Supply chains and labour standards in China
| Published date | 27 July 2012 |
| Date | 27 July 2012 |
| Pages | 552-571 |
| DOI | https://doi.org/10.1108/00483481211249102 |
| Author | Bill Taylor |
| Subject Matter | HR & organizational behaviour |
Supply chains and labour
standards in China
Bill Taylor
Department of Public and Social Administration, City University of Hong Kong,
Kowloon Tong, Hong Kong
Abstract
Purpose – This paper aims to examine the relations between supply chain strategies and impact on
terms and conditions of employment of multinational corporations operating in China.
Design/methodology/approach – Case study analysis of two production plants owned by leading
multinational corporations, and a number of their suppliers (five in total), was undertaken.
Semi-structured interviews with managers (personnel, production and supply chain) and workers in
each case study were conducted both to gain information and to triangulate evidence. Visits were
made to each of the factories and to the environment in which the workers lived and worked.
Findings – There is no uniform or single deterministic relationship between supply chains and
labour standards. Supply chain strategies, ownership form and industry are all determinants of the
relationship. However, size, as measured in terms of number of employees, does not seem a significant
factor in power relations. There is also a balance between cost squeeze and other factors (the potential
of cost saving, desire for predictability) in relations between existing firms in a supply chain.
Originality/value – Analysis of management practices and its relationship with employment issues
in supply chain theory is still not well integrated. Part of the reason lies in the concerns of each
discipline. By treating supply chain concerns as a menu of issues rather than an integrative theory,
through case study analysis, a nuanced and explanatory detail can be given. These will need later
repetition in quantitative or qualitative forms of research. Ontologically, the paper attempts to draw
together the critical research and business school approaches to strategic management concerns.
While both approaches provide a wealth of substantive evidence, there is a need to read from both
perspectives to be able to catch the nature of work organisation and the management practices that
inform them in China.
Keywords Supply chains,China, Labour standards, Multinationals, Korean firms,
Supply chain management, Labour, Multinationalcompanies
Paper type Research paper
Firms use suppliers to provide flexibility (reducing costs in shifting between different
product or processes), displacing the risk of obsolescence onto suppliers or spreading
the cost of innovation, reducing costs by sourcing from mainly lower wage cost sources
and to source materials and components which are too expensive to source in-house
(Ahn et al., 1999; Handfield et al., 2000). While Fordism, is associated with
agglomeration, providing both technological gains from economies of scale and
heightened control over the production process by direct ownership of as much of the
process as possible, the process of outsourcing and subcontracting is largely a reversal
of the previous movement. This initially associated with Toyotaism and Japanisation,
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0048-3486.htm
This research was funded by Hong Kong Research Council (CityU 1502/06H). The author is
grateful to Glenn Drover, Gerard Greenfield, Jenny Eagleton and Shi Hui, and to the Editors and
anonymous reviewers for Personnel Review.
PR
41,5
552
Personnel Review
Vol. 41 No. 5, 2012
pp. 552-571
qEmerald Group Publishing Limited
0048-3486
DOI 10.1108/00483481211249102
but has its roots in post-Second World War strategies to build productive capacity
based on small manufacturing units (in contrast to Nissan’s Fordist strategy ).
Therefore, just as the movement towards concentration of ownership has been
criticised for production and wage cost inflexibility, subcontracting and positivist
literature has emphasised flexibility (Clairmonte and Cavanagh, 1981; Rutherford et al.,
1995) and risk sharing (Wilkinson et al., 2005). Critical studies tend to focus on
problems of pressures on workers in global supply chains (Deyo, 1998; We n and Yu,
2003) and the lengths to which unscrupulous employers go to circumvent lab our
standards (Harney, 2008; Jones, 1996). In much of the labour process and human rights
literature, a “squeeze” is associated with keeping down labour costs within the
production process (Ngai, 2005; Zhang and Yang, 2007), and practices associated with
“just in time management” (Chen, 2008; Taylor, 1999; Xu, 2006) and its derivatives has
become a method to highlight and then squeeze costs through the production chain.
Analysing the supply chain in South America, Lawson (1992) provides a more nuanced
analysis, arguing that the nature of the work performed affects labour standards, and
thus, if the work is fairly standardised, a squeeze is more likely. She also found gender
and pay methods (piece rate etc.) had a significant effect on labour standards.
Within the mainstream managerial literature, supply chain management has
become a major academic subject internationally, which has grown from an opera tions
management background to a more multidisciplinary approach ( Johnson, 2006).
Reviewing a body of the literature, there are two broad approaches, normative and
empirical. Theoretical approaches with strong normative content, using statistical
modelling, general data or a case study is sometimes used to establish solutions to
commonly identified problems in the SCM field. Within this literature there are
interesting substantive examples but they often see one element, such as how to
integrate quality management into supply chains (Carmignani, 2009), worries over
globalising tendencies of chains (Flynn, 2010), or analysis drawing on competitive
advantage theories (Antai, 2011). More ambitious approaches include subsuming
almost all management activities within value chains (Sherer, 2005) or stretching the
original meanings of social capital theory to be “key” to SCM (Min et al., 2008).
By contrast, those who demonstrate through their methodologies and analysis that
they have conducted in-depth or thorough empirical analyses of a number of cases
almost invariably find a large gap between (normative) theories and practice (Storey
et al., 2006; Taylor and Fearne, 2006). If the normative theories are irrelevant, then it
seems unnecessary to analyse labour standards in terms of supply chain control
strategies. However, because there are both examples of relevance and the sheer weight
of normative writing there is a substantive connection as discussed earlier in the paper.
So perhaps a way to deal with the theories involved in SCM is to examine them as
attempts to address actually existing problems facing managers involved in
procurement, or buy or make decisions in companies rather than as solutions. Thus, we
can construe form SCM writing that managers are concerned with three related issues:
risk, integration and flexibility. Manuj and Mentzer (2008) outline different forms of
risk facing a firm and identify that frequently firms avoid detailed analysis, preferring
to either play safe (such as by high stock holding or taking out insurance), or focusing
on short-term risk rather than long term, but potentially catastrophic, risks. Blos et al.
(2009, p. 250) found the electronics industry involved high risk within the supply,
encouraging dual and multi-sourcing to cope. Richey et al. (2010) analyse both the real
Supply chains
in China
553
To continue reading
Request your trial