Research Project

POWER RELATIONS AND LABOUR GOVERNANCE IN THE COMPUTER INDUSTRY

GLOBAL PRODUCTION NETWORK

Dr Gale Raj-Reichert

University of Manchester

Introduction

The computer industry global production network (GPN) faces challenges of poor labour conditions in outsourced factories in developing countries. Efforts by brand firms to improve the situation often fail to produce real and lasting improvements amongst suppliers (Locke et al 2012). In their efforts to improve labour conditions in the GPN, nongovernmental organisations (NGOs) and trade unions (TUs) target brands in their campaigns. Suppliers are generally not considered the main drivers for improving labour conditions in the computer industry (Raj-Reichert 2011). This research project asks the question whether large and key suppliers, namely contract manufacturers (CMs), can play an important role in improving labour conditions in the GPN. CMs undertake a significant amount of manufacturing for brands and employ a large amount of labour in developing countries. CMs also control very large supplier bases in developing countries. Given the growing importance of CMs to brands, questions arise over whether CMs can and should play a greater role in improving labour governance down the GPN. This research project will examine the rising power of CMs and what it means for governance over labour conditions in the computer industry, and what it implies for NGO and TU campaigns at the global and local scales.

The key research objectives are:

1)   Assessing changing power relationships between CMs, brands, NGOs, and TUs in negotiations over labour governance in the GPN at the global and local scales

2)   Exploring whether CMs can be key actors of influence for improvements in labour governance in the GPN

3)   Contributing to an improved understanding of power relationships in the GPN literature

 

Background

The global computer industry is organised by brands that outsource and subcontract their manufacturing activities to suppliers worldwide. These suppliers also outsource and subcontract production activities to lower tier suppliers resulting in vast GPNs. Brands are said to have power over suppliers because they dictate their conditions of participation in GPNs (Gereffi et al 2005). Because brands control suppliers and have reputations critical to their competitiveness, NGOs and TUs traditionally target them in campaigns to improve labour conditions (O’Rourke 2005). Brands have responded by creating codes and standards, increasing supplier monitoring and audits, and building supplier capacity to meet codes and standards. These traditional labour governance approaches, however, have not resulted in real improvements (Locke et al 2012).

CMs are a key group of suppliers because they undertake a substantial portion of manufacturing and design activities for brands. While power asymmetry between brands and CMs is considered low (Sturgeon 2002), there are signs of change. Some suggest limits to production modularisation (associated with low power asymmetry between brands and CMs) as product specifications become more complex and less standardised (Sabel and Zeitlin 2004). As brands continue to increasingly subcontract manufacturing and service activities to CMs and consolidate their suppliers (Sturgeon and Kawakami 2010), questions of increasing dependency by brands on CMs arise.

How changing power relationship between CMs and brands affect negotiations over labour governance in the GPN has not been explored. Further, CMs are not targets of labour campaigns by international NGOs and TUs. Only a few NGOs and TUs have recently campaigned CM factories at the local scale, for example against Foxconn in China (Shah 2012). Considering the role of CMs in labour governance is important because they control the organisation of manufacturing, employ a large number of workers, and have suppliers in developing countries. Therefore, ensuring their ability to improve labour conditions within their factories and suppliers would make a significant difference for labour governance in the GPN. This research project builds on my PhD research on health and safety governance of the computer industry GPN using Hewlett Packard and its suppliers in Penang, Malaysia as a case study.

 

Research Questions

 1)   What are the implications of changing power dynamics between CMs and brand firms in the computer industry GPN for negotiations over labour governance? This question will explore changes in the level of negotiating power over labour standards between CMs and brands. This includes various corporate social responsibility (CSR) forums in which CMs and brands are members such as the Electronic Industry Code of Conduct and the Global e-Sustainability Initiative.

 2)   How do CMs present opportunities for improving labour governance in the computer industry GPN? This question aims to understand the opportunities and challenges CMs face for improving labour conditions in the GPN. It will assess whether CMs can exercise a networked form of collective power against brands to increase their ability to improve labour conditions in their factories and amongst suppliers. This requires analysis of the interaction between structural power between brands and CMs and a networked form of collective power amongst CMs.

3) What are the implications of changing power relationships between CMs and brand firms on NGO and TU campaigns for improved labour standards at the global and local scales of the GPN? This question considers international NGOs and TUs campaigns against brands at the global scale, and analysis strategies for parallel efforts with CMs. Recent strategies by local NGOs and TUs in China to campaign against manufacturing sites of a CM will be examined. The question aims to understand the opportunities and limitations NGOs and TUs face – at the global and local scales – in targeting CMs in campaigns.

4)   What does shifting power relations in the GPN imply for new modes of contestation between CMs and brand firms and between CMs, and NGOs and TUs at the global and local scales? How does re-conceptualising power at the theoretical level in the GPN framework affect efforts to improve labour conditions in practice? This question gets at the heart of linking theory and praxis. The findings from the previous questions will contribute to deepening the understanding of power dynamics between different actors and at the global and local scales in a GPN.

 

Methodology

I will use the GPN analytical framework for analysing the political economy of globally fragmented production systems and their governance (Henderson et al 2002). The GPN framework considers firm and non-firm actors as equal participants in the governance processes of global industries. This is important for understanding relationships between brands, CMs, NGOs, and TUs in negotiations over labour conditions.

The GPN framework considers different concepts of power (Hess 2008). A multi-power conceptual approach will be used to analyse power dynamics between and amongst firm and non-firm actors. The concept of ‘power over’ will be used to examine inter-firm governance relationships between CMs and brands. ‘Power to’, which forms the basis of advocacy movements and counter-power to capital will be used to examine the relationship non-firm actors have in affecting labour governance in the GPN. This networked form of power will also be used to assess whether CMs can act as a group to bring about changes in their governance relationships with brands for improvements in labour conditions.

The GPN framework uses a multi-scalar analytical approach. In the computer industry, negotiations and outcomes of labour governance vary at the global, regional, national, and local scales. For example, while brands engage in developing industry standards and work with NGOs at the global scale, such activity is often missing at the local scale in developing countries. Understanding the disconnections and synergies between the global and local scales of labour governance processes is important for assessing whether CMs can improve labour conditions in the GPN.

Data will be collected through:

1) Semi-structured interviews with managers from procurement/purchasing, human resources, and corporate responsibility departments of the top five CMs at headquarter offices in the United States and Canada and manufacturing sites in China, Malaysia, and Singapore;

2) Semi-structured interviews with campaign managers in NGOs and TUs engaged in global campaigns in the United States and Europe and at local levels in China, Malaysia and Singapore;

3) Focus group discussion with NGOs and TUs on the question of targeting CMs for improved labour conditions in the GPN.

Secondary data sources will be CSR reports and blogs by CMs and brands; and publications by industry/business groups, academic institutions, independent market research organisations, NGOs, TUs, and electronics industry news sources. Triangulation of data will be done through interviews with independent experts, analysts, and academic researchers with knowledge of the computer industry and labour governance.

 

**This research will be undertaken at the University of Manchester, Institute for Development Policy and Management. It is being funded by the British Academy Postdoctoral Fellowship from 2014-2016. It is also supported by a Hallsworth Research Fieldwork Award at the University of Manchester.

 

References

Gereffi G, Humphrey J, Sturgeon T (2005) The governance of global value chains. Review of International Political Economy, 12(1), 78-104.

Henderson J, Dicken P, Hess M, Coe N, Yeung H W-C (2002) Global production networks and the analysis of economic development. Review of International Political Economy, 9(3), 436-464.

Hess M (2008) Governance, value chains and networks. Economy and Society, 37(3), 452-259.

Locke RM, Distelhorst G, Pal T, Samel HM (2012) Production goes global, standards stay local: Private labor regulation in the global electronics industry. MIT Political Science Department Research Paper No. 2012-1, MIT, Boston.

O’Rourke D (2005) Market movements: Nongovernmental organization strategies to influence global production and consumption. Journal of Industrial Ecology, 9(1-2), 115-128.

Raj-Reichert G (2011) The Electronics Industry Code of Conduct: Private governance in a competitive and contested global production network. Competition and Change, 15(3), 221-238.

Sabel CF, Zeitlin J (2004) Neither modularity nor relational contracting: Inter-firm collaboration in the new economy. Enterprise and Society, 5(3), 388-403.

Shah A (2012) Apple, Foxconn Slammed by SACOM on worker abuse in China, PCWorld. http://www.pcworld.com/article/256590/apple_foxconn_slammed_by_sacom_on_worker_abuse_in_china.html [accessed 2 October 2012].

Sturgeon T (2002) Modular production networks: A new American model of industrial organisation. Industrial and Corporate Change, 11(3), 451-496.

Sturgeon T, Kawakami M (2010) Global value chains in the electronics industry. World Bank, Washington DC.