The case of Foxconn in Turkey: benefiting from free labour and anti-union policy

Starting from the 2000s Foxconn invested in Czechia, Slovakia, Hungary, Russia and Turkey, implementing a territorial diversification strategy aimed at getting nearer to its end markets. This chapter investigates the development of Foxconn in Turkey where the multinational owns a plant with about 400 workers. A few kilometres from the city of \uc7orlu and close to highways, ports and international airports, the plant enables Foxconn to implement an efficient global supply chain. We illustrate this process by examining the company\u2019s localisation within a special economic zone, underlining the economic advantages derived from such a tax regime, bringing labour costs down to the Chinese level and obtaining proximity to European, North African and Middle East customers, thus lowering logistic costs. We also analyse the roles of labour flexibility and trade unions. In order to impose far-reaching flexibility on its workers Foxconn put in place a range of strategies, including an hours bank system, multitask operators and the recruitment of apprentices thanks a special programme funded by the state. We show how these have been crucial for Foxconn\u2019s just-in-time production contrasting its labour turnover problem. Finally, we highlight how the company has been able to implement a flexible working pattern, weaken the trade unions and undercut workers\u2019 opposition, thanks to favourable labour laws approved by successive governments in the past thirty years

Introduction

This book investigates restructuring in the electronics industry and in particular the impact of a \u2018Chinese\u2019 labour regime on work and employ - ment practices in electronics assembly in Europe.1 Electronics is an extremely dynamic sector, characterized by an ever-changing organi - zational structure, as well as cut-throat competition, particularly in manufacturing. Located primarily in East Asia, electronics assembly has become notorious for poor working conditions, low unionisation and authoritarian labour relations. However, hostile labour relations and topdown HR policies are not unique to East Asia. They have become associated with the way the sector is governed more broadly, with a number of Western companies also coming to rely on such practices

Flexible workforces and low profit margins: electronics assembly between Europe and China

This book investigates restructuring in the electronics industry and in particular the impact of a \u2018Chinese\u2019 labour regime on work and employ - ment practices in electronics assembly in Europe.1 Electronics is an extremely dynamic sector, characterized by an ever-changing organi - zational structure, as well as cut-throat competition, particularly in manufacturing. Located primarily in East Asia, electronics assembly has become notorious for poor working conditions, low unionisation and authoritarian labour relations. However, hostile labour relations and topdown HR policies are not unique to East Asia. They have become associated with the way the sector is governed more broadly, with a number of Western companies also coming to rely on such practices

What Permits Small Firms to Compete in High-Tech Industries? Inter-Organizational Knowledge Creation in the Taiwanese Computer Industry

This paper addresses a puzzle related to firm size and competition. Since Stephen Hymer´s pioneering contribution (Hymer, 1960/1976), theories of the firm implicitly assume that only large, diversified multinational enterprises can compete in industries that combine high capital intensity, high knowledge-intensity and a high degree of internationalization. Small firms, by definition, have limited resources and capabilities and are unlikely to possess substantial ownership advantages. They also have a limited capacity to influence and shape the development of markets, market structure and technological change. One would thus expect that they are ill-equipped to compete in a knowledge-intensive industry that is highly globalized. Taiwan’s experience in the computer industry tells a different story: despite the dominance of small- and medium-sized enterprises (SMEs), Taiwan successfully competes in the international market for PC-related products, key components and knowledge-intensive services. The paper inquires into how this was possible. It is argued that organizational innovations related to the creation of knowledge are of critical importance. Taiwanese computer firms were able to develop their own distinctive approach: due to their initially very narrow knowledge base, access to external sources of knowledge has been an essential prerequisite for their knowledge creation. Such “inter-organizational knowledge creation” (Nonaka and Takeuchi, 1995) was facilitated by two factors: active, yet selective and continuously adjusted industrial development policies; and a variety of linkages with large Taiwanese business groups, foreign sales and manufacturing affiliates and an early participation in international production networks established by foreign electronics companies. A novel contribution of this paper is its focus on inter-organizational knowledge creation. I first describe Taiwan´s achievements in the computer industry. The dominance of SMEs and their role as a source of flexibility is documented in part II. Part III describes some policy innovations that have shaped the process of knowledge creation. The rest of the paper inquires how inter-organizational knowledge creation has benefited from a variety of linkages with large domestic and foreign firms; I also address some industrial upgrading requirements that result from this peculiar type of knowledge creation.knowledge creation; learning; small firms; networks; firm strategy; industrial policies;

Falling behind or catching up? Developing countries in the era of globalization

Globalization improves the prospects for developing countries (DCs) to catch up economically with industrialized countries. But not all DCs will automatically benefit from globalization. Some DCs even face the risk of being delinked from the international division of labor. Differences in DC economic policies ultimately determine whether there will be a deepening divide between rich and poor countries in the world economy. Many observers draw an overly pessimistic picture of the perspectives of DCs in the era of globalization because of missing institutionalized links to regional integration schemes in Europe and North America, a low level of interfirm technology cooperation between industrialized countries and DCs, and a high concentration of foreign direct investment (FDD flows on only a few DC hosts. However, such concerns are largely unfounded: Asian DCs are most successful in globalization although they have remained outside institutionalized integration schemes, while ACP countries have not made much progress despite their preferential access to EU markets. Technology transfers between industrialized countries and DCs mainly occur through FDI and trade in capital goods, rather than through interfirm technology cooperation. Recent trends in FDI and international trade strongly support the proposition that DCs have become closely integrated into globalization strategies. A high concentration of FDI flows on a few DC hosts does not imply that new attractive locations cannot compete for international capital. Admittedly, it is true that between two thirds and three quarters of total FDI flows to DCs have persistently been absorbed by ten host economies. But the country composition of this group has changed over time. Globalization implies an increase in international investment cooperation. Case studies for selected DC industries show that FDI prevails in industries applying sophisticated technologies, whereas licensing and subcontracting are favored when production processes are standardized. Policy interventions may limit the choices open to investing foreign firms and, thereby, cause substitution effects between different forms of globalization or hinder globalization at all. The quality of DC economic policies determines whether these countries will succeed in joining the globalization club. The experience of the frontrunners among DCs suggests some basic policy conclusions: Openness towards world markets is a precondition for becoming involved in globalization strategies of transnational corporations. Liberalizing all forms of international investment cooperation and removing barriers to international trade should rank high on the policy agenda of DCs. Under conditions of globalized production, DC governments are increasingly constrained in pursuing policies of their own liking. Those DCs characterized by pronounced macroeconomic instability are relatively unattractive locations for international investors. Investment in physical and human capital plays a crucial role in enabling DCs to participate in globalization. Economic policies that discourage domestic saving and investment must be avoided. Financial market reforms are needed in DCs characterized by financial repression and inefficient intermediation between savers and investors. A better education of the workforce is required for a successful application of new technologies that become available through globalization. --

Benchmarking Evaluation of National Innovation Policy Implementation

[[abstract]]As small island countries, both Taiwan and Ireland have been regarded as locations that have performed economic miracles. Growing from agricultural economies to major regional players, both have often been studied as examples of national development and innovation. Therefore, this study seeks to compare the innovation policy in national contexts. The comparison of respective innovation policies on supply, environmental, and demand sides with a more elaborated classification base shows that the Taiwanese government adopts a more active top-down approach, making use of substantial levels of government research funding and resources to develop target industries. In contrast to this is the bottom-up approach of the Irish government that focuses more on creating an innovation environment and lifting firm-level research and development (R&D). Policy implications and suggestions are also given based on a number of similarities and contrasts identified in this research.[[notice]]補正完畢[[journaltype]]國內[[incitationindex]]A&HC

The economic analysis of multinationals and foreign direct investment: a review.

This article provides an up-to-date, comprehensive synthesis and evaluation of the existing literatura on multinational firms and foreign direct investment. Unlike most previous reviews it combines severalinsights showing their inconsistencies and complementarities. Through a chronological description it presents the main strands since the earliest perfect competition studies from the 1960s till some new recent contributions such as the knowledge-capital model, heterogeneous firms models, and internalisation issues. The paper also offers a new perspective, by reviewing the available computable general equilibrium models that include multinationals and foreign direct investment.Multinational enterprises, Foreign direct investment, Computable general equilibrium models.

Japanese LMEs and internationalisation: a study of the internationalisation behaviour of Japanese leading medium-sized enterprises in the context of globalisation.

This thesis is about globalisation and the firm. Specifically it concerns a particular type of firm called here a 'leading medium-sized enterprise'. or LME. This term is derived from the Japanese 'chuken kigyo’ which is used in Japan to distinguish the LME from small and medium-sized firms on the one hand and large firms on the other. LMEs are not exclusive to Japan, but they thrive there. The thesis establishes the importance of the LME as a (hitherto neglected) concept and business type, and analyses the conditions in Japan that have favoured the emergence of such firms there. Subsequently the investigation employs the Japanese LME to illustrate the approach to globalisation o f this particular kind of firm. Apart from being medium sized and a leader in its self-determined area of business, the LME is characterised by being independent and highly specialised in its core competence, to which it has devoted considerable time and effort. Deriving from and substantiating its particular character is a mode of operation and strategic philosophy called here 'articulation', which is an incremental approach applied first to the LME's domestic development and subsequently to internationalisation. The type of firm discussed here is the manufacturing LME and the form of internationalisation analysed is foreign direct investment (FDI). In contrast to the large transnational corporation (TNC), the smaller LME is hypothesised to be more prone to favour proximity in its inaugural FDI endeavours. So the adjacent multinational region of East Asia is introduced as the potential initiating location for FDI by Japanese LMEs. Within this region, Taiwan is posited as the representative of 'super proximity' because of the high degree of complementarity it is deemed to have with internationalising Japanese LMEs. An aggregate sample of 110 Japanese LMEs which have invested in Taiwan are compiled and analysed to see how this investment has contributed to shaping their globalisation strategies. From this aggregate sample, five case study LMEs are abstracted for more detailed examination of the motives, strategies and regional impacts (contribution to globalisation) of internationalising LMEs. In order of priority, this research has been conducted in Japanese, English. Chinese and French. In fact, it could not have been started without knowledge of at least written Japanese and Chinese. The first contribution to knowledge of this thesis, therefore, is that it brings to light information and materials not readily available to Westerners not conversant with these languages. In addition, the concepts of the LME and articulation have been introduced into accounts of the internationalisation of the firm, and also employed as analytical tools to show that the process of internationalisation by the smaller, specialised firm (as opposed to the large, multifunctional TNC) is accomplished in a manner distinctive to itself, because of its assertive concentration on its core competence, and despite the constraints of size and scope imposed upon it. This thesis also demonstrates that Japanese LMEs make a distinctive contribution to the on-going process o f globalisation, by their (generally positive) impacts on the overseas locations in which they operate, and by helping to shape the economic integration of the East Asian region

Searching for a New Role in East Asian Regionlization: Japanese Production Networks in the Electronics Industry

This paper will be published in Peter and J. Katzenstein and Takashi Shiraishi, eds. Remaking East Asia: Beyond Americanization and Japanization, Cornell University Press. Part 1 introduces a few conceptual building-blocks that we need to capture the interactions between international business organization and regionalization. Part 2 describes the growing dependence of Japan's electronics industry on Asia, and explores how Japanese electronics firms are searching for ways to expand and upgrade their regional production networks, with China as the main prize. Part 3 examines constraints to change. I highlight peculiar features of the Japanese network management model in East Asia that once may have reflected strength. But now these very same features have turned into systemic weaknesses, as they constrain the capacity of Japanese firms to cope with and shape East Asia's increasingly complex processes of regionalization. The chapter concludes with an illustrative example of how some Japanese electronics firms are seeking to turn around gradually their EAPNs, by developing strategic alliances with emerging new industry leaders in Asia, primarily from Greater China. Forthcoming as: "Searching for a New Role in East Asian Regionalization - Japanese Production Networks in the Electronics Industry", chapter 7, in: Peter and J. Katzenstein and Takashi Shiraishi, eds., Remaking East Asia: Beyond Americanization and Japanization, Cornell University Press.