82

APPENDIX C:CHARMING SHOPPES ... 83

APPENDIX D:ADIDAS ... 83

APPENDIX E:PUMA ... 84

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List of Abbreviations

BHRRC

CEADEL CHRD

Business and Human Rights Research Centre Center for Studies and Support for Local Development

Corporations and Human Rights Database

CSR Corporate social responsibility

FLA Fair Labor Association

Guiding Principles Guiding Principles on Business and Human Rights for implementing the UN Protect, Respect and Remedy Framework

IGLHR IGO ILO MNE

Institute for Global Labour and Human Rights Intergovernmental organization

International Labour Organization Multinational enterprise

MSI NGO

Multi-stakeholder initiative Nongovernmental organization

OHCHR Office of the United Nations High Commissioner for Human Rights

PRR Framework Protect, Respect and Remedy Framework (UN)

SRSG Special Representative of the Secretary-General on the issues of human rights and transnational corporations and business enterprises (UN)

UDHR Universal Declaration of Human Rights

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Abstract

According to Spar (1998), multinational enterprises (MNEs) will change their corporate practices when they are in the global spotlight. Spar (1998) calls this the spotlight phenomenon. This thesis investigates how corporations react to allegations of labor rights violations within host countries that have aroused public interest. Moreover, what impact has the level of negative media attention (social activism), brand awareness, company size and corporate governance system of the accused MNE had on the level of pressure for change? Therefore, this qualitative work analyzes how six MNEs within the apparel and textile industry have reacted to separate allegations of labor rights violations.

The findings in the selected cases indicate that the likelihood of the spotlight phenomenon occurring increases when there is a higher volume of negative press generated by social activism, or a corporate target with a high profile brand. However, the implemented changes by these MNEs were neither limited to the issue-specific allegations or, indeed, nor influenced by their respective corporate governance systems. Contrary to expectations, five out of six MNEs implemented changes in collaboration with external stakeholders, such as the host government, local nongovernmental organizations (NGOs) and multi-stakeholder initiatives (MSIs).

Keywords: MNEs; social activism; labor rights; human rights; media attention;

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1 Introduction

The sweatshop scandal for Nike in the 1990's and the 2013 collapse of Rana Plaza1, a Bangladeshi apparel factory producing for multinational enterprises (MNEs) like H&M and C&A, are over 20 years apart, and yet demonstrate that not enough has happened globally to protect the human rights of workers. Both incidents were highly publicized in western media and mobilized social activists and legal professionals alike in promoting reform. Under a global media spotlight, Nike was pressured to improve labor and monitoring standards (Zadek, 2004), whilst H&M and C&A agreed on access to remedy for the victims, and on better safety standards within the Bangladeshi garment industry (Uddin, 2016). Both examples highlight that the campaigning of NGOs, stakeholder and media against corporations (i.e. social activism) can be a promising path, besides legal and voluntary actions, to ensure access to remedy for victims of corporate abuse, and to pressure for organizational change within MNEs (Spar, 1998).

Spar (1998) describes this effect, where being in the public eye causes a corporate actor to change its way of doing business, as the 'spotlight phenomenon'. The organizational changes this can trigger include the requirement on corporations to create new management structures or systems, such as new labor polices (c.f. Greenwood & Hinings, 1996), and to 'institutionalize' these changes within the corporation (Kotter, 1995). Nevertheless, "the spotlight does not [often] change the morality of […] multinational managers. It changes their bottom-line interests" (Spar, 1998: 9). As a direct result of negative attention, these corporations are forced into the position of weighing the financial benefits of inhumane and cheap labor standards abroad against

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1,800 workers died and more than 2,500 workers were injured due to the collapse (Siddiqui & Uddin, 2016)

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the risk of reputational damage, the possibility of consumer boycotts and the loss of deterioration of their public image in the home market (Spar, 1998).

The driving interest for capitalist market oriented MNEs can be summed up as profit maximization, regardless of the victims of this system (Monshipouri, Welch & Kennedy, 2003). Under the ideological blueprint of the 'Washington Consensus' (1980's), developing countries have been increasingly exposed to the activities of MNEs, resulting in a 'race to the bottom' in labor standards (Gereffi, 2014). The era of deregulation that this doctrine promoted marked the beginning of complex global supply chains (Ibid.), which have transformed national enterprises into global companies that transcend borders (i.e. MNEs). The corporate activities of an MNE, such as production, marketing, product development, sales and other services, tend to be carried out all around the world (Gereffi, 2014; ILC.105/IV, 2016). MNEs have gained the ability to engage in labor arbitrage, due to the variable strength of institutions in different national jurisdictions (Surroca, Tribó & Zahra, 2013). In some cases, the result is the creation of nontransparent and unregulated cross-border practices, providing fertile ground for labor rights violations, including sweatshop practices, forced and child labor, as well as hazardous working conditions (Schrempf-Stirling & Palazzo, 2016).

Despite decades of international debate on the topic of business and human rights, there is still no internationally binding law in place that sufficiently ensures the protection of human rights in (multinational) corporations (ILC.105/IV, 2016; Uddin, 2016). In 2016, it was estimated that were 168 million victims of child labor, 21 million victims of forced labor, and 19 million victims of exploitation by corporations (ILO, 2016a; ILO, 2016b). The International Labour Organization (ILO; est. 1919) estimates that the profit the private sector generated by forced labor runs as high as $150 billion annually (ILO, 2016b).

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In this context, the research on business and human rights has heavily addressed corporate responsibility within a state – corporation nexus (Harrison & Sekalala, 2015). Nonetheless, activities of non-state actors such as NGOs, stakeholders and the media (i.e. social activism) can also have an impact on the human rights performance of MNEs (c.f. Aguilera et al., 2007; Utting, 2008). The central argument of this thesis is that social activism has the power to pressure corporate wrongdoers to change their established working conditions, by creating the spotlight phenomenon. The case studies will illustrate whether social activism can contribute to the established legal and self-regulating mechanisms that hold MNEs accountable for human rights violations (c.f. Monshpouri et al., 2003; Spar & La Mure, 2003; Ruggie, 2013; Kamminga, 2016). The multiple-case study takes into account the variation of media attention, corporate targets (i.e. brand awareness and size) and corporate governance systems to provide further insights on the spotlight phenomenon. Although there is a growing literature in the field of business and human rights, this thesis attempts to close the literature gap between social movement theory and organizational change management literature. This leads to the following research question: When an MNE is publicly accused of a labor violation

in a host country, what is it that inspires an organizational change (i.e. level of negative media attention, the brand awareness and company size, the specific accusations, or the corporate governance system)?

This empirical work is structured as follows: the literature review is divided between an overview on human rights (chapter 2.1.), the contemporary debate with regards to business and human rights (chapter 2.2.), social movement theory (chapter 2.3.) and theories concerning organizational change management in corporations (chapter 2.4.). Thereafter, the theoretical framework (chapter 3) is introduced. Within the methodology section (chapter 4), the research design, the data sources and the case

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selection are explained. Chapter 5 includes the data analysis and the results of a multiple case study of six MNEs (Nike, GAP, Charming Shoppes, Adidas, Puma and Karl Rieker). The findings are critically reviewed and future research implications are provided within the discussion section (chapter 6). Finally, the last section provides summarizing remarks in a conclusion (chapter 7).

2 Literature Review

The following literature chapter is divided into a short overview of human rights, and labor rights, and the relation between business and human rights. Furthermore, theories relating to social activism and the on organizational change management in MNEs are also covered.

2.1 Human Rights

The Office of the United Nations High Commissioner for Human Rights (OHCHR) defines human rights as the "rights inherent to all human beings" (OHCHR, 2016a), which include "basic civil, political, economic, social and cultural rights that all human beings should enjoy" (OHCHR, 2016b). Human rights stem from three ideological movements: liberalism, socialism and the 'collective development rights' movement (Marks, 1980; Preuss & Brown, 2012). Firstly, the liberal tradition, rooted in the 'bourgeois' revolutions of the eighteenth century, focuses on civil-political rights, such as the freedom of expression. Secondly, the socialist approach, which was promoted and coopted by the anti-exploitation revolutions of the early twentieth century, pinpoints the importance of socio-economic rights, such as the right to a fair wage and basic health care. Thirdly, the movement of 'collective development rights', originating from the post- World War II decolonization process, concentrates on the protection of minorities and the right to live without any forms of discrimination (e.g. ethnic, religious,

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country-specific etc.) (Marks, 1980; Preuss & Brown, 2012). In 1948, the United Nations (UN) set out the 'Universal Declaration of Human Rights' (UDHR) "as a common standard of achievements for all peoples and all nations".

Since then, the UN has released further conventions, such as the 'Declaration of the Rights of the Child' in 1959, the 'Convention on the Elimination of all forms of Discrimination against Women' in 1979, and the 'Convention on the Rights of the Child' in 1990 (UN, 2016b). Besides the supplemental rights for women and children, the need for special rights for laborers has also been addressed (ILO, 2016c). The distinction between labor rights and human rights is elaborated on in the next section.

2.1.1 Labor Rights as Human Rights

The movement for labor rights was originally rooted in the class conflicts resulting from the era of industrialization in Western civilization (Preuss & Brown, 2012). Labor rights stem from the ideologies of the socialists, and can be categorized as socio-economic human rights (c.f. Marks, 1980). Contrary to the universality of human rights, labor rights can only be obtained by people within the working population (Mundlak, 2007 in Kolben, 2009). According to the UDHR (1948: Art. 23, 24), a laborer shall be protected by the state against any kind of forced labor, discrimination in employment, substandard wages, denial of freedom of association, and unreasonable overtime work.

The ILO is the most prominent and recognized international organization concerned with the development of labor standards, protection of labor rights and the progression to more humane labor standards around the world (ILO, 2016c). The ILO cooperates "with governments, employers and worker representatives of 187 member states" (ILO, 2016c). One of the most important ILO achievements on the path towards globally accepted labor rights was the adoption of the 'Declaration on Fundamental Principles and Rights at Work' in 1998 (ILO, 1998; Kolben, 2009). Nevertheless, member states

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who signed this declaration are only held to "respect and promote" these principles, without any legal compulsion to ratify the declaration (ILO, 1998). Next to states, companies also have a (moral) responsibility to respect and protect human rights, including labor rights. The next section will discuss business and human rights.

2.2 Business and Human Rights

Beginning in the early 1970's, several industries, such as the apparel and textile industry, started to produce their goods within developing countries with weak institutional systems (Gereffi, 2014). These shifts in production, and the increasing power of MNEs, were followed by several prominent labor rights violations of factory workers (Schrempf-Stirling & Palazzo, 2016). As a result of the growing human rights scandals involving corporate actors, the 1970's marked the beginning of a political debate on whether non-state actors (i.e. businesses) should be considered as equally responsible agents in protecting and guaranteeing human rights (Hamanna et al., 2009; Fasterling & Demuijnck, 2013; Mwangi, Rieth & Schmitz, 2013; Olsen & Payne, 2013; OHCHR, 2016c). These struggles to broaden a formerly state-centric approach led to the first debate on the need for international legally binding standards for corporate actors, constituted by the UN (UN, 1990; Ruggie, 2007; Uddin, 2016). Due to the veto of several UN member states, only non-binding agreements have been established, such as the 'UN Center for Transnational Corporations' (1974) or the 'OECD Declaration and Decisions on International Investments and Multinational Enterprises' (1976) (Ruggie, 2007; Mwangi et al., 2013; Olsen & Payne, 2013; Uddin, 2016).

Nevertheless, international law scholars have addressed the field of business and human rights (Ratner, 2001). Law publications within the field of business and human rights have focused on the interrelation of four main groups (Ratner, 2001): the MNE, the home country government, the host country government and the affected

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stakeholders. However, different opinions exist as to whether international human rights law needs to provide sufficient legally binding international instruments to obligate MNEs to protect human rights, and to adequately penalize abuses outside the home country (Monshipouri et al., 2003; Weissbrodt & Kruger, 2003; O'Brien & Dhanarajan, 2015; Uddin, 2016) or not (Ruggie, 2013). After the rejection of the 'UN Sub-Commission' working draft 'Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights' (2003) from the OHCHR, there is still no international legally binding standard for corporate actors (Ruggie, 2007; UN, 2010). Nevertheless, the field of international law has employed corporate actors alongside the state as a unit of analysis in order to sufficiently address human rights (Weissbrodt & Kruger, 2003; Ruggie, 2007; O'Brien & Dhanarajan, 2015). The contemporary political and academic debate in the field of business and human rights gathered a new momentum with two significant UN achievements discussed in the following chapter.

2.2.1 The UN Guiding Principles on Business and Human Rights

In the last decade, scholars in the field of business and human rights have given special attention to the prominent work of John Ruggie, the 'Special Representative of the Secretary-General on the issues of human rights and transnational corporations and business enterprises' (SRSG) of the UN. His work resulted in the 'UN Protect, Respect and Remedy Framework on Business and Human Rights' (hereafter: PRR Framework) in 2008, and the UN 'Guiding Principles on Business and Human Rights for implementing the UN Protect, Respect and Remedy Framework' (hereafter: Guiding Principles) in 2011 (O'Brien & Dhanarajan, 2015; OHCHR, 2016c). According to the UN (2010:1), it was the first time that an "intergovernmental body had taken a substantive policy position on this issue". The non-legally binding PRR Framework

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(2008: 4) is structured by three pillars: "the state duty to protect against human rights abuses by third parties, including business", "the corporate responsibility to respect human rights", and "the need for more effective access to remedies".

The first pillar underscores the duty of every government to prevent and to address corporate human rights violations, by providing an adequate legal system (PRR Framework, 2008). The state's duty to protect human rights includes every operating business within its national territory (PRR Framework, 2008). Nevertheless, when multinational companies operate under national governments that fail to enact and to enforce human rights or even violate human rights themselves, the need for international human rights law is still strong (Fasterling & Demuijnck, 2013; Uddin, 2016).

The second pillar provides a clear statement of to the corporate responsibility to respect human rights (UN, 2010) now defined as "acting with due diligence to avoid infringing on the rights of others, and addressing harms that do occur" (UN, 2010: 2). Furthermore, the corporate responsibility to respect human rights applies to all corporate actors regardless of the size or location of their business operations (PRR Framework, 2008; UN, 2010). Nonetheless, in cases where states fail to fulfill their requirements, the human rights responsibility of corporate actors remains an ethical request (Arnold, 2010; O'Brien & Dhanarajan, 2015; ILC.105/IV, 2016). Additionally, Wettstein (2010: 33) argues that the "corporate responsibility in regard to human rights [should] go beyond ‘‘doing no harm’’ and [should] include a positive obligation to protect".

The third pillar refers to the fact that even under the hypothetical assumption that the first and the second pillar are perfectly implemented, corporate human rights abuses can still occur and thus every victim of corporate abuse should be able to seek remedy (UN, 2010). The PRR Framework (2008: 5) regards each component as equally essential, as "each supports the others in achieving sustainable progress". The

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dependency between these three pillars upon each other, and the lack of guidelines for the implementation of the pillars has been heavily criticized (O'Brien & Dhanarajan, 2015).

The UN's publication of Guiding Principles in 2011 was a direct response to this criticism; they are the "only state-approved global statement of how governments and business are expected to behave with respect to protecting human rights in a commercial setting" (Steinhardt, 2013: 1). In addition, the work of the SRSGhas helped to shift the debate "from whether business [has] human rights obligations to whether businesses are doing enough to prevent, mitigate and redress violations associated with their operations" (Kimotho in BHRRC, 2016).

Despite this, the Guiding Principles cannot substitute the need for legally binding

obligations (Jägers, 2011; Stiglitz in OHCHR, 2013; O'Brien & Dhanarajan, 2015).

Joseph Stiglitz (in OHCHR, 2013: 4), a laureate of the Economic Sciences Nobel prize, stated in the second UN Forum on Business and Human Rights in 2013 that: "[s]oft law – the establishment of norms of the kind reflected in the Guiding Principles on Business and Human Rights – are critical; but they will not suffice. We need to move towards a binding international agreement enshrining these norms." Jägers (2011) argues, "the decisive language used by the Special Representative [Ruggie] closes the door to developments that can be detected trending towards more direct applicability of human rights obligations to corporations". The due diligence concept of the Guiding Principles also does not provide detailed reporting and control standards that ensure the accuracy and consistency of human rights performance reporting by corporations (Fasterling & Demuijnck, 2013; Harrison & Sekalala, 2015). Uddin (2016) concludes in his study on the Rana Plaza collapse that the adequacy of those principles is highly questionable, given that the Bangladeshi government had ratified them before the disaster took place.

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All in all, the debate around the Guiding Principles played a decisive role with regards to the UN adoption of a resolution on the 'Elaboration of an international legally binding instrument on transnational corporations and other business enterprises with respect to human rights' in 2014 (UN, 2014; O'Brien & Dhanarajan, 2015).

2.2.2 Corporate Compliance with Human Rights

Every victim of corporate abuse is entitled to have 'access to effective remedy', (PRR Framework, 2008; Muchlinski, 2012). According to the Guiding Principles (2011: 27), remedy "may include apologies, restitution, rehabilitation, financial or non-financial compensation and punitive sanctions (whether criminal or administrative, such as fines), as well as the prevention of harm through, for example, injunctions or guarantees of non-repetition". So far, the grievance mechanisms of the Guiding Principles have foreseen legal actions of the state (i.e. legal approach) and voluntary corporate actions (i.e. ethical approach) that can be implemented alone or with the help of third parties in the case of corporate abuse (Aaronson & Higham, 2013).

Most law scholars have focused on the shortcomings of the legal approach within the case of internationally operating businesses (Ratner, 2001; Muchlinski, 2012; Aaronson & Higham, 2013; Zerk, 2013; Uddin, 2016). These cases are described as a 'protection gap' or 'regulatory gap', whereby neither national nor international law protects victims of corporate abuse (Zerk, 2013). For instance, in the case of US-based businesses, the national (here: US) labor laws governing the protection of labor standards and human rights are not applicable to the labor practices of US firms outside of the US territory2. In other words, only the host government in the country of operation can impose compliance with its national jurisdiction on foreign companies and file legal actions in cases of corporate abuse (Muchlinski, 2012; ILC.105/IV, 2016).

2

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Nevertheless, several states are unable or even purposefully unwilling to obligate the implementation of decent labor polices and to penalize contempt (Ratner, 2001; ILC.105/IV, 2016). This is based on the reality that many national governments depend on the MNEs as a crucial employer and taxpayer (Uddin, 2016). Furthermore, different legal regulations exist as to whether informal and migrant workers are entitled to labor rights or not (Kolben, 2009). The exclusion of this kind of labor can result in the loss of state protection, as seen with the illegal work done by undocumented immigrants (Miller, 2007). Nevertheless, the protection gap is most often the outcome of the "failure to enforce existing law" due to "legal and policy incoherence[s]" (UN, 2010: 2).

Another important reason why victims do not have a fair chance of remedy lies within the structure of corporate law (Muchlinski, 2012). The victims of corporate abuse are often in a difficult position when trying to prove the direct involvement of the parent company in the alleged violation (Muchlinski, 2012). Therefore, Muchlinski (2012: 152) argues that these 'foreign direct liability litigations' "may lead to significant under-compensation of victims, or even no under-compensation, if the parent [company] has used the separation between itself and its subsidiary to insulate itself from liability". However, the ongoing efforts of the UN to implement an internationally binding treaty (UN, 2014) will strengthen the position of victims within labor rights violations. As Wettstein (2010: 35) states "[a] company may not be liable for certain actions from a legal point of view, but nevertheless be regarded an accomplice from an ethical perspective."

At the outset of the ethical approach, scholars in the field of business ethics originally emphasized the idea that corporations have broader responsibilities than legal and economic obligations (Abrams, 1951). This has commonly been referred to as corporate social responsibilities (CSR) (Carroll & Shabana, 2010). CSR-policies have become a crucial topic in business research in recent decades (c.f. Scherer, Palazzo, &

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Baumann, 2006; Yu, 2008; Hamanna et al., 2009; Kobrin, 2009; Carroll & Shabana, 2010; Mena & Palazzo, 2012; Fasterling & Demuijnck, 2013). Whereas CSR activities related to consumers have been addressed early on in CSR literature, CSR activities that focus on global supply chain operations first gained attention with the increasing labor rights violations in the late 1980's (Schrempf-Stirling & Palazzo, 2016).

CSR scholars have also addressed how "corporations [can and do] step in, where governments are not willing or not able to play their regulatory role" (Mena & Palazzo, 2012: 527). This CSR research, mostly covered as political CSR, focuses on self-regulation approaches of corporations or of whole industries (Scherer et al., 2006; Yu, 2008; Hamanna et al., 2009; Mena & Palazzo, 2012; Fasterling & Demuijnck, 2013). Actions within political CSR include the engagement of corporations or whole industries in developing, negotiating and implementing social, labor or environmental standards into their businesses (Mena & Palazzo, 2012). For instance, 9,269 companies within 166 countries have voluntarily implemented the 'United Nations Global Compact' (est. 2000) as one standard for socially responsible business practices (Mwangi et al., 2013; UN Global Compact, 2016). Thus, many MNEs have been engaged in implementing and promoting labor standards within global supply chains (Nadvi, 2008; Mena & Palazzo, 2012).

On the contrary, the Rana Plaza disaster in 2013 showed that many corporations have not yet implemented sufficient self-governance systems for situations where states fail to sufficiently enforce labor rights (c.f. Surroca et al., 2013; Kamminga, 2016; Uddin, 2016). Corporate actors have argued that insufficient labor policies and the risk of labor violations are beyond their control as foreign production facilities have often been operated by independent subcontractors (Spar, 1998; Muchlinski, 2012).

In conclusion, two complementary grievance mechanisms have been addressed by the Guiding Principles (2011): legal and non-legal mechanisms. As a consequence, most

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research is concerned with either the legal obligations (Jägers, 2011; Muchlinski, 2012; Zerk, 2013; Uddin, 2016) or moral responsibilities of corporations to respect human rights (Arnold, 2010; Fasterling & Demuijnck, 2013; O'Brien and Dhanarajan, 2015). Nonetheless, little research has been undertaken outside of the legal versus voluntary debate regarding the human rights compliance of MNEs. This is based on the fact that the Guiding Principles and related work have failed to realize that the activism of NGOs and civil society (i.e. social activism) can also be the driving force of corporate social change (Harrison & Sekalala, 2015).

2.3 Social Movement Theory

Social movement theorists argue that the 'state-corporation' nexus should be complemented by NGOs and civil society (Hond & Bakker; 2007; Utting, 2008; Huijstee & Glasbergen, 2010; Harrison & Sekalala, 2015). According to Utting (2008: 969), "it is up to actors and entities such as civil society organizations, the media, shareholders and public opinion to expose, 'name and shame', or otherwise bring pressure to bear on a company to improve its [human rights] performance". Contemporary publications have drawn attention on the influence of non-state actors, such as NGOs and other stakeholder groups, on corporate practices (e.g. Hond & Bakker, 2007; King, 2008; Glasbergen & Huijstee, 2010). In contrast to the proactive ethical approach (i.e. self-regulation), corporate change as an outcome of social activism is based on a responsive approach of such corporations (Hond & Bakker, 2007; Glasbergen & Huijstee, 2010). In general, social activism is based on the context and thus is determined by: Who is the target of a campaign? What is the objective of the campaign? And how can it be achieved?

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2.3.1 Social Activism: NGOs, Stakeholder Mobilization and the Media

Social movement literature refers to the use of non-legal influence strategies by NGOs (Glasbergen & Huijstee, 2010). In this context, literature on influence strategies has been concerned with which kinds of NGO influence exist (Frooman, 1999), which are used in which kind of context (Frooman & Murell, 2005; Glasbergen & Huijstee, 2010), which kind of stakeholder can be mobilized to affect firms (Gardberg & Newburry, 2009) and what kind of impact they can have on corporate behavior (Eesley & Lenox, 2006; Hond & Bakker, 2007; King, 2008; Glasbergen & Huijstee, 2010). Consistent with the structure of influence strategies of NGOs from Hond and Bakker (2007), NGOs have two kinds of targets: institutions and corporations. The NGOs' objective, on the institutional/political level, is to aim for institutional change (e.g. pressure on governments to change insufficient labor law), while on the firm level the aim is for organizational change (e.g. pressure on corporations to change insufficient labor policies) (Hond & Bakker, 2007). Moreover, influence strategies of NGOs can be categorized either as symbolic gain (positive publicity) and material gain strategies (e.g. a call out for customers to buy from a certain business) or as symbolic damage (negative publicity) and material damage strategies (e.g. a call out for customers to boycott a certain corporation) (Hond & Bakker, 2007). NGOs use damage strategies if they aim for radical change in corporations, whereas the focus of the gain approach lies on a reformative change (Hond & Bakker, 2007; Glasbergen & Huijstee, 2010).

At the center of the symbolic damage campaign, NGOs pressure for radical change within the targeted corporation by negatively affecting the corporate reputation via the media (Hond & Bakker, 2007). Brown et al. (2006: 104) defines corporate reputation as, "the set of corporate associations that individuals outside an organization believe are central, enduring, and distinctive to the organization". To successfully execute a damage

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campaign, NGOs make use of modern communication technologies (e.g. email and social media) as well as traditional ones (e.g. television and newspaper) to increase the level of attention on corporate misconduct (King, 2008; Gardberg & Newburry, 2009; Thrall, Stecula & Sweet, 2014). Furthermore, to increase their reach and power, NGOs also cooperate with other NGOs as well as stakeholder groups or trade unions (Utting, 2008). Regardless, the majority of investigative human rights NGOs are incapable of meaningfully impacting the global press with the issues they seek to promote; typically, only those with the largest budgets (over $10 million annually) are able to generate global attention (Thrall et al., 2014). Amnesty International (2016) and Human Rights Watch (2016) are good examples of radical human rights NGOs who manage to be frequently covered within the international press (Thrall et al., 2014). The success of a symbolic damage campaign depends on the NGO's ability to reach enough public attention (King, 2008; Thrall et al., 2014) and to "affect public opinion via the media" (Keck & Sikkink, 1998: 23).

By focusing on the aspects of a material damage campaign, it is important to take a closer look at the stakeholder literature (Frooman, 1999; Glasbergen & Huijstee, 2010). The possibility to trigger organizational change in corporations through stakeholder activism was first recognized by Freeman (1984). Freeman's (1984: 48) work combines the "groups and individuals who can affect the organization" (i.e. strategic stakeholders) with strategic implications on the managerial "response to those groups and individuals". Paradoxically, it is often the most structurally weak stakeholders who will be the most sorely affected by irresponsible corporate behavior (Gardberg & Newburry, 2009). Human rights activists deal with this paradox by making strategic stakeholders aware of the disastrous position of non-strategic stakeholders (i.e. victims of corporate abuse) via exposure in the international press (i.e. the spotlight phenomenon) (Spar, 1998;

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Gardberg & Newburry, 2009; Glasbergen & Huijstee, 2010). In contrast to a symbolic damage campaign, NGOs also mobilize the kind of stakeholder the MNE depends on: the consumers (c.f. Hond & Bakker, 2007; Gardberg & Newburry, 2009; Glasbergen & Huijstee, 2010). The collective power of this kind of stakeholder is based on the fact that "the consumer can do without this particular firm and choose another, whereas the firm cannot do without clients" (Glasbergen & Huijstee, 2010: 612). Nonetheless, social movement scholars argue that some of the corporations targeted are more susceptible to social activism than others (Spar & La Mure, 2003; King, 2008; Kamminga, 2016).

2.3.2 The Corporate Target: MNEs in the Spotlight

As previously mentioned, damage campaigns of social activists aim to adversely affect the reputation of the corporate target (Hond & Bakker, 2007; Glasbergen & Huijstee, 2010). The extent to which a targeted corporation actually perceives the damage campaign as a threat is highly dependent on how recognized its profile and products are across civil society. Marketing scholars describe this familiarity as 'brand awareness', which is defined as "the brand recall and recognition performance by consumers" (Keller, 1993: 2). High brand awareness is most likely in the case of corporations within industries such as the footwear and textile industry, "where brand is often the central feature to distinguishing one corporation's products from another" (Spar & La Mure, 2003: 84). In other words, especially large corporations within an advertising-intensive market with high profile brands are more susceptible to reputation damage (Spar & La Mure, 2003; Zadek, 2004; Hand & Bakker, 2007).

Moreover, as King (2008) illustrates, previous declines in reputation or sales facilitate the efforts of social activists to successfully put pressure on corporate executives to change. Similarly, Kamminga's (2016) findings highlight that the corporate response rate to civil society reports is higher for corporations that operate within a

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consumer-oriented sector (e.g. food and beverage or retail industry), as compared to faceless business-to-business operating companies. In conclusion, social movement research demonstrates that the NGO and its strategy, the level of generated media attention and the brand importance for the corporate target all play an important role in pressuring organizational change (Spar, 1998; Spar & La Mure, 2003; Eesley & Lenox, 2006; King, 2008; Glasbergen & Huijstee, 2010; Thrall et al., 2014).

2.4 Organizational Change Management within MNEs

An organizational change process can be the outcome from external as well as internal sources of pressure on the corporation (Greenwood & Hinings, 1996). Focusing on the external sources of pressure, the field of new institutionalism indicates that organizational change in corporations occurs because of institutional (Oliver, 1991; Surroca et al., 2013) or market pressure (Greenwood & Hinings, 1996). "[I]nstitutional constituents that exert pressures and expectations include not only the state and professions, as institutions, but also interest groups and public opinion" (Oliver, 1991: 147). The capability of MNEs to effectively manage these fast-changing contextual pressures is crucial in terms of organizational survival (c.f. Oliver, 1991; Greenwood & Hinings, 1996). Hence, external actors can influence how businesses operate (c.f. Spar, 1998; Aguilera et al., 2007; Gardberg & Newburry, 2009).

2.4.1 The Impact of Corporate Governance on Organizational Change

One source of external influence can be the corporate governance system of the MNE (La Porta et al., 1998; Aguilera & Jackson, 2003; Aguilera et al., 2007; Ellram, Kirchhoff & Tate, 2010). According to Aguilera and Jackson (2010: 487), "[c]orporate governance may be defined broadly as the study of power and influence over decision making within the corporation". The two most often used models of corporate governance systems in research are the Anglo-American and the Continental European

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system (also known as Rhineland model) (La Porta et al., 1998; Aguilera & Jackson, 2003; Aguilera & Jackson, 2010; Ellram et al., 2010). Important governance differences exist between the labor market, finance, corporate control and the ownership structures of the corporations (Aguilera & Jackson, 2003). Research has addressed the implications of corporate governance systems on management practices via various topics.

In particular, numerous studies within the CSR context show that Anglo-American governed MNEs differently address CSR topics compared to Continental European governed MNEs (Christopherson & Lillie, 2005; Aguilera et al., 2007; Bouvain & Chen, 2008; Ellram et al., 2010; Matten & Moon, 2008). Aguilera et al. (2007) argues that institutional norms within the home country of the MNE set expectations about how corporations manage societal issues on a global scale. Contrary to expectations, Surroca et al. (2013: 563) provide evidence "that rising stakeholders' expectations for greater CSR in an MNE's home country can serve as a stimulus for noncompliant behaviors in host countries". Nevertheless, two main observations can be drawn from the Anglo-American versus Continental European governance nexus in terms of CSR (Aguilera et al., 2007; Matten & Moon, 2008).

First, the Anglo-American governance system promotes voluntary CSR initatives and the issuing of corporate codes, while within the Continental European system CSR targets are often integrated within national law (e.g. employment law) (Aguilera et al., 2007). Following the legal theory, this distinction is based on the civil law tradition of Continental Europe (e.g. Germany) and the common law tradition of Anglo-American countries such as the USA (Botero et al., 2003). As a consequence, many European companies have adapted an implicit CSR approach (e.g. corporate values) and American-based companies have followed an explicit CSR approach (e.g. CSR disclosure, code of conduct) (Matten & Moon, 2008).

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Continental European governed corporations (Aguilera & Jackson 2003). Shareholder-financed Anglo-American companies favor short-term profits (i.e. shareholder oriented objectives) over long-term social change actions (Aguilera et al., 2007). Therefore, American corporations implement social change actions when these actions minimize reputation risks or when these policy changes can strengthen the competitiveness of the firm (Aguilera et al., 2007). In contrast, Continental European companies are often financed by banks, which pressure corporations to achieve long-term profits and to provide sustainable strategies (i.e. stakeholder-oriented objective) (Aguilera et al., 2007). Moreover, Bouvain and Chen's (2008) content analysis of CSR reports by Australian, UK, US (i.e. Anglo-American governance), and German (i.e. Continental European governance) firms show that German companies are more engaged in 'political dialogue' to shape social change than the corporations from the other countries. In consequence, American- and European-based MNEs differently manage CSR (Aguilera et al., 2007; Detomasi, 2007; Matten & Moon, 2008; Bouvain & Chen, 2008).

2.4.2 Stages of Organizational Change

Organizational studies have commonly described the process of organizational change in the context of corporate citizenship, CSR or sustainable supply chain management of corporations with stage models (Zadek, 2004; Matten & Crane, 2005; Moan, Lindgreen & Swaen, 2010). These stage models of corporate responsibility underscore "key organizational stages along a continuum which indicate greater consideration for social and environmental issues" (Moan et al., 2010: 26). One of these stage models is Zadek's (2004) study of Nike's organizational change process as a response to social activist groups (i.e. the anti-sweatshop campaign) in the 1990's. Zadek's (2004) research follows an organizational learning perspective, which emphasizes that corporations adapt and change CSR policies while facing new situations

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(Moan et al., 2010). According to Zadek (2004), an organizational change process towards corporate responsibility can be separated into five stages from corporate denying strategies (i.e. defensive stage) towards promoting change within countries or industries (i.e. civil stage). These five stages are summarized in Table 1.

TABLE 1:FIVE STAGES OF ORGANIZATIONAL LEARNING

Stage What organizations do Why they do it

Defensive Deny practices, outcomes, or _{responsibilities} To defend against attacks to their reputation that in the short term could affect _{sales, recruitment, productivity, and the brand}

Compliance Adopt a policy-based compliance _{approach as a cost of doing business} To mitigate the erosion of economic value in the medium term because of _{ongoing reputation and litigation risks}

Managerial Embed the societal issue in their core management processes To mitigate the erosion of economic value in the medium term and to achieve longer term gains by integrating responsible business practices into their daily

operations

Strategic Integrate the societal issue into their _{core business strategies} To enhance economic value in the long term and to gain first-mover _{advantages by aligning strategy and process innovations with the societal issue}

Civil Promote broad industry participation in _{corporate responsibility} To enhance long-term economic value by overcoming any first-mover _{disadvantages and to realize gains through collective action}

Source: Zadek (2004)

On the defensive stage of Zadek's (2004) framework, corporations do not take responsibility of alleged issues arising from NGOs, media or stakeholders nor show any attempts to change. Zadek (2004) argues that corporations defend their reputation and image by either denying that the violation has happened, by assuring that the parent company did not know about any misconduct, or by disclaiming any liability. On the

compliance stage, corporations respond to external pressure with compliance-based

actions. "Compliance is understood as a cost of doing business; it creates value by protecting the company’s reputation and reducing the risk of litigation" (Zadek, 2004: 1). Moving towards the managerial change stage, corporate executives realize that they face a long-term problem that has to be sufficiently addressed with changes of core management practices, such as changes within supplier contracts or CSR disclosures (Zadek, 2004). Within the strategic stage, corporations fully capitulate to external pressure and implement long-term strategic changes. Businesses recognize within this stage that strategic changes can bring 'first mover' advantages and long-term financial

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and reputation benefits. On the civil stage of Zadek's (2004) framework, a collaborative solution involving organizational change management and a broad engagement with other stakeholders to effectively change the whole industry is key.

In this context, multi-stakeholder initiatives (MSIs) have emerged as one collaborative way of organizing corporate changes and have become a crucial research avenue (c.f. O'Rouke, 2006; Roloff, 2008; Mena & Palazzo, 2012; Schrempf-Stirling & Palazzo, 2016). These issue-based initiatives include "private and non-governmental stakeholders in negotiating labor, health and safety, and environmental standards, monitoring compliance with these standards, and establishing mechanisms of certification and labeling" (O'Rouke, 2006: 899). For instance, the Fair Labor Association (FLA) was established in 1999 as a response to Nike's global sweatshop scandal (Olsen & Payne, 2013). The FLA combines key businesses from the apparel and footwear industry, representatives from several US universities (here: principal buyers) and different NGOs (O'Rouke, 2006). In any case, MSIs are issue-driven and provide an alternative to implement social changes (Roloff, 2008; O'Rouke, 2006; Uddin, 2016).

Zadek's (2004) framework has been addressed within several publications (e.g. Mirvis & Googins, 2006; Moan et al., 2010; Perry & Towers, 2012; Baumann-Pauly et al., 2013; Wickert, 2014; Schrempf-Stirling & Palazzo, 2016). For instance, Perry and Towers' (2012) case study research makes use of Zadek's (2004) stage model to classify the level of CSR implementation within supplier factories of different apparel and textile labels. Schrempf-Stirling and Palazzo's (2016) study uses Zadek's (2004) to explain shifts within CSR management practices, such as CSR disclosures, as a response to NGO activism. Baumann-Pauly et al.'s (2013) study of CSR differences between small and large firms clarifies Zadek's (2004) work with firm-specific levels of commitment, implementation (i.e. internal structure and procedures), and external collaboration for each stage. Likewise, Wickert (2014) adapts Zadek's (2004) model to conceptualize how

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small- and medium-size enterprises can implement political CSR. In contrast, Mirvis and Googins (2006: 106) argue that Zadek (2004) only focuses on the organizational complexity faced by corporation to manage social changes on the firm level, but that it fails to fully address "the generative logic and mechanisms that drive the development of citizenship within organizations". Therefore, there is a clear opportunity to investigate organizational change management from various perspectives and within its context (Mirvis & Googins, 2006; Aguilera et al., 2007).

The above literature review has elaborated on the concept of corporate responsibility to respect human rights from an ethical and legal perspective. The social movement theory addresses non-state actors as a potential driver of social change actions within corporations; and the corporate governance, CSR and organizational change management literature have given insights in managing corporate responsibility. However, the actual praxis of a given company's reaction to allegations of human rights abuse remains unclear (Harrison & Sekalala, 2015; Kamminga, 2016; Uddin, 2016). To close the literature gap between social movement theories and organizational studies in the context of allegations of labor rights violations by MNEs will be the central aim of this thesis. Therefore, this work is concerned with: When an MNE is publicly accused of

a labor violation in a host country, what is it that inspires an organizational change (i.e. level of negative media attention, the brand awareness and company size, the specific accusations, or the corporate governance system)?

3 Theoretical Framework – The Spotlight Phenomenon

In this study, a combination of social movement theory and organizational change theory will be employed to investigate the spotlight phenomenon. The level of attention on a corporation can be divided into negative attention generated by social activism and

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the general (positive) attention the firm itself is able to attract (e.g. advertising). The level of organizational change is classified with Zadek's (2004) stage model, whereas corporate reactions can be classified within five stages (i.e. defensive, compliance, managerial, strategic and civil). When combining these theories, one can formulate a number of propositions concerning the level of attention a corporation is subjected to and the resulting level of organizational change.

Level of attention. Social activism, such as NGO campaigns, stakeholder activism

and press investigation, can call public attention to the corporate abuse of a specific company, in order to negatively affect the reputation of the corporate target (Hond & Bakker, 2007). The resulting reputational risk can cause the corporate violator to change (c.f. Spar, 1998; Zadek, 2004; Hond & Bakker, 2007; Kamminga, 2016). Radical NGOs and investigative journalism have been successful in widely exposing the labor violations of MNEs sufficiently affecting the public opinion and mobilizing stakeholders (Hond & Bakker, 2007; Kamminga, 2016). Profitability of a brand or company can be significantly affected by the consequences of airing labor rights scandals (c.f. Kamminga, 2016). Some of the possible negative outcomes include a loss of market share considerable reputational damage, loss of customer loyalty, national boycotts, decreasing sales, and exclusion from profitable markets (c.f. Easley & Lenox, 2006; Hond & Bakker, 2007; Nadvi, 2008; Kamminga, 2016). However, the hurdle for social activism is to generate enough negative publicity in order to have an impact on the reputation of the targeted corporation (Keck & Sikkink, 1998; King, 2008; Gardberg & Newburryy, 2009; Thrall et al., 2014). As King's (2008) study of 133 boycotts of US corporations showcases, social activism increases in its success when it is supported by high levels of media attention. Therefore, the more media attention, in this case negative reporting, is generated through social activism, the more likely it is for a corporation to

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follow through the stages of Zadek's model (2004). Thus, this thesis proposes the following working proposition:

P1: The likelihood of a corporate target to acknowledge allegations and to

change in the face of social activism by NGOs, stakeholders or the press, increases with high levels of negative media attention (i.e. level of negative media attention).

Corporate executives will also consider the likelihood of reputational risks and possible shifts in consumer preferences (Spar & La Mure, 2003). As Spar and La Mure (2003) argue that not all corporate targets are subject to the same levels of public attention. Large, advertising-intensive MNEs within a consumer-centric industry generally attract higher levels of attention than smaller, lesser-known corporations (Kamminga, 2016). Brand awareness and company size also increase the public interest in allegations of labor rights violations and in consequence heighten the reputational risks for the corporation (Spar & La Mure, 2003; Zadek, 2004; Bartley & Child, 2014; Kamminga, 2016). Therefore, companies that have spent decades cultivating a brand (i.e. high brand awareness) are more vulnerable to declines in reputation than their lesser-known counterparts (Spar, 2003). Corporations that heavily rely on their high profile brand image are more inclined to sufficiently change (e.g. civil change) in consequence to prevent further reputational damage (Spar & La Mure, 2003; Zadek, 2004; Easley & Lenox, 2006; Nadvi, 2008; Kamminga, 2016). For MNEs, a first reaction to specific allegations is often the publication of a corporate statement to minimize the media attention (Kamminga, 2016). In contrast, small and barely unknown corporations can deny allegations without noticeable reputational risk (c.f. Zadek, 2004). The bigger the brand and profile of a corporation, the more likely the target

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company will be susceptible to pressures of social activism and public scrutiny (Bartley & Child, 2014). This assertion leads to the following proposition:

P2: The spotlight phenomenon is more likely to affect large corporations

with high profile brand(s) (i.e. brand awareness and company size).

Organizational change management. As presented in the literature review,

developing countries often do not adequately ensure the protection of labor rights. In weak institutional settings, MNEs are less constrained by rules and are more likely to compromise on their own standards (Schrempf-Stirling & Palazzo, 2016). The MNE is thus only controlled by its corporate governance system at home while addressing labor rights issues within less-developed host countries (Christopherson & Lillie, 2005). Different tactics of facing labor rights allegations stem from the Anglo-American (e.g. USA) and the Continental European governance system (e.g. Germany) (Aguilera & Jackson, 2003; Christopherson & Lillie, 2005; Aguilera et al., 2007; Detomasi, 2007).

Generally, it is observed that companies that are governed by the Continental European system opt for cooperation with institutions and civil society (i.e. external stakeholders) (Ellram et al., 2010). This was demonstrated by a CSR report content analysis of their supply chain management (Ellram et al., 2010). Conversely, most corporations that are governed by the Anglo-American system only address institutional settings as risk within their risk management strategies (Ellram et al., 2010). For instance, former European and American sub-purchasers of textiles produced in the collapsed Rana Plaza factory separated their remedy strategies into a US and a European MSI (Uddin, 2016). Whilst the legally binding agreement of the European MSI includes the Bangladeshi government, trade unions and several NGOs (Accord, 2017), the American agreement is not legally binding and only includes U.S. retailers (Alliance, 2017). Likewise, Christopherson and Lillie (2005) find varying strategies of managing

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alleged labor issues within their multiple-case study analysis of IKEA (i.e. Continental European) and Wal-Mart (i.e. Anglo-American). Whereas Wal-Mart follows a low-cost strategy (i.e. to satisfy shareholders returns on investment expectations) by responding to NGOs campaigns by simply cutting abusive supplier ties, the IKEA management approach focused on extended supplier contracts and on active stakeholder engagement to improve labor standards (Christopherson & Lillie, 2005). Additionally, the Continental European governance model (i.e. stakeholder-oriented model) ascribes itself to focusing on long-term 'relational' partnerships with business partners, suppliers and employees, while the Anglo-American governance model (i.e. shareholder-oriented model) favors short-term 'arm length' relations (Detomasi, 2007). Hence, "the ways in which the [home country-] market is governed have important implications for how firms respond to the requirements posed by labor standards and how they behave in the globalized production environment" (Christopherson & Lillie, 2005: 1933). This postulates the third proposition:

P3: MNEs governed by the Continental European system (Anglo-American

system) are more (less) likely to collaborate with external stakeholders to address allegations of labor rights violations (i.e. corporate governance system).

NGO damage campaigns are often concentrated on one specific corporate abuse in order to attract the most possible attention, pressuring the company to react in a tightly managed and issue-specific manner to excise the immediate source of negative publicity (Hand & Bakker, 2007; Detomasi, 2007; Thrall et al., 2014). The main aim for profit-oriented corporations is to move out of the public limelight as quickly as possible (Spar, 1998; Zadek, 2004). To be able to provide fast results, MNEs will focus on addressing the specific issue (i.e. the labor rights issue(s) within the alleged supplier) while

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sidelining any other related causes (e.g. general shortcomings of the labor policy, supply chain management, audit systems) (Detomasi, 2007). As Spar (1998) argues, not all corporations might be inclined to operate ethically after having been in the spotlight of media attention. These issue-specific change actions are seen as an unavoidable 'cost of doing business' to protect the corporation from further reputation decline (Zadek, 2004; Nadvi, 2008; Kamminga, 2016). So, this thesis suggests that:

P4: Corporations are most likely to react to allegations of labor rights

violations with issue-specific remedies/changes to minimize any reputational risk (i.e. issue-specific change management).

FIGURE 1:THEORETICAL FRAMEWORK –SPOTLIGHT PHENOMENON

As shown in Figure 1, this thesis investigates the different change/reaction approaches of MNEs facing allegations of labor rights violations in host countries while being publicly scrutinized (i.e. the spotlight phenomenon).

4 Methodology

This thesis will follow a holistic multiple case study approach in order to gain deeper insights into the reactions of MNEs in the spotlight due to labor rights violation allegations. This exploratory process research aims to bridge established theories

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(Eisenhardt, 1989) within the field of human rights and business. To investigate the spotlight phenomenon in its real context and to be able to sufficiently capture its outcomes, a process study approach was chosen for the analysis of the research question. According to Ven and Huber (1990: 213), "[p]rocess studies are fundamental to gaining an appreciation of dynamic organizational life, and to developing and testing theories of organizational adaptation, change, innovation, and redesign." In order to accurately portray organizational change processes it is necessary to collect longitudinal data (Johnson, 1987). Therefore, this work will use several sources of secondary data for a coherent content analysis of the organizational change process.

4.1 Data Sources

The data on specific allegations of labor rights violation stems from the global Corporations and Human Rights Database (CHRD). Corporations, which are accused of a labor violation, as found in the CHRD, represent the unit of analysis. The CHRD makes use of the (unstructured) information of corporate abuse allegations generated by the independent Business and Human Rights Resource Centre (BHRRC). Therefore, researchers of the CHRD-project convert the available data from the BHRRC into a predefined coding structure, which includes about 6000 allegations worldwide from 2000 until 20143. Each allegation belongs to one out of four categories (Olsen & Payne, 2013: 16): 1) Development and Poverty, 2) Environment, 3) Health, and 4) Labor. This thesis will only focus on the fourth category Labor, which is itself subdivided into (Olsen & Payne, 2013: 16): "1) child labor, 2) forced labor, 3) substandard working conditions, and 4) right to unionize". On each corporate abuse allegation the CHRD covers information about the company, the violation characteristics, affected parties, third-party involvement and judicial and non-judicial actions. Moreover, since 2005,

3

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companies have been invited by the BHRRC to release a statement concerning firm-specific allegations of misconduct4. The BHRRC received corporate responses for 1317 allegations between 2005 and 2014 (Kamminga, 2016). As a corporate response is often the first statement to a specific allegation (Kamminga, 2016), it will be the starting point for the data analysis. According to Olsen and Payne (2013), the size and longitude of the data in the CHRD fulfills the requirements for a meaningful analysis, and gives the opportunity to track and compare these allegations over time.

The level of media attention given to a specific allegation will be measured with data from the LexisNexis database. This database includes 1845 English language global media outlets, such as the New York Times (USA), Business Mirror (Philippines), Times (London), Global Times (China) or the Globe and Mail (Canada). Furthermore, the data analysis will also include news outlets within the language of the home country of the MNE from the LexisNexis database. If a human rights violation allegation is not covered within "the news outlet in this collection, which includes the agenda-setting newspapers across the nations most likely to provide human-rights support, then its is almost impossible" to gather any attention (Thrall et al., 2014: 141). To find media content on the specific allegation, keywords such as the name of the supplier, the labor rights violation, the host country and the name of the corporation will be used. The overall number of newspapers covering the specific allegation within a time frame of six months determines the level of negative media attention (c.f. Thrall et al., 2014). This work classifies cases that were covered within more than 10 newspapers as having high level of negative media attention and vice versa.

The level of brand awareness performance is measured with the annual Top 100 Global Brands ranking of the consultancy firm InterBrand that is published in the

4

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Business Week (Chu & Keh, 2006; InterBrand, 2017). The InterBrand valuation model has received widespread acceptance (Ratnatunga & Ewing, 2009). The brands are ranked depending on their financial figures, the role of the brand and the general brand strength (InterBrand, 2017). Companies are only listed in the ranking if they "have a public profile and awareness across the major economies of the world" (InterBrand, 2017). Thus, this work considers every corporation that is listed once within the Top 100 Global Brands ranking before or within the year of the allegation as having high brand awareness performance and vice versa.

Information on the corporate target will be taken from the database Orbis. Orbis covers data of the company size (i.e. operating revenue) and provides information on the location of the corporate headquarters (i.e. home country). North American-based corporations (e.g. USA) will be classified as governed by the Anglo-American system, while European-based MNEs (e.g. Germany) belong to the Continental European corporate governance regime (Aguilera et al., 2007; Detomasi, 2007; Bouvain & Chen, 2008; Matten & Moon, 2008; Aguilera & Jackson, 2010).

The level of organizational change will be measured by comparing the information given in the corporate statement of the MNE about an allegation (i.e. plan of action) with the content of the CSR tools of the MNE (e.g. sustainability reports, CSR report, human rights policies) after the labor rights violation allegation has happened (e.g. policy changes). CSR tools that are displaced on the corporate website can be seen as the official and approved statement of a corporation with respects to CSR, human rights and labor rights policies (Bondy, Matten & Moon, 2004; Preuss & Bown, 2012). A content analysis of CSR tools is a well-establish approach to measure CSR/human rights development (Bondy et al., 2004; Ellram et al., 2010; Preuss & Brown, 2012; Baumann-Pauly et al., 2013; Schrempf-Stirling & Palazzo, 2016). In cases where no CSR tool

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exists, as it is not mandatory by law yet, the data will be supplemented by published corporate statements and NGO reports with regards to the specific allegation. Finally, the documented changes within the CSR tools of the accused MNE will be classified into Zadek's (2004) five stages model. Allegation updates from the BHRRC, which include NGO, industry and media reports will be used for third-party verification of the (documented) changes. The triangulation of different data sources will allow for multifaceted insights into the change process at the corporate level (Johnson, 1987). The case selection process will be described next.

4.2 Case Selection

The six cases depicted in this thesis are selected from the CHRD due to a purposive sampling (Saunders & Lewis, 2012). Besides the well-known MNEs Nike Inc. (hereafter: Nike), GAP Inc. (hereafter: GAP), Puma SE (hereafter: Puma) and Adidas Group (hereafter: Adidas), this thesis will also cover two lesser-known MNEs: Charming Shoppes Inc. (hereafter: Charming Shoppes) and Karl Rieker GmbH & Co. KG (hereafter: Karl Rieker). According to Eisenhardt (1989: 545), a multiple case study with "a number between 4 and 10 cases usually works well" for building theory. The selected cases all share the following criteria: 1) the allegation can be found within the CHRD; 2) the corporate abuse can be categorized as labor; 3) the corporate abuse case deals with a Western-based MNE that operates in the apparel and textile industry; 4) the corporate headquarters are either located within a Continental European or North American state which fulfills the essential requirements of a democratic country, such as freedom of press and freedom of opinion (i.e. home country); 5) the labor rights violation occurred within a supplier factory of the MNE in a developing country (i.e. host country).

Organizational change management : multinational enterprises in the spotlight of human rights activism

Master Thesis