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The Garment Supply Chain Governance Project, which ended in June 2019, has recently published its final stakeholder report. After three years of collecting data from 79 lead firms from four countries, 152 factory managers in Bangladesh, 1.500 Bangladeshi garment workers and multiple stakeholders, we see a relatively coherent picture more than six years after the fatal Rana Plaza factory collapse: “Rana Plaza and the resulting public attention to building safety and worker standards in global garment supply chains has led to an enhanced climate for compliance, manifested in a range of new governance  models – most importantly the Accord and Alliance initiatives – and more longer-term, stable buyer-supplier relationships that have contributed to improved worker outcomes in some respects. These developments are direct responses to an unprecedented human disaster in the global garment industry which has triggered a positive collective response but not a systemic change towards more sustainable garment production. In fact, our results indicate the fragility of these gains, shedding light on the continued systemic challenges to sustainable labour standards faced by lead firms and suppliers alike.”

These results echo previous findings, not least those reported on this blog, regarding the continued challenge of raising the wages of garment workers and the need for further stakeholder pressure on garment brands and policy makers. In addition, our results provide nuanced insights regarding the current state of buyer-supplier relations and working conditions. For instance, we observe a form of “asymmetrical cooperation” between buyers and suppliers that is marked by increased power asymmetries between lead firms and suppliers on the one hand, but longer-term relations, mutual understanding, trust and continuity of orders on the other. The main problem in these relationships is the continued pressure on production prices, which undermines suppliers’ capacities for improving labor standards. Rather than sweatshops, we argue that many of the larger garment factories in Bangladesh constitute “hardship workplaces”, maked by improvements in workers’ outcome standards
(mainly better health and safety conditions, relative job security and improved social benefits) and process rights (mainly representation in worker participation committees), but continued problems regarding wages, working hours, abuse and management rejection of unions and collective bargaining.

Many of these developments can be tied to the Accord and Alliance initiatives whose presence has clearly created a stricter “climate for compliance” that ensures that basic standards are met. Yet, these initiatives have also further consolidated lead firms’ power and has mixed impacts at best for local labor actors. Overall, we fear that with the fading out or transitioning of these initiatives and a continued lack of stricter regulation of labor standards and human rights in global supply chains – on national and transnational levels – the improvements garment workers gained might be instable. Thus, we conclude: “As Rana Plaza starkly revealed, the safety and wellbeing of millions of workers and their families depend on the development of effective governance
solutions on multiple levels. Our research indicates that despite the progress made in recent years, further efforts will be necessary to help the millions of workers who depend on the garment industry for their livelihoods.”

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On the 24th of April 2018, many people around the world commemorated the over 1000 lives lost and the 1800 people injured during the collapse of the Rana Plaza factory in Savar, Dhaka, Bangladesh. The Global Garment Supply Chain Governance Project, together with King’s College London, took this date as an opportunity to bring together the community of international scholars investigating the consequences of this disaster for the governance of labor standards in the global garment industry. Given the high and immediate policy relevance of this topic, the conference was not just purely academic: several representatives from lead firms, supplier factories, policy makers and civil society actively participated in debating and interpreting the research results, and also constituted the strong opening panel. So what are the news for global governance?

A focal point of the debate was the Accord for Fire and Building Safety in Bangladesh, a five-year multi-stakeholder, transnational collective agreement co-signed by over 200 brands and the UNI and IndustriaALL global unions that not only commits brands to pay into a centrally organized safety inspection regime and to ensure continuity of orders for a limited period, but also demands the introduction of worker participation into safety committees in garment factories and provides for legally binding arbitration mechanisms if complaints are unresolved. While Mark Anner, Jennifer Bair and Jeremy Blasi argue that the Accord is not unprecedented, pointing to the “jobbers agreements” drafted between workers, contractors, and lead firms in the US apparel supply chain to ensure fair prices and stable orders in the earlier 20th century, most would agree that the Accord’s governance model is unique in a global supply chain context. Thus, it is often hailed as a solution to the industry’s ongoing and pressing problems regarding labour standards. The Accord departs most from previous initiatives in that it is a collective approach for addressing the “race to the bottom” dynamic of competing on the lowest possible labour standards characterizing the garmen industry since decade – an issue which lead firms only now begin to see as a collective action problem. In analyzing the history of the Accord, Juliane Reinecke and Jimmy Donaghey  point out, however, that the Accord was not crafted as a reaction to the Rana Plaza disaster. In fact, it existed previously as a memorandum of understanding on building and worker safety by two lead firms following earlier factory accidents – but other lead firms were not interested in signing it before the fatal factory collapse occurred. Does the Accord stand up to these hopes?

As argued by Miriam Neele, on the panel as Head of Signatory Engagement of the Accord, the Accord program has now covered approximately over 2 million workers in the Bangladesh garment industry and has ensured the remediation of about 85% of the factories covered by the Accord. Data on over 1000 garment workers collected by Naila Kabeer, London School of Economics, likewise indicates that there has been positive change on those issues that Western lead firms can influence, such as building safety and working time, at least in those factories covered by the Accord and by the US-driven Alliance for Bangladesh Worker Safety. Both Frank Hoffer (on the panel as representative of the new Action Collaboration Transformation initiative) and Giesela Burckhardt from the German NGO Femnet, however, stress that wages still need to go up – an issue that is simply not covered by the Accord. Additionally, there is some scepticism as to the actual scalability of the Accord model to other issues and other countries. The renewal of the Accord in Bangladesh has resulted in a rather slow process of getting brands to sign up to the agreement again, and the initiative has faced intense critique from various Bangladeshi stakeholders who think that the Accord has lost its purpose in Bangladesh. In a study conducted by Steve Frenkel (UNSW) and Chris Wright (University of Sydney) and myself shortly after the Rana Plaza disaster we found that intense stakeholder pressure was a main driver behind firms’ willingness to sign the Accord. In the absence of such immediate pressure, it seems that the majority of firms is only reluctantly willing to engage in stricter forms of labour standards regulation, such as those embraced by the Accord.

At least four additional problems must be noted. First, as argued by Kabeer, certain worker-related issues cannot be influenced by Western brands. Most importantly, these are the (mis-)behaviour of supervisors and the still very low level of unionization and worker representation in Bangladesh. Here local stakeholders are called upon to bring forward changes. Second, as repeatedly noted by Dorothee Baumann-Pauly and her colleagues from the NYU Stern school of business, the current safety schemes has at best created “islands of compliance” in which some of the best, most well-financed factories are getting better, while the smaller, already struggling factories remain off the radar – and have notoriously poor standards. Third, the Accord remains an auditing tool – and audits can easily turn into mere reputational devices for lead firms rather than creating actual accountability and liability for brands and their auditors, as Carolijn Terwind, lawyer at the European Center for Constitutional and Human Rights (ECCHR), highlighted on our panel. Fourth, evidence from a survey on 150 factory managers in Bangladesh conduced by Shahidur Rahman (BRAC University) and Kazi Mahmudur Rahman (ULAB) suggests that lead firms rarely support factory’s remediation efforts financially. Thus, while suppliers value continuity of orders, they feel heavily squeezed between ongoing price pressure exerted by lead firms and increased demands regarding infrastructure and working conditions.

An important structural condition must be noted though, which in my view is a core boundary condition for seeing continued improvements in labour standards in Bangladeshi garment factories: unless digitalization is able to replace manual labour in this industry, large volumes of garment production will remain in Bangladesh because, as China continues to reduce its capacities, no other country is to date able to absorb the high demand for garment production. In this sense, the race to the bottom is currently on hold – an unforeseen opportunity for stakeholders in the West as well as in Bangladesh to continue pressing for stricter regulations and better labour standards in this industry.

Blogging about organizational strategy and even using blogs as a strategy-making device is an increasingly common practice among (not only) young firms. For instance, in a paper* co-authored with Thomas Gegenhuber, we analyze strategy blogging as an open strategy practice that increases transparency of and involvement in strategy making, while at the same time adding to the corporate impression management repertoire.

Consequentially, it comes at no surprise that non-profit organizations such as Creative Commons, which heavily rely on external communities such as different groups of license users, also engage in strategy blogging. Ryan Merkley, CEO of Creative Commons, started the series of strategy posts with general reflections on sharing, followed by suggestions for the overall mission and role of Creative Commons in his second post:

CC must recognize its various roles in a variety of diverse and active communities. We provide essential infrastructure for the Web, and are vital contributors and leaders in these global movements. The opportunity to realize the benefits of openness will come from showing how “open” is uniquely able to solve the challenges of our time. Our role is not just as providers of tools, but also as strategic partners, advocates, influencers, and supporters to quantify, evangelize, and demonstrate the benefits of open.

Only after announcing that Creative Commons had received a $10 million grant from the The William and Flora Hewlett Foundation to implement the new strategy, Merkley identified “three specific areas” that Creative Commons will focus on (emphasis in original: Read the rest of this entry »

I’m very pleased to announce the publication of a new English-language textbook on the management of inter-organizational relations written and edited by Jörg Sydow, Gordon Müller-Seitz and myself and published by Palgrave. While several textbooks on specific topics such as strategic alliancesoutsourcing and offshoring or social networks are already out there, there was to date no comprehensive textbook dealing with different forms of inter-organizational relations from a management perspective that could be used in English-language courses on managing alliances and networks.Palgrave Bild

Several academically-oriented books such as the Oxford Handbook of Inter-Organizational Relations or the book Managing Dynamic Networks are useful to complement teaching, but are – in our experience – too theoretical to structure an entire course. Conversely, practitioner-oriented texts like the Manager’s Guide to Choosing and Using Collaborative Networks can only complement, but not fill an entire university course. A case collection on alliance management has been edited by the Ivey School of Business, but this collection does not include textbook chapters.

Our new book aims to include both an introduction to several forms of inter-organizational relations and the underlying academic debates as well as a collection of case studies highlighting particular managerial issues. In an effort to promote research-led teaching, all cases were developed on the basis of research projects conducted by members of the Research Group Inter-firm Networks and the Group’s international network. The book is structured in six parts, four of which comprise the main forms of inter-organizational relations that are distinguished: strategic alliances and networks, regional networks and clusters, global production and supply networks, and innovation and project networks. Especially the chapter on global production and supply networks includes a debate about transnational governance issues and discusses, for instance, the challenges associated with transnationalizing professional services or issues of accountability and liability in global production networks.

Five case studies are available for each of these network types, each focusing on particular management challenges. For strategic alliances and networks, for instance, Jörg Sydow together with Horst Findeisen, Vice President at the Star Alliance Services GmbH, wrote a case on the institutionalization of new management structures in the Star Alliance. For regional networks and clusters, Chacko Kannothra and Stephan Manning from the University of Massachusetts in Boston developed a case on the new impact sourcing trend and its implications for regional development in India. For global production and supply networks, Miriam Wilhelm from the University of Groningen presents details from her in-depth research on Toyota’s practices for managing cooperation and competition. In the chapter on innovation and project networks, Leonhard Dobusch wrote about the development of the international network organization behind Wikimedia.

Overall, this book tackles not only a border-crossing issue – management practices and challenges arising outside of hierarchical organizational boundaries – but also aims to bridge the gap between theory and practice in a new textbook format geared towards advanced bachelor, master and MBA students. The book is complemented by a companion website where teaching notes, a glossary and further informative links for each case are provided.

The Book

Governance across borders: transnational fields and transversal themes. Leonhard Dobusch, Philip Mader and Sigrid Quack (eds.), 2013, epubli publishers.
November 2019
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All texts on governance across borders are licensed under a Creative Commons Attribution-Share Alike 3.0 Germany License.