In 1996, Kathie Lee Gifford made front-page news. The well-liked TV personality had lent her name to a discount line of women's clothing that, it was discovered, had been made by underage Central American workers. That same year, the Walt Disney Co. was exposed contracting with Haitian suppliers that paid their workers less than Haiti's minimum wage of $2.40 a day. Nike and Reebok, makers of perhaps the world's most popular athletic footwear, were repeatedly criticized for similar transgressions.

In all these cases, the companies accused were U.S. manufacturers of consumer products. They were being targeted for human-rights violations committed abroad not by their own managers or in their own plants but by the subcontractors that produced their products in overseas facilities.

Traditionally, U.S. firms have argued that they cannot realistically or financially be held responsible for the labor practices of their foreign suppliers. In recent years, though, this attitude has started to change. As a direct result of heightened human-rights activism, sharper media scrutiny, and the increased communication facilitated by the Internet, U.S. corporations are finding it difficult to sustain their old hands-off policy. They have begun to accept responsibility for the labor practices and human-rights abuses of their foreign subcontractors. Much of this new activity clusters around the promulgation of voluntary codes of conduct, now seen as consistent with - indeed, reinforcing - a strong brand-driven business model.

As pressure for, and interest in, codes continues to mount, and as accounting firms eagerly offer to audit firms' compliance with the codes, such cases will probably proliferate. In the process, human rights are likely to improve. Under these circumstances, the old Leninist link between multinational firms and foreign exploitation seems outmoded or even contradictory. Rather than having an interest in subverting human rights, corporations - particularly high-profile firms from open and democratic societies - may well see the commercial benefits of promoting human rights. This reversal is ironic and certainly not obvious. But in a world marked by international media and transnational activism, U.S. multinationals could be - indeed, may already be - powerful instruments in the pursuit of human rights.

During President Clinton's first term, for example, Labor Secretary Robert B. Reich launched a "No Sweat" campaign designed to steer garment makers toward compliance with U.S. labor laws and to expose retailers who might be purchasing garments made under sweatshop conditions. This was followed by the widespread publication of a Labor Department Trendsetter list of retailers that had publicly agreed to "demonstrate a commitment" to U.S. labor laws and to monitor working conditions. In August 1996 the White House established an Apparel Industry Partnership, which devised a workplace code of conduct defining decent and humane working conditions. Members of the Partnership also proposed that the code's adherents open their facilities to periodic inspections by independent monitors. Even more striking is Social Accountability 8000 (SA8000), an ambitious attempt by participating firms to comply with a certifiable set of labor and human rights standards, launched in 1997 by the Council on Economic Priorities and a group of influential companies.

The SA8000 initiative rests on market acceptance, not legal coercion. Firms would comply with the standards and the monitoring necessary to ensure compliance simply to win certification. Already, retail giants Toys 'R' Us and Avon have announced their intent to demand that all their suppliers become SA8000-certified.

It is easy, perhaps, to be cynical about these codes. But it is not clear that such skepticism is warranted. In fact, codes of conduct have already begun to be a significant factor in the pursuit of human rights. By changing the calculus of U.S. firms doing business abroad, codes can change their behavior.

The logic follows a pattern that one might call the spotlight phenomenon. When U.S. corporations go abroad, they take more than their capital and technology with them. They also take their brand names, their reputations, and their international images. When local producers in Vietnam, Pakistan, or Honduras exploit their workforce, few in the West hear of it, especially if the products are not exported to Western markets. U.S. multinationals, by contrast, bring with them the glare of public scrutiny and the changes it can induce in an increasingly global marketplace. They bring in their wake the scrutiny of U.S.-based activist groups and the international media.

The combination of an increasingly global economy and ever-more sophisticated and diverse communication channels has recently expanded the reach of even small-scale critics. On the Internet, grassroots activism has, quite literally, been electrified. Using inexpensive electronic mailing campaigns, human-rights groups can reach a far wider audience than in the past, drawing supporters from across national borders to mobilize consumer boycotts or political action campaigns. Once these campaigns reach the public arena, the perpetually hungry media is quick to bring attention to stories pitting giant U.S. corporations against hapless foreign workers.

Suddenly, companies must weigh the advantages of lower-cost labor or lower-cost inputs from abusive suppliers against the crush of negative publicity, the cost of public relations, and the possibility of consumer protests. More companies have come to realize that manufacturers who obey labor laws and treat their workers well also supply better products and are better business partners. Humane treatment and social responsibility reinforce a stronger brand image and are likely to come with higher quality (even if costs are slightly higher too).

In a 1995 survey, 78 percent of respondents said that they would prefer to shop at retail stores that had committed themselves to ending garment-worker abuse; 84 percent said they would pay an extra $1 on a $20 item to ensure that the garment had been made in a worker-friendly environment. Similar results appeared in a 1996 survey - only this time, nearly 24 percent said that retailers and not just manufacturers should take responsibility for preventing the use of sweatshop labor. Such polls do not, of course, necessarily predict consumer behavior, but they do seem to show the public's heightened awareness of human-rights issues. As public concern coalesces around issues of human rights, the promulgation of codes and standards completes the spotlight phenomenon. Once firms have adhered to publicly acknowledged standards, they magnify the effect of their own violations.

Already, early evidence supports the potency of the spotlight phenomenon. When reports surfaced that Reebok was purchasing soccer balls stitched by 12-year-old Pakistani workers, the firm created a new central production facility in Pakistan and established a system of independent monitors. Reebok affixed new "made without child labor" labels to its soccer balls. Starbucks Coffee, generally regarded as one of the most socially progressive U.S. firms, was heavily picketed in 1995 by activists demanding that the company keep closer tabs on the Guatemalan plantations from which it buys some of its coffee beans. The chain eventually complied, issuing a revised code of conduct and specific action plans for all of its supplier countries.

Recently, the spotlight has focused most frequently on Myanmar, whose ruling junta, the State Peace and Development Council, is one of the world's most repressive regimes. Facing mounting criticism of their presence in Myanmar, Levi Strauss, Macy's, Liz Claiborne, and Eddie Bauer all pulled their operations out of the country, as did oil giants Texaco and Amoco. All these firms left for purely commercial reasons. The spotlight had made its way to their bottom line.

Still, American companies whose business models are driven by brand and reputation do not always have adequate leverage to change the labor practices of their suppliers. In some instances, the only way to solve this problem is through collective action. If all firms - or at least a good majority of the larger ones - adhere to the same standard, none is penalized. Collective action can thus force a race to the top rather than the oft-noted race to the bottom.

What changes the direction of this race is the combined force of codes and the commercial success of companies that adopt and rigorously implement labor standards enforcement programs. And as more companies adhere, the easier it is for even the low-profile or sluggish to join.

Reebok, for instance, used the collective approach in Pakistan. Before proceeding with its child-labor-free campaign, the company obtained approval and support from both the World Federation of the Sporting Goods Industry and the U.S.-based Sporting Goods Manufacturers Association. When Reebok refused to sell balls made with child labor, so did all of its competitors. None, then, were left at a commercial disadvantage.

Traditionally, human rights advocates and business leaders have seen themselves standing on opposite sides of a vast divide, with the advocates trumpeting the possible evils of foreign direct investment and executives claiming that business cannot concern itself with issues beyond its own purview. In the contemporary global economy, however, these two sides may coincide as often as they clash.

Improved human rights are better in many cases for business, and more business, of certain types, may accelerate the pursuit of human rights. Both sides, moreover, have strong interests in the rule of law and in the promulgation of open markets and economic freedom. Both sides support freedom of the press and the protection of free speech. Thus the challenge for both business leaders and human rights advocates is to figure out how to manage the fragile relationship that binds them. Carving out a concerted agenda may ultimately prove more fruitful than battling solely in support of either human rights or untrammeled foreign investment.