The ‘Network Economy’ and Models of the Employment Contract
| DOI | http://doi.org/10.1111/j.1467-8543.2004.00335.x |
| Published date | 01 December 2004 |
| Author | David Marsden |
| Date | 01 December 2004 |
British Journal of Industrial Relations
42:4 December 2004 0007– 1080 pp. 659– 684
© Blackwell Publishing Ltd/London School of Economics 2004. Published by Blackwell Publishing Ltd,
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Blackwell Publishing Ltd.Oxford, UKBJIRBritish Journal of Industrial Relations0007-1080Blackwell Publishing Ltd/London School of Economics 2004December 2004424659684Articles
The
‘Network Economy’British Journal of Industrial Relations
David Marsden is in the Department of Industrial Relations and the Centre for Economic
Performance, London School of Economics.
The ‘Network Economy’ and Models of
the Employment Contract
David Marsden
Abstract
The development of the ‘network economy’ and the project-based work challenge
established methods of regulating employment relationships. There appears to
be an unsatisfied demand for its greater use, especially among employers, and
this may be blocked by the lack of suitable contractual forms. Project-based
work seeks to retain some of the open-ended flexibility of the standard employ-
ment relationship in relation to its task content but not its duration. I argue that
the success of the standard employment relationship stems from articulation of
its psychological, economic/incentive, and legal aspects. As yet, this appears to
be lacking for more transient forms of relationship.
1. Introduction
The full development of the so-called ‘network economy’ depends upon
establishing suitable forms of contracting between firms and workers. The
classical employment relationship, open-ended as to both its task content and
its duration, came to assume near universality in the advanced industrial
world during the twentieth century because it succeeded in aligning employ-
ees’ psychological expectations, performance incentives and a supportive
legal framework. This gave rise to a contractual form that has combined great
flexibility and a good deal of enforceability: hence the popularity of the open-
ended employment relationship. It has worked so successfully in the past
because it has evolved a number of incentive mechanisms, referred to in
shorthand as three types of ‘contract’ (psychological, economic/incentive and
legal), all of which seek to deal with the non-codified elements of the rela-
tionship that underpin its flexibility. These are complementary and mutually
supportive. However, they achieve this largely by means of the expectation of
a long-term relationship.
The European Commission’s Supiot Report (Supiot 1999) was among the
first to call attention to the fundamental changes occurring in labour markets
660
British Journal of Industrial Relations
© Blackwell Publishing Ltd/London School of Economics 2004.
and the need to develop alternative forms of regulation rather than to try to
push back the tide by reinforcing existing patterns of regulation. Supiot and
his colleagues sought to reconcile discontinuity of employment with continu-
ity of activity in a chosen occupation, and concentrated on legal mechanisms.
In this paper I should like to focus more on the incentive and institutional
mechanisms that underpin the open-ended employment relationship and on
how these articulate with legal norms, to enable us to understand better the
challenge posed by firms’ need for greater use of more transient forms of
employment relationship. I should like to focus particularly on collaborative
work with a team output, rather than on the traditional system whereby
predetermined tasks are put out to freelancers such as in translation or
publishing (e.g. Fraser and Gold 2001). Whereas in the latter cases a specific
product can be defined, the former case is much closer to the spirit of the
open-ended employment relationship, because teamwork requires adaptive
and flexible roles, thereby preserving something of the spirit of the open-
ended employment relationship as far as task content is concerned, but
without the implied open-ended duration. Such ideas are at the heart of the
so-called network economy, the chosen theme of the 2003 IIRA congress.
Sydow and Staber (2002) identify project organization and project net-
works as key organizational features of the ‘network economy’ as it is devel-
oping in certain economic sectors, such as the media industries. One might
say that the project rather than the firm emerges as the focus of workers’
activity. With this sector in mind, Jones and Walsh (1997) characterized the
career system of workers as comprising three elements: (i) movement between
employers; (ii) validation from the labour market rather than the employer;
and (iii) use of extra-organizational networks and information. A project
might comprise an advertising campaign, a film, a CD or a book, on which
a temporary team of people might work, bringing together a mix of business
management, technical and creative expertise.
Baumann (2002) argues that project production and small companies have
flourished in the media industries for several reasons.
•
Media products, especially fiction and entertainment, resemble fashion
items, with constant audience demand for novelty and innovation.
•
There is a high element of one-off creation of new material (as in fashion),
which is highly risky as the outcome is uncertain.
•
Once produced, the product is easily and cheaply reproduced (compared
with the reproduction of models in such industries as automobiles, where
reproduction is highly capital and labour-intensive).
•
There is a dominance of one-off creation as opposed to continuous
reproduction.
Although these can be handled within large organizations, as was the case
when large studios and large broadcasters dominated production, there are
clear advantages to organizing such activities by means of small firms and
project teams. Indeed, although the initial impulse for dispersing production
work in Britain and Germany owed much to their respective governments’
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