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Decent Work in Global Supply Chains

Unit 4, Lecture 1 - TNCs and labor: the contested terrain

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The conditions of employment are “contested terrain” between managers and workers.
This terrain is also fragmented – internally and externally.

The “fissured workplace” – employment conditions are at the center of managerial cost cutting – caught between investor demands and organizational/technological advances (push for more flexibility, outsourcing, elimination, etc.)

Factors affecting employment practices:
- types of contract
- collective agreement
- training
- skill distribution
- labor supply
- hierarchies of responsibility and decision-making
- departmental competition
- conflicting perceptions
- investor demands
- organizational changes
- increasing uncertainties and inequalities

These factors impact how work is organized and how managers and worker interact.

Non-Standard Employment Arrangements:
- part-time work
- on-call work
- freelancing
- bogus self-employment

Management rids itself of responsibility
Contracted out workers face insecurity
Permanent workers feel coerced into making concessions to save their jobs
Gap in pay levels between direct and indirect employees (agency or sub-contracted) -- > the “triangular trap”: no chance to join union or collectively bargaining, neither the company or agency take responsibility for their employment conditions

Defining power politics in MNCs
- Mistrust , engaging in activities going beyond or even against one’s formal role in order to influence the distribution of advantages or disadvantages within an organization
- Divide between the interests and expectations of corporate management and MNC subsidiaries
o Subsidiaries expect support and resources from corporate management an a degree of autonomy (to adapt to changing local environment)
o Control can be pursued in 2 ways by corporate management – by treating local subsidiaries as strategic partners or as strategic dependents
- “Corporate standardization strategies” and subsidiary entrepreneurship – contentious points between MNCs and subsidiaries

Influence Tactics
- Working to attract positive attention at headquarters
o ‘Boy scout strategy’ – avoiding any behavior that could offend headquarters combined with referring to the subsidiary’s good track record
o Management has to be able to distinguish between real achievements and impression management
- Bridging national cultures and institutional systems

Sources of power/workers’ involvement
- micro-political bargaining power
o lobbying/negotiation skills, issue-framing skills and ability to form coalitions w/ actors both in the subsidiary and across the MNC
o this power usually resides in local management’s relations with employee representatives
- subsidiary position in the MNC’s production value chain i.e. systematic power → controlling specific functions critical to the proper functioning of the overall value chain , it is often only temporary
- resource dependency – when a subsidiary controls resources that are rare, valuable, inimitable and non-substitutable. Such resources can be specialized knowledge, technology an innovative product or a particular strength to leverage domestic business opportunities
- domestic institutional structures it is subject to i.e. institutional power. Such structures include specific regulations and laws. Institutional structures can serve as a shield against undesired corporate policies.

Towards more effective workers’ involvement:
Workers and their representatives have no choice but to get involved in political processes and power struggles between corporate management and their subsidiary. Leveraging the power deriving from the institutional environment first and foremost depends on the quality of the institutional environment itself (i.e. its ability to block undesired corporate standardization strategies). Workers and their representatives must be aware of the options open to them and have the political will and resources/skills to make use of these options.

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