Flexibility and restructuring of value
chains: findings from the WORKS
project
Ursula Holtgrewe (holtgrewe@forba.at)
Jörg Flecker
(flecker@forba.at)
Annika Schönauer (schoenauer@forba.at
Paper presented at the International Labour Process Conference,
Edinburgh, April 6-8, 2009
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Flexibility and restructuring
1.
INTRODUCTION
This contribution analyses the effects that value chain restructuring has on
organisational and employment flexibility. It is based on case study evidence from the
EU-FP6 WORKS project (www.worksproject.be) which investigated the effects of
value chain restructuring on work and conducted 58 coordinated case studies in a range
of industries (IT, food, clothing, public sector, services of general interest) and business
functions (such as R&D, production, customer service, logistics and IT service) in 13
countries.
Since the 1990s, in both management studies and the business press flexibility has been
regarded as a general aim and necessity of restructuring and business process
reengineering in saturated, globalised markets. However, it is worth keeping in mind
that organisation studies have regarded flexibility as something an organisation seeks to
limit in order to increase efficiency (Thompson 1967). To balance the requirements of
flexibility and efficiency, labour market segmentation was expected to be used within
companies to combine the advantages of internal and external flexibility as the concept
of the “flexible firm” suggested (Atkinson 1984).
The WORKS findings (Flecker et al. 2008b) show that indeed, through value chain
restructuring that goes beyond the boundaries of individual work organisations,
demands for flexibility are distributed along the chain. Companies and organisations
attempt to externalise it and to pass on risk and cost to others where possible – and not
least to workers. Yet requirements for flexibility are not simply divided up along the
value chain. Externalisation is complemented both by a standardisation of products and
processes and by a multiplication of interfaces and boundary-spanning roles. Indeed, the
standardised and contractualised procedures that extend control across organisational
boundaries, continue to require interpretation and negotiation. Thus, restructuring
generates its own demands for flexibility, and these demands reiterate the dilemmas of
competition and collaboration (Thompson 2003), and co-ordination and control. Beyond
the flexibilisation of employment and work organisation, the functional and ad-hoc
flexibility of live labour is required to fulfil the multiplied demands of business and
work processes that extend across organizational boundaries. However, it is compressed
as work and business processes accelerate.
Indeed, in this context, the WORKS project did not find many uniform trends beyond
the overall speed-up of business and work. It shortens time horizons and
simultaneously, multiplies the perspectives that workers need to take into account.
Otherwise, the dilemmas of flexibility and efficiency, co-ordination and control play out
in sector-specific ways. The effects are contingent upon the competition on the
respective sector’s product or service markets, on customers’ or client companies’
demands, on power relations in the value chain, demands by shareholders to increase
return on investment or on public policies.
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Adverse effects on the quality of work tend to concentrate on the weaker groups of the
labour market, in operative production, logistics and customer service work. In
manufacturing we found ongoing Taylorist patterns of work organization, although
when standardised work is outsourced and offshored, internal and functional flexibility
may increase at the point of origin. Outsourcing was found to directly increase
precarious employment chiefly in the public sector and in services of general interest.
Here, employers sought to escape from the traditionally strong labour protection in the
public sector. In the knowledge-intensive functions, standardisation of work and
codification of knowledge is directly related to value chain restructuring and may even
hamper organizational flexibility. Here, we find a multiplication of pressures and
perspectives that both expands working times and compresses demands. Changes of
work organisation then can offer challenging and more interesting work but this does
not necessarily mean more favourable working conditions.
2.
FLEXIBILITY
In the debates on organisational flexibility and flexible employment firms’ need for
flexibility is usually taken for granted. The consensus is so widespread that authors usually only have to refer to globalisation, intensified competition, versatile markets and
capricious consumers to establish the salience of the issue. This applies both to
academic discourses on organisational change or employment and to political debates
for example on labour market flexibility. Yet, ‘the market’, or ‘the environment,’ is not
only shaped by consumers and regulators but influenced first and foremost by the
strategies of all companies competing in a market. It is thus both the outcome of
aggregated strategic actions and their consequences, and provides the conditions of
further action (Fligstein 2002). However, the main focus of debates on flexibility has
been on the organisation and its capacity to increase adaptability and responsiveness in
view of versatile markets and shifting consumer demands. Organisational flexibility
then, is usually seen to lie in the flexible use of personnel in numerical or functional
terms, or drawing on external or internal resources. The traditional distinctions of
internal/external flexibility or numerical and functional flexibility have been treated as
analytically distinct dimensions (Vickery/Wurzburg 1996; Goudswaard/De Nanteuil
2000). Figure 1 provides an overview of types of flexibility and the different types of
employment contracts, HR and organisational practices to achieve the respective types
of flexibility.
Figure 1
Types of flexibility
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Internal
External
Numerical
Functional
Part-time work, flexitime arrangements,
annualised working hours, working time
accounts
Fixed-term contracts, freelance work, temporary agency work, temporary layoffs/seasonal work, irregular work
Multitasking, job enrichment, multiskilling,
teamworking, project organisation
Subcontracting, outsourcing, freelance work
Sources: (Atkinson/Meager 1986; Huws 2006; Wickham 2005; Monastiriotis 2003; Goudswaard/De
Nanteuil 2000)
Strategies to reach flexibility are linked with value chain restructuring in various ways.
In the labour process perspective, outsourcing has mostly been associated with the
externalisation of flexibility to smaller, lower-cost or peripheral companies (Rainnie
1991) which are likely to use more precarious labour and shift additional pressures and
risks onto these employees. This appears to be especially the case in the outsourcing of
service functions (Arzbächer et al. 2002; Lehndorff/Voss-Dahm 2005). Similarly, from
a more managerial perspective, in Atkinson’s ( 1984) flexible firm model outsourcing
was located in the periphery of the firm providing it with numerical flexibility.
Functional flexibility was supposed to be located in the core of permanently employed
workers within the firm. In both perspectives, outsourcing has mostly been seen as
increasing only numerical and temporal flexibility. Recent investigations of the service
sector have also revealed a negative impact of outsourcing on the standardisation and
regimentation of work (Batt et al. 2009; Holman et al. 2009), and on the erosion of
interest representation (Doellgast et al. 2009). In this context, interorganisational
arrangements are not only interesting at the formal level of outsourcing projects or
supply contracts or in term of transaction cost. Flexibility strategies also depend on the
actual power relations between the organisations. More powerful organisations may
gain the option to pass on the risk of capacity utilisation to their suppliers and service
providers. This means that organisations’ strategies to reach external flexibility in turn
intensify the pressure for flexibilisation within service and supplier organisations
(Arzbächer et al. 2002; Lehndorff/Voss-Dahm 2005). Such subcontractors may operate
under different labour regulations which allows them to shift flexibility and risks to
their employees. ‘Business to business contracting may act to place very strict
constraints on the subcontracting organisations in terms of wage levels, work
organisation and even working time arrangements. (…) However, at the same time the
dilemma between cooperation and control may mean that the external contracting is not
as “hands off” as assumed in the flexible firm models; instead of the contracted out
work being treated as a market rather than an employment relationship (…), the end
result may be (…) that the labour process becomes subject to the control of both the
employer and the client organization.’ (Rubery 2006).
A different perspective has been provided by discussions on flexible specialisation
(Piore/Sabel 1984; Sabel 2001; Thompson 2005) and innovation networks (Powell
1990; Tuomi 2002). These studies show how external functional flexibility can be
important for the access to knowledge and innovation and its circulation. They rarely
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show an adverse impact on the quality of jobs but focus on increased labour market
options for workers. However, this literature tends to present networks as a silver bullet
that automatically enhances functional flexibility and is necessarily based on long-term,
trusting relationships both between companies and between capital and labour.
Either stream of the discussion thus has a somewhat linear bias and from both point of
views it is risky to generalise. It is worth looking at the cognitive and systemic tradition
in organisational theory which conceives of flexibility as a response to an inherent
dilemma for organisations. The aim to increase responsiveness to changing and volatile
environments, or devote resources to uncertain ends such as innovation is at odds with
the aims of efficiency and complexity reduction (Kühl 1995; Luhmann 2000; Carlsson
1989). Responsiveness and innovation thus inevitably require organisational slack
(Thompson 1967; Rammert 1988) – in contrast with the business process reengineering
view that seeks to reduce or externalise that slack as much as possible.
3.
THE WORKS PROJECT
The WORKS project has investigated the ongoing changes in the organisation of work
in the context of economic globalisation and rapid technological change. Specifically
we looked at the global restructuring of value chains which entails a simultaneous
decomposition and recomposition of sectors, organisations, labour processes and skills.
Value chains mostly are investigated under a governance perspective that looks at the
distribution of power and the co-ordination of production on the level of companies and
relationships between them (Gereffi et al. 2005; Faust et al. 2004). WORKS explored
the impacts of such restructuring on workers, the quality of work, and on social
institutions and. The project was funded by the European Commission in 2005 under its
6th Framework Programme. With partners in 17 different institutions in 14 EU Member
States, it has combined theoretical work and a detailed analysis of a wide range of
statistics with in-depth case studies.
This paper is chiefly based on the case study research conducted in WORKS. Cases
constituted business functions in selected sectors rather than organisations or
organisational units. The selection of sectors reflected the emergence of global value
chains in different historical stages: sectors where vertical disintegration and
internationalisation have been constitutive from the beginning and sectors where these
have developed only very recently. We selected the clothing and food industry as
„classic“ instances of value chain restructuring, and software, the public sector and post
and railway services as sectors in which vertical disintegration has occurred more
recently. For business functions we selected R&D in the software industry and fashion
design in clothing to cover innovation, production in the food, clothing and software
industry, i.e. software development, logistics in food and clothing, customer service in
the public sector, post and railway services, and IT services in the public sector.
Each business function located in a particular sector was studied in a range of countries
with diverse employment and welfare regimes (liberal, conservative, socio-democratic,
etc.). This made it possible to analyse the influence of institutional frameworks on the
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consequences of restructuring. Overall, 58 case studies were conducted in fourteen
countries. The following overview shows the distribution of case studies.
Figure 2
Sample of case studies
R&D,
design
production
logistics
Customer
service
IT
Textiles/clothing BE, FR,
DE, PT, IT
BE, IT, PT,
HU, GR
FR, DE,
NL, PT,
HU
Food
GR, BG, IT, BE, NO,
NO, DK,
BG, GR,
UK
UK
Public
sector
administration
AT, BE,
BG, HU,
IT, UK, SE
BE, NL,
UK, FR,
DE, NO,
SE, PT
Post and rail
DE, AT,
SE, NL, GR
Software
DE, AT,
UK, BE,
FR, NO
DE, AT,
HU, BG,
SE
For each case study, 8 – 10 interviews with management, key employees, and shop
stewards (in the selected business functions) were conducted. The interviews were complemented by an analysis company documents and other material that made it possible
to produce a comprehensive picture. Researchers in the respective countries synthesised
the individual case studies from the interview data. On the basis of the individual case
study reports, comprehensive comparative analyses were carried out to analyse value
chain restructuring in the respective industries and functions (Flecker et al. 2008a) and
along the lines of a range of research questions. We are deeply indebted to the
researchers who carried out the case studies in the various countries and to the
respondents who devoted their time to our research and helped us to understand the
developments in their companies and sectors. For the presentation in this paper, all
company names have been changed to assure anonymity.
4.
FLEXIBILITY AND VALUE CHAIN RESTRUCTURING
When restructuring value chains, companies investigated in the WORKS case studies
pursue flexibility for a range of reasons that are highly sector-specific. The most general
finding of the case studies is an overall speed-up of all business activities. Otherwise,
the aim to increase responsiveness to market demands and opportunities takes various
shapes, and strategies to reach flexibility in the context of value chain restructuring have
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different goals. They are contingent upon the competition on product or service markets,
the characteristics of the product or service, on customers’ or client companies’
demands for flexibility, on demands by shareholders to increase return on investment
and on public policies. However, motives and outcomes of outsourcing are related
recursively: Outsourcing strategies may enhance or limit flexibility even where this is
not intended, and their outcomes may require further measures and provide further
opportunities. Specifically, the standardisation or modularisation of products, services
and procedures is both a prerequisite and an outcome of outsourcing and makes further
outsourcing easier, as organisations gain practice and knowledge in the use of such
standardisations.
4.1
Externalising flexibility
First, outsourcing or relocation indeed help companies to cope with variations in
capacity utilisation in a cost-effective way. To be able to use suppliers or service
providers to cover excess demand or to deal with fluctuating volumes of output makes it
possible to keep fixed costs low and to save on overtime of the internal workforce. This
is mostly the case in production of food and clothing, the more routine parts of software
development, and in customer service, that is, in the more operative and standardised
functions. In customer service, value chain restructuring may be used additionally to
improve the availability of services, to extend opening hours and to enhance temporal
flexibility at comparably low costs. A typical example of this is the outsourcing of
customer service activities to call centre companies with lower employment standards
and therefore lower costs of flexibility (Schönauer 2008). Second, flexibility has the
meaning of responsiveness, adaptability, swift workflows and increased variation and
changeability of procedures, products and services (Carlsson 1989). This mostly plays a
part in the more knowledge-intensive functions. External knowledge and capacities are
used for example in software R&D, in software development or in clothing design.
Overall, strategies to reach flexibility through externalisation often mean that risks and
pressures for flexibility are passed down the value chain with adverse consequences for
the quality of work at supplier and service provider companies. Some of the case studies
actually read like textbook examples in which the devil takes the hindmost. For
example, at the IT multinational Domainsoft, CEE subsidiaries compete with West
European locations, among others, on the basis of greater flexibility, longer working
hours and willingness to work week-ends. Hence, they accept fluctuating workloads and
tight deadlines (Makó et al. 2007). In Italy, the clothing company Green S.p.a. benefits
from outsourcing to a range of small companies that in Italy are exempt from some
employment protection and capable of further putting out work to homeworkers (Pedaci
2007).
However, this picture should not be generalised. First, not all suppliers and service
providers are in a dependent position and provide low-cost input. In IT services, for
example, big international service provider companies may be well-positioned to set the
terms of the cooperation. Second, power distribution also depends on the professional
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groups that are affected. Highly skilled workers in the IT industry, for example, can also
be in a rather strong bargaining position and thus are able to influence the terms of
flexibility even if they are positioned further down the value chain. In this sense, there
are also examples that contrast with the situation in the owned subsidiaries of
Domainsoft (see 4.5).
4.2
Flexible employment
The externalisation of flexibility requirements suggests the use of more flexible
employment. In Europe in general, atypical employment and specifically temporary
work is increasing which indicates that companies build up their external-numerical
flexibility and make use of the options national labour market regulations and their
liberalisation provide (Fernández-Macías/Hurley 2008). The way in which employment
becomes more flexible depends to a great extent on the institutional context of a country
and on sector-specific traditions – and with present data resources can only rarely be
directly linked to value chain restructuring. We thus see different degrees to which
providers of outsourced services may pass on the flexibility requirements of their clients
on to their employees in the form of non-standard contracts (Arzbächer et al. 2002;
Shire et al. 2009) or, conversely, degrees to which external flexibility of organisations
relies on the internal flexibility of suppliers and service providers (Lehndorff/VossDahm 2005). In the business function of customer service, in the Italian and Portuguese
clothing industry and partly in IT services the WORKS case studies have shown that the
externalisation of pressures for flexibility actually translate into more flexible forms of
employment or casual labour on the part of suppliers or service providers. In contrast,
other business functions and sectors rather indicate that outsourcing relationships
involve an extension of working time and flexible working hours on the side of
suppliers and service providers, i.e. forms of internal-numerical flexibility.
In fact, a lot of outsourcing and restructuring takes place with the use of normal
employment relationships. However, in transnational industries such as clothing and IT,
WORKS has not been able to investigate the employment contracts of say, workers at
Asian offshoring destinations. It is also worth keeping in mind that there, a ‘normal’
employment relationship may still mean very little protection and poor working
conditions. In the food industry, flexible employment is traditional and does not appear
to change much – but nearshoring may provide access to more flexible labour. The
Danish company Meat Inc. for example set up a slaughterhouse in Germany and
employed Polish workers with freelance contracts there.
However, configurations in which value chain restructuring directly leads to a
flexibilisation and precarisation of employment contracts are mostly found in the public
sector. Here, we also find the most evidence of a fragmentation of employment.
Through the integration of workflow systems and performance criteria, the use of
outsourcing and ‘new’ flexible employee groups puts pressure on the working
conditions of core employees rather than cushioning ‘core’ employees from market
fluctuations. This fragmentation also erodes workers’ capacity for voice and interest
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representation as work is moved out of the more organised segments of the labour
market, new employees may regard their jobs as transitional and competition across
segments increases.
4.3 Work organisation in restructured value chains
With regard to functional flexibility, we find that the restructuring of value chains does
not necessarily foster flexible work organisation. Increasing functional flexibility is
rarely an explicit agenda of work reorganisation in processes of restructuring.
Restructuring is diversified, and the contradictory processes of standardisation that
enables outsourcing, offshoring of simpler tasks and upgrading the remaining ones, and
businesses’ moves up the value chain have varied impacts on the flexibility of work and
organisation.
Occasionally, functional flexibility is an aim of IT outsourcing in the public sector when
administrations want to gain access to technical knowledge and the implementation of
new technology. It may also be part of the rationale for contracting out software R&D
or, internally, for a company to buy up or merge with an R&D business or university
start-up. However, overall, aims of cutting cost, moving up value chains and improving
competitiveness shape work organisation more than explicit functional flexibility
strategies. Then, new demands for functional flexibility emerge chiefly, but not
exclusively, on the higher value-added side. Especially, the co-ordination of suppliers
and outsourcing activities requires flexibility in terms of working time (for instance
communication across time zones), technical and social skills (of intercultural
competency, negotiation, documentation, project management and general learning
capacities). Such capabilities may be provided through additional recruitment and/or
more or less formalised skill enhancement, but chiefly, are achieved through the
individual skills, competencies and performance of workers in these positions.
For operative and low-skilled work in production and services, value chain restructuring
on its own does not contribute much to increases in functional flexibility. The exception
is clothing production where the jobs remaining in Europe have been comprehensively
upgraded in some cases as mass production has moved abroad. In Belgian Wonderwear,
seamstresses had their jobs enriched by moving on to the sewing of prototypes (De
Bruyn/Ramioul 2007). However, this manufacturer and another in Hungary reported
shortages on the labour market since, with the relocation of large parts of the industry,
regional training institutions were eroding and potential apprentices regarded it as a
dying sector without perspective. It appears that here, the industry remaining in Europe
was unable to retain a ‘critical mass’ of training and institutional networks that are
traditionally regarded as prerequisites of flexible specialisation. In other sectors, while
some uses of information technology allow for job redesign, most teamwork and job
enrichment arrangements in these functions have other causes, not least a commitment
by management to more enriched job designs and/or workers’ own initiative.
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4.4 Knowledge standardisation and circulation
Value chain restructuring affects the circulation of knowledge in more contradictory
ways than the perspective on networks and innovation would have it (for example
Hippel 1994). Tacit and codified knowledge (Polanyi 1967) are interrelated and remain
so across fragmented value chains, but not necessarily in a harmonious way. Both
(internal) market structures of governance and hierarchical divisions of labour have
been found to hinder the circulation of knowledge.
A striking example of internal competition getting in the way of knowledge circulation
and collaboration is provided by a project manager at Hungary’s Domainsoft: ‘That was
an interesting situation when we succeeded to get a job which had never been
delocalised to Hungary before. This product was developed in another location for years
but we gained a foothold in it for 4 months. We already had experiences of the same
product within another system and the task was to implement this product into this new
system. Our foreign colleagues thought that this is a violence against their authority and
caused some tensions. As a consequence, if we ask something from them they will help
but in doing so they try to keep as much information as possible, especially new or
strategic ones. It is no more an aim to teach us for 100 per cent because thus we could
jeopardise their jobs. At the same time they can not afford not to pretend being helpful.
The same is true for us. Our telephone centre has a support division in Romania, it is to
them to solve eventual problems or errors, therefore they have often questions to us.
Naturally, we always respond but we pay attention not to say too much from which they
could take competitive advantage. Because we will be competitors on the next tender’
(Makó et al. 2007: 11).
Also, the increased demands on documentation and standardised procedure render
knowledge explicit but get in the way of actual, situated problem-solving and longerterm creative vision as they cut into the time and discretion workers have available for
both aspects of innovation. While formalised knowledge is potentially available, it may
not be actually useful. Local solutions to these dilemmas apparently emerge from
workers’ professional outlook and their situated attempts to create procedures and
examples for discussion. Again, their skills, their functional flexibility and their capacity
for articulating different knowledge bases compensate for emerging rigidities of work
organisation as value chains are restructured on hierarchical or market-based terms and
generate dilemmas between the codification and circulation of knowledge.
The knowledge perspective (Ramioul/de Vroom 2008; Holtgrewe 2008) thus adds a
point to the general findings of the WORKS project that outsourcing and standardisation
are recursively related: standardisation enables outsourcing enables standardisation and
so on (Huws/Dahlmann 2008). Looking at the cases, standardisation of work and
codification of knowledge ‘work’ to a limited extent only. The need for (re)interpretation, negotiation and sensemaking of codified bodies of knowledge is not
codified away and cannot be. Standardisation and new demands on tacit knowledge are
interrelated, and put on workers (and their ad hoc functional flexibility and tacit skills)
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knowledge-intensive areas. Especially there, in the face of Taylorist standardisation, the
remaining and increased demands on knowledge tend to be invisible and underrated,
specifically when newly imposed routines get in the way of competent work
performance – a classic issue in IT supported interactive service work for example,
when customer interactions and knowledge bases need to be handled simultaneously (cf.
Frenkel et al. 1999; Durbin 2006; Holtgrewe/Kerst 2002).
The emergence of new demands on tacit skills and knowledge was also found to be an
issue at outsourcing destinations. Croatian software engineers at Messenger, the
subsidiary of an US-owned software company, whose project management was located
in Austria, found bottlenecks in communication and deficits of task specifications.
Instead of waiting for clearer instructions, they developed business cases for features in
order to have a more comprehensive basis for discussion with management
(Flecker/Schönauer 2007). Indeed, remote suppliers’ reserves of skill are likely to be
essential for functioning co-operation along the value chain even if they are used for
numerical rather than functional flexibility reasons – and it is worth keeping in mind
that at the lower wages of outsourcing destinations a company can hope to get more
skilled labour for less money. Such extra capabilities also provide resources for
companies’ moving up the value chain – unless they are eroded by the frustrations of
working ‘just’ on compensating deficits in work organisation along the value chain.
4.5
Limitations to flexibility
Although both numerical and functional flexibility thus may be externalised through
value chain restructuring and its unintended consequences, the research findings also
reveal limitations in this respect. In several cases it became clear that outsourcing
hampers flexibility in the sense of reducing responsiveness, slowing down overall
workflows, and intensifying ‘bureaucracy’ where needs for control and monitoring
increased. These effects can be expected in particular where power relations are
balanced, where contractual arrangements are complex and where it is difficult to exert
control across organisational boundaries.
This is frequently the case in outsourced IT services. Here, the demands on
documentation and controlling of all work generally increase. Instead of tech support
immediately responding to a client’s problem, engineers’ tasks frequently are scheduled
centrally. A British IT support engineer says: ‘For example someone has a problem with
their PC in the finance department, they ring up explaining that they have a problem
with the system. Before, we would come to an agreement between us when I will come
and take a look at it; now the central help desk, they pass on the query to me and then I
have a certain number of days to solve the problem; if I have a fail rate of 10 per cent
over the month, then the Citycouncil gets service credits’ (Dahlmann 2007: 13). Service
level agreements that are supposed to let the client control the subcontractor’s
performance thus have an immediate impact on work and translate into performance
criteria for workers. In this case, they remove some but not all discretion over the
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scheduling of work, impose controls that render the co-ordination of problem-solving
less effective and in addition, replace some actual problem-solving by cost calculations.
In other sectors and functions, value chain restructuring also limits flexibility. As we
have seen, relocation and offshoring first affect the more standardised and operative
functions and processes such as coding and testing in software development, or
Taylorised production in clothing. However, there are instances in which either quality
or logistics issues resulting from relocations lead to changes in the composition of the
value chain or even to companies insourcing these functions again. The Swedish/USowned software company Init at the time of the research was about to shift part of its
software development from an external service provider in India to a subsidiary in the
Philippines, on grounds of both control and cultural proximity (to the US). Clothing
companies in higher-quality segments of the market tend to outsource production to
Eastern Europe and the Mediterranean Rim rather than China.
Indeed, spatial distance limits responsiveness to short-term demands by clients or the
market. Mobility remains a bottleneck. This is also an issue where it is not products but
workers who are expected to be mobile. In software development and IT services,
where work takes place on the customer’s site, longer-term secondments may be
unpopular, and experts are in a position to negotiate limitations on their own mobility.
The Bulgarian software outsourcing company SoftServ reported it had to turn down
contracts where too much work was supposed to take place off-site (Galev 2007).
German IT service provider MM Spinoff (Meil 2007) tended to establish locations near
its larger customers rather than have engineers travel for longer-term projects. Highlyskilled employees thus are occasionally able to have their employers flexibilise
workflows and communications in their own interest – and highly-skilled IT work
emerges as a less mobile activity than we might have expected as work organisation is
rendered more flexible in the interest of workers.
4.6
Quality of work
The WORKS findings on the quality of work show that across Europe there is neither
uniform upgrading nor comprehensive downgrading of work. Working environments
are not improving, and fixed-term contracts continue to lessen job satisfaction
(Birindelli et al. 2008). In cases of restructuring, we see increased pressure and a
multiplication of demands and perspectives that workers need to take into account. Even
logistics and production operatives are made aware of the (global) market, and
knowledge and service workers need to take the interest of actual and potential, internal
and external clients on board. In addition, they are faced with the impact of those
clients’ interest in controlling their service provider, which for workers means
intensified monitoring and documentation needs. While ‘the market’ through these
mechanisms does not corrode occupational identities as Sennett argued ( 1998), it
increases the pressure, limits collaboration and the circulation of knowledge, and thus
encroaches upon the job content that many workers perceive as the source of those
identities: helping people, pursuing technical or artistic ideas, solving others’ problems.
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For example, in the clothing industry, as fashion collections are adapted continuously
rather than seasonally, designers use the immediate feedback of sales figures along with
creative and artistic input into their work and closely collaborate with marketing from
the beginning. As time-to-market shortens, designers’ communication and co-ordination
with pattern makers and production engineers intensifies as well. As more tasks are
done simultaneously, some cycles of improvements and corrections are eliminated:
‘And if we make too many corrections, we’ll never see them at the end, we have to
launch production directly so we have very little time available to react, so we have to
be very self-confident’, says a French designer (Muchnik 2007). Functional flexibility
thus is compressed: Communications and perspectives multiply under increasing
temporal constraints – and it is likely that to compensate, working days become longer.
The largest negative impacts on job quality are found where work is relocated to
precarious segments of the labour market as in the Italian clothing industry or in service
outsourcing from the public sector in Continental Europe. Thus institutional contexts
that promote dual labour markets appear to exacerbate negative effects: both by
providing incentives for outsourcing and by leaving new employee groups outside of
social protection. Specifically, these changes appear to be disproportionately
detrimental to women. The reason for that is not that women by definition are found in
secondary segments of the labour market. Rather, they concentrate in the sectors with
the most adversarial effects of restructuring such as higher pressure for flexibility
(Tengblad & Sternälv, 2007), a weakening of equal opportunities and diversity policies
(Dahlmann, 2007), and increasing problems in reconciling employment with care duties
(Bannink et al. 2007), and some wage discrimination because of differences between
men and women in formal education (Dahl-Jørgensen & Torvatn, 2007).
Conversely, more inclusive welfare states which provide complex jobs and workeroriented options for flexibility (Lorenz/Valeyre 2005) also provide a basis for workers’
ongoing professionalisation and interest representation. Both in the public sector and in
IT, Scandinavian workers have realised the most beneficial effects from outsourcing and
have been able to retain favourable working conditions and make use of flexible work
organisation in their own interest. We may conclude that the Scandinavian production
‘model’ retains an influence on ‘high road’ strategies. These favourable conditions
appear to accumulate where highly-skilled experts are involved and capable of crafting
organisational flexibility according to their own interest.
5.
Conclusions
Value chain restructuring still shifts demands for flexibility down the value chain, to
lower-cost regions, labour market segments or employee groups. Some of these
segmentations are traditional as in the cases of seasonal labour in the food industry.
Elsewhere, companies proactively seek access to new, cheaper and more flexible groups
of employees which may be found in lower-wage regions or less protected service
industries. In all these configurations WORKS found that segmentation no longer
‘protects’ core employees from increased demands on their flexibility. Through the
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implementation of internal competition or through technical integration of workflows
beyond single organisations, segments compete with another and work is intensified
across segments (cf. Rubery 2006).
So far, the findings mostly fit in with what is known from more limited studies of the
impact of restructuring and outsourcing. On the level of industries and individual cases
there are few surprises. However, the comparably high number of case studies which
could only be provided by a distributed and collaborative international project in our
view has added some width and depth to the picture. The value chain concept has been
extended to unlikely places such as public sector outsourcing and the service sector. It
has also been taken beyond governance questions of governance on to the level of work
and interest representation. By comparing cases that contrast both maximally and
minimally, we have been able to explore the interplay of sectoral, positional,
institutional aspects of value chain restructuring, and to indentify both general trends
and mechanisms and tendencies that apply to particular sectors and functions and should
not be generalised, such as precarisation.
Centrally, we found that the externalisation of either numerical or functional flexibility
is not the entire picture. The externalisation of flexibility is rarely simple. The effort of
co-ordinating expanded value chains and multiplied interfaces between organisations or
units generates additional demands and compressions on functional flexibility
especially. In spite of increased specialisation for example in software development,
workers in knowledge-intensive jobs (and also in some operative positions) need to take
a wider range of perspectives on board, keeping the demands of customers and markets,
the problems up and down the value chain in mind – under conditions of a general
speed-up of work. Hence, the externalisation of numerical and/or functional flexibility
and the compression of internal functional flexibility are associated.
Value chain restructuring extends both market-based and organisational mechanisms of
governance and control beyond their original and ‘natural’ habitats. Within companies,
subsidiaries and units compete through tenders, and formerly hierarchically imposed
workflow management and accounting systems are contractualised across organisations,
for example through service-level agreements. Both types of mechanisms constrain
some aspects of flexibility: Market-like competition limits collaboration and knowledge
circulation which in the network literature is traditionally regarded as essential for
innovation. Contractual-bureaucratic control with its associated bureaucratisation limits
the co-ordination of situated problem-solving, with uncertain impacts on the efficacy of
other workflows. Thus, the familiar contradictions of capitalist production and the
organisational dilemmas of flexibility put in new appearances across organisational
boundaries – and they play out in contextualised, sector- and configuration-specific
ways.
Inter-firm relations thus turn out to be a contested terrain, and the relations in the value
chain overlie and shape the conflict and negotiations of capital and labour, but should
not be confused. The pressures for flexibility and their consequences are also negotiated
implicitly or explicitly. This means that the impact of value chain restructuring on the
quality of work is structured by power relations between organisations as well as
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bargaining positions of particular groups of workers – with an unsurprising reverse
Matthew effect (Merton 1968) of the devil taking the hindmost, i.e. workers with
problematic working conditions and tenuous labour market positions facing the most
negative impacts. As institutional contexts and the segmentation lines in particular
countries and sectors shape such contestations, they clearly impact on the outcomes of
strategies to reach flexibility for the quality of work.
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