Abstract
Through ethnographic research at a model garment factory in Central Mexico that had re-organized under lean techniques in 1996, this article challenges assumptions made by development theorists who posit industrial upgrading as the path to development. The article argues greater attention needs to be given to differential capitalization structures, institutional pressures, management fashion-setters and power changes in the apparel and textile commodity chain that constrain upgrading for Third World firms. In this case study, sunk costs made to transform the firm in question into a lean factory and full-package producer, in the end debilitated the firm's capacity to respond to market fluctuations and worker unrest. Paradoxically, in an effort to become a flexible producer a successful export manufacturer devolved into a sub-contractor, and eventually closed its doors.
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