Will it ever be good enough? That was the key question facing Apple Inc., (Apple) the California-based
multinational technology company that was known for its innovative hardware, software, and online
services. Apple had been accused of having allowed labour rights violations in China at Foxconn, a major
supplier of its products in 2009, but the company had worked hard to overcome these issues to avoid any
negative ramifications for its corporate image. Yet on December 18, 2014, new evidence was presented in
a British Broadcasting Corporation (BBC) documentary that showed that labour rights violations continued
to occur in China, this time at Pegatron, another large Apple supplier that specialized in the assembly of
Apple’s iPhones 1 This documentary questioned Apple’s repeated statement in its 2014 supplier
responsibility progress report that “Each of those workers has the right to safe and ethical working
conditions.”2
Jeff Williams had been promoted to the role of senior vice president for Operations only 15 days earlier,
when he was put in charge of what Apple called “end-to-end supply chain management . . . dedicated to
ensuring that Apple products meet the highest standards of quality.”3
Given the huge progress that Apple
had achieved, was the company simply being singled out unfairly because of its size, visibility, and earlier
problems? Indeed, Apple now had an excellent reputation in terms of corporate social responsibility (CSR)
and, in 2014, had been ranked fifth on Forbes’ “best CSR reputations” list.4
As Apple’s stock market value
moved ever closer to US$1 trillion,5
did outside observers hold Apple, the most valuable company ever, to
a higher level of corporate social responsibility? Alternatively, had the company still not fully come to
terms with the nature and magnitude of its CSR challenges?
It had indeed proven to be difficult to maintain control over Apple’s vast operations, particularly when most
activities were undertaken through outsourcing to independent suppliers that were mostly situated in
offshore locations, such as China, far from Apple’s base in California. Perhaps the most important question
of all was what Williams and Apple could do to tackle the allegations. Would it suffice to adopt a defensive
strategy, by simply denying that the problem was structural in nature and pointing to Apple’s many and
costly efforts? Or should Apple’s management instead engage with the issue and instigate further CSR
changes in its sourcing strategy? If so, what changes should be implemented? In short, how should Apple
and Williams respond?
