Patterns of Flexibility in Domestic and Foreign Enterprises

This chapter tries to answer empirically the question whether the power of companies has reached a new level, as economic globalisation gathers pace, and, if so, what form this shift in the balance between the power of the local environment and that of companies takes. The decisive factor in this shift in the balance of power is said to be the threat to move production and hence jobs elsewhere, a threat that can be forestalled only if management’s demands are met. According to this interpretation, this bargaining power places companies in the position to impose lower wages, longer working times and more flexible systems of work organisation. Companies’ power is determined by the tension between the local environment, i.e. the institutional setting at a given location, and the company itself and its particular organisational structures and culture. Companies will always try to obtain what they regard as the optimal conditions under which to produce goods or deliver services. However, local conditions, and in particular industrial relations and legal arrangements, may stand in the way of companies seeking a free hand to determine working and employment conditions. For some years now, there has been a wide-ranging academic debate on how to assess the strength of companies’ position relative to the local environment (e.g. Bornschier, 1980; Chase-Dunn, 1990; Flecker, 2000; Hirsch, 1995; Hirst and Thompson, 1997; Krugman, 1994; Schief, 2003; 2008).