Global Factory Research Articles

Input-Output Analysis for Sustainability by Using DEA Method: A Comparison Study between European and Asian Countries

Policymakers around the world are confronted with the challenge of balancing between economic development and environmental friendliness, which entails a robust set of measures in energy efficiency and environmental protection. The increasing complexity of these issues has imposed pressure on the Asian countries that have been acting as global factories. This paper proposes a meta-frontier slacks-based measure (SBM) data envelopment analysis (DEA) model, with the hope that policymakers clarify the relationship between labor force, energy consumption, government expenditures, GDP, and CO2 emissions. Clarification of the causal relationship can serve as a template for policy decisions and ease concerns regarding the potential adverse effects of carbon reduction and energy efficiency on the economy. The results show: (1) Developing countries should establish their own climate change governance and policy frameworks; (2) Developed economies should seek to lower carbon emissions; (3) Energy policies play a pivotal role in energy efficiency improvement; (4) Top-down efforts are critical for the success of carbon reduction policies; (5) Learning from the success of developed countries helps to improve the effectiveness of energy policies; (6) Environmental policies should be formulated, and new production technologies, pollution prevention measures, and treatment methods should be introduced; (7) Governments are suggested to build long-term independent management institutions to promote energy cooperation and exchange.

Transnationality and Financial Performance in the Era of the Global Factory

Drawing on the core notions of knowledge augmentation and rational choice in internalization theory, the paper develops a theoretical framework to examine the relationship between transnationality and financial performance in the era of the global factory, and tests hypotheses against recent experience of leading transnational enterprises. The paper rejects a direct relationship between transnationality and financial performance, and supports a mediation model in which knowledge-based assets mediate the relationship between transnationality and financial performance conditional on R&D intensity. In making decisions on the transnationality of a firm, managers should not focus on whether it helps the firm achieve direct financial benefits because these are quickly offset by the costs in a competitive environment. Instead, they should focus on whether it helps the firm enhance knowledge-based assets and, through it, financial gains that can be long-lasting, and whether it is supported by R&D to augment such assets.

Holding together logistical worlds: Friction, seams and circulation in the emerging ‘global warehouse’

This paper examines logistics in the space of action between production and consumption to provide (1) a rethinking of logistical power, not as seamless flow but through seam space and friction, and (2) a re-conceptualisation of cargo mobilities, as the dynamic articulation between things being freight cargo, and being products and goods. The paper uses empirical research on cargo movement in Northern Europe to reveal the frictions resulting from freight cargo’s spatial ordering and from systemic imbalances in trade flows. It shows the multiple lines of friction produced by and productive of cargo mobilities across maritime and terrestrial space. It argues that logistics is an art of accommodating this and creating competitive advantage through making interruptions, discontinuities or seams in the spaces of flow. This is done through different temporal logics of ordering physical cargo sequenced across maritime and terrestrial space. The paper further shows the frictions between the physical spaces and flows of freight and the corresponding code-space and data flows. Bespoke corporate systems translate freight cargo to data and provide visibility to actors such that logistical and regulatory work can be anticipated and planned. Yet they do so through specific lines of sight. Bespoke systems also create seam spaces between networks as they simultaneously make frictions between rival corporate systems. The effect is to generate a contested, fractured space in which at stake is whether logistics works to further the interests of lead actors in the distribution chain linking up the global factory or as a tool of supply chain capitalism that spans continents and connects material supply to consumer, in which logistical actors increasingly perform the role of contractors in a global warehouse.

Advanced Manufacturing and China's Future for Jobs

This chapter explores how China’s push into advanced manufacturing and services through robots and other new disruptive technologies might affect the country’s future for jobs.After decades of rapid-fire growth, China’s comparative advantage in manufacturing and the extraordinary size of its economy explain why China has not followed Dani Rodrik’s pattern of “premature de-industrialization”. However, China now has reached a level of development where catching up through an investment-driven “Global Factory” model is no longer sufficient to create long-term economic growth and prosperity. Chinese firms now need to adopt, absorb and develop advanced manufacturing technologies. At the same time, severe headwinds are constraining China’s growth. International trade, a primary source of China’s rise, has fallen to its lowest level since 2009, and keeps languishing. Since the turn of the century, a declining labor force, rising wages, and skill bottlenecks are eroding China’s international competitiveness. To break out of this growth impasse, China’s leadership has decided to leapfrog into advanced manufacturing and services. Two policy initiatives are the expression of that ambition: the China Manufacturing 2025 (MIC 2025) Plan, and China’s Internet Plus (IP) Plan both seek to promote innovation-driven development through robots, 3D printing, Big Data, and the integration of manufacturing and services through the mobile Internet. The chapter examines how these two major policy initiatives might affect China’s Future for Jobs. While China has improved its position and capabilities in advanced manufacturing (especially in robots), the country still has a long way to go to catch up with global industry leaders. A critical weakness of both the MIC 2025 and the IP plans is an almost exclusive focus on technology, and a failure to collect data on possible impacts of advanced manufacturing and services on jobs, skills, income and inequality. To reduce this knowledge gap, the chapter reviews newly available data for China on unemployment, income inequality, skill requirements, and the development and quality of service jobs. These data show that China still has a long way to go to create the necessary skills (especially for soft and vocational skills), as well as enough well-paying knowledge-intensive service jobs. Forging ahead in advanced manufacturing thus will face major hurdles.If China fails to upgrade the quality of the new jobs that are being created in its service sector, this might slow down the growth of household incomes and consumption. As China’s push into advanced manufacturing coincides with the “new normal” of a lengthy industrial slowdown, any such slowdown in income might eventually begin to constrain the service sector too, as the profit squeeze in manufacturing companies and declining income of workers might lead to a cut in investment in services and in their consumption. In order to avoid this “worst case scenario”, it is necessary that both the MIC 2025 and the IP Plans are based on realistic projections of employment and other labor market impacts.

The role of experiential and non-experiential knowledge in cross-border acquisitions: The case of Indian multinational enterprises

This paper investigates the antecedents of the internationalization of emerging economy multinational enterprises (EMNEs) through cross-border acquisitions. Using a panel data set of 1138 cross-border acquisitions made by 515 Indian multinational enterprises (MNEs) during 2000–2013, it examines interactions of in-house resources with experiential and non-experiential knowledge to explore how EMNEs manage and exploit their knowledge base when internationalizing. The results show that Indian multinational enterprises have ‘interface competence’. They combine in-house resources with experiential market and externally sourced technological knowledge for undertaking cross-border acquisitions. The Uppsala model provides insights in analyzing the role of market knowledge and the Global Factory model helps in analyzing the role of technology in cross-border acquisitions by EMNEs.

From global factory to global mall? East Asia’s changing trade composition and orientation

This paper examines East Asia’s changing trade composition and geographical orientation from 1999 to 2014 and draws implications for the region and beyond. Over the last two decades, East Asia has been one of the most successful regions in the world to build and connect cross-border supply chains. Introducing a new and simple analytical tool, we show that since 1999, East Asia has been successful in consolidating its role as a global manufacturing hub and is sourcing an increasing share of intermediate and capital goods directly from the region. Being a thriving manufacturing hub has also triggered rising demand for consumption goods. All East Asian countries, except the PRC, are selling an increasing share of their consumption goods within the region. Furthermore, more consumption goods from outside the region are also being attracted to East Asia. If these trends were to continue, East Asia has the potential to transform into one of the world’s largest “malls”.

Food Security, FTA and Trade Protectionism in Asian Countries

Food security is the broad area of the food for the forth coming generation. Asia’s famous economic rise as the “global factory” over several decades was facilitated by outward-oriented development strategies and a multilateral approach, based initially on the General Agreement on Tariffs and Trade (GATT) and then its successor, the World Trade Organization (WTO). Free trade agreements (FTAs), as trade-policy instruments in Asia, were largely absent in the region’s trade policy architecture during Asia’s economic rise. Four main factors underlie the recent spread of FTA initiatives in Asia: (1) deepening market- driven economic integration in Asia, (2) European and North American economic integration, (3) the 1997–98 Asian financial crisis, and (4) slow progress in the WTO Doha negotiations. Food security is mixed blessing because it is providing substitute domestic industrial and agricultural production and made a country more efficient for the production of particular product in international production for trade disruption and co-ordination failure.

‘To Finish, We Must Finish’: Everyday Practices of Depletion in Sri Lankan Export-Processing Zones

The integrative dynamic between social reproduction (SR) and the market economy is underscored by the everyday experience of what can be termed ‘depletion’ for many women in the Global South. Drawing upon case study material from Sri Lanka, this paper focuses on migration decisions to work in export-processing zones (EPZs) and everyday production processes. It shows how workplaces are sites of depletion. Depletion reproduces the processes of disposability in global factories. Relations of SR are also reproduced in the factory. Affecting body and mind, depletion flourishes in environments without recourse to adequate inputs that maintain well-being including, but not limited to, leisure and rest, adequate wages, freedom of association, adequate nutrition, housing, and job security. In Sri Lanka, migration to EPZs was prompted by a crisis in SR and lack of inflows to sustain the well-being of women and households. Such workplaces are also an everyday day element of the global political economy, enacted upon gendered bodies, fuelling a cycle of gendered harm through the reproduction of disposability.

The Information Technology Agreement, Manufacturing and Innovation China's and India's Contrasting Experiences

The Information Technology Agreement (ITA), a plurilateral trade agreement, seeks to accelerate and deepen the reduction of trade barriers for the critically important Information and Communication Technology (ICT) industry. ITA thus provides an interesting case study of how tariff reduction within an industry-specific trade agreement might affect gains from trade for manufacturing and innovation. From a global welfare perspective, trade expansion could reinforce the diffusion of innovation. Developing countries and especially emerging economies could thus reap significant gains for industrial manufacturing and innovation. But whether this really happens is an empirical question. This chapter compares the contrasting experiences of China and India throughout the history of ITA, from the conclusion of the original ITA-1 agreement in 1996 up to the extended ITA-2 agreement on December 16, 2015. India joined ITA early from a position of weakness in electronics manufacturing. This gap in technological development explains why tariff reductions increased IT imports but failed to stimulate domestic electronic manufacturing and innovation. By contrast, China joined ITA six years after India from a position of strength as the global export factory in electronics manufacturing. Through a continuous upgrading of its industry, China was able to reap the gains from trade. Two specific questions are addressed: First, why is it that China’s electronics industry has benefited substantially from ITA, while in India the gains from trade liberalization have been overshadowed by major costs that are eroding domestic electronic manufacturing and innovation? And, second, to what degree are domestic economic structures and global network integration useful to explain these different experiences and the very different approaches of India and China to the ITA-2 negotiations about expanding the product lists covered by this agreement? The analysis focuses on the role played by differences in the stage of development of their ICT industry, but also more generally in their growth models and regulations, and their resources and capabilities. In addition, differences are considered in the integration of both countries into the global corporate networks of production (GPNs) and global innovation networks (GINs) of the ICT industry. By inserting these domestic determinants into the analysis of trade and innovation, new insights are expected for the study of trade and innovation within plurilateral and megaregional trade agreements. The chapter concludes with suggestions for policy and further research.

Global Production in a Romanian Village: Middle-Income Economy, Industrial Dislocation and the Reserve Army of Labor

This article contributes to the discussion about the process of relocation of industrial production. The study focuses on a community in Eastern Europe which witnessed a cycle of events: from localization of a high-scale global factory in 2007 to its unexpected displacement in 2012. In this study is analyzed the process of the community’s inclusion in the production system, and it is argued that the challenge of production mobility is distinctively different in middle-income economies. Employing a cultural approach to the study of global production, the process of social reconstruction caused by the investment is chronologically outlined and its outcomes for the local labor market and host community are described.

The limits of firm-level globalization: Revisiting the FSA/CSA matrix

Multinational enterprises (MNEs) engaging in foreign direct investment (FDI) need advantages allowing them to offset the liability of foreignness in host countries. This liability of foreignness gives rise to additional operational costs related to economic, institutional, and cultural differences between home and host countries. MNEs therefore need to own or control firm-specific advantages (FSAs) that, along with country-specific advantages (CSAs) and internalization advantages, affect international business transactions. In this paper, we revise Rugman’s classic FSA/CSA matrix to better reflect how firms bundle their assets with CSAs. We further contribute to the prior debate on the linkages between the global factory paradigm and internalization theory by empirically evaluating the validity of a key proposition associated with the global factory, namely that FDI becomes relatively less important as a building block of the modern MNE. We do so using data on FDI and cross-border mergers and acquisitions, a major component of FDI.

CHINESE PEACEFUL RISE AND DEVELOPMENT. THE THEORY OF “CHINA’S THREAT”

People’s Republic of China (PRC) has achieved phenomenal economic growth and unprecedented development “miracle” in human history. From the middle of the first decade of this century China has become a significant player in the global economy, it has flourished into a formidable economy, ranked the second largest in the world, and stands as the largest, the fastest growing and the most heavily engaged in international business and investment. The sustained and rapid growth of China’s economy, since the late 1970s, initiated by Deng Xiaoping (8 March 1978 - 17 June 1983), driven by reform and opening-up policy, became one of the most important milestones of the global economy during the past quarter century. The reform and opening up has enabled China to complete the historic transformation from a semi-closed society into a fully open one. Today, the openness of Chinese society and its integration with the outside world have reached unprecedented levels. The consequence of integration into the global economy, economic development has made China into a major force and advocate of globalization. China has become the strategic center of the “global factory” that produces the commodities consumed globally, above all in the centers of global capitalism.

Global Factories: Concepts, Structures and Consequences

Global Factories: Concepts, Structures and Consequences

Organizational Hierarchy, Deprived Masculinity, and Confrontational Practices: Men Doing Women’s Jobs in a Global Factory

Based on an interactionist approach, this article examines how men workers negotiate the doing of factory jobs conventionally considered as those suited for young women and defend their masculinity in harsh and contested organizational environments. Data collected during a 15-month-long ethnography of a large global factory in South China reveal that in an oppressive institutional setting that involves coercive management, devaluation of men labor, and the lack of a family wage, men workers defend their masculinity through offensive language, flirting and sexual harassment, as well as physical violence. In doing so, they develop a rebellious identity, diaomao, both to address themselves and to curse others, as a way to resist their low status, reconstruct their own understanding of the power hierarchy, and consequently, defend their deprived masculinities. This article asserts the critical role of daily interpersonal interaction in gender practices as well as in labor process.

Engaging with Dr. Plankey-Videla’s We Are in This Dance Together: Gender, Power, and Globalization at a Mexican Garment Firm

Dr. Plankey-Videla provides a complex and thorough study of a Mexican global factory that reorganized to manufacture consent but instead manufactured militancy. In particular, she is able to capture how macro-level forces such as the global economy, dynamics of neoliberalism that promote the hiring of women as a presumably docile workforce, and labor control from the nation-state impact micro-level dynamics such as firm innovations in work arrangements, workers’ economic compensation, gender wage inequality, internal conflicts among laborers, as well as labor strikes. Dr. Plankey-Videla is able to establish these multifaceted connections between macroand micro-level processes by using a feminist ethnographic approach that involved complete immersion in her study site by laboring on the industrial sewing line and participating in strikes right along with the firm’s workers. Theoretically, Dr. Plankey-Videla interjected feminist theories into structural labor processes to not only explain hegemony on the shop floor, but also to show how workers interject their own subjectivities into the workplace. Through such a framework she was able to capture the changes that an internationally renowned firm underwent to transition from the traditional piece work system to an innovative reorganization of work arrangements involving ISSN: 1076-156X | Vol. # 21 No. 2 | http://dx.doi.org/10.5195/jwsr.2015.34 | jwsr.org

A “World-Class” (Labor) Camp/us: Foxconn and China's New Generation of Labor Migrants

The fact that in 2010 eighteen young workers attempted suicide at Foxconn production facilities in China has attracted worldwide attention. Drawing on research conducted in Foxconn factories in three regions of China—the Pearl River Delta, the Yangtze River Delta, and West China—the authors trace the development of the Foxconn Technology Group as a case that demonstrates the aggressive nature of capital expansion in China and its impact on the lives of Chinese workers. While the Foxconn Group produces Apple products for the world's consumers, it simultaneously produces a new Chinese working class, the majority of whom are young migrant laborers. The authors claim that in China the state played a significant role in accelerating global capital accumulation. The authors hope to make sense of the way that a state-capital alliance is shaping a new form of labor recruitment and labor use. This article analyzes the emerging labor regime, specifically, the use of student labor in the process of Foxconn's expansion in China. First, the article discusses the ways in which the state contributes to the rise of monopoly capital by supplying workers who are both cheaper and younger. Second, the article examines how the new labor regime, established by Foxconn, generates more pressure on workers, leading to increased levels of anxiety and desperation among young factory workers. The article's principal research question is how a labor crisis was structurally produced in a mega global factory regime, when a new youth working class was emergent in China.

How have Japanese multinational companies changed? Competitiveness, management and subsidiaries

Evidence on the strategies and capabilities of Japanese multinational companies (MNCs) and their subsidiaries points to aspects of established management practices (typically home-grown) that complicate or inhibit adaptation to the demands of global competition since the 1990s. Japanese MNCs have had to respond, amongst other trends, to the switch from production to buyer-driven global value chains, cross-border vertical specialization, global factory strategies and strategic alliances and cooperative relationships. Amongst the factors that might affect the ability of Japanese MNCs to make competitive and organizational transitions are: parental MNC intent and capability in the cross-border transfer of management practices; the impact of host country risk on investment, ownership and entry strategies; measures of institutional difference and the gap in economic development between home and host nations; parent firm–subsidiary and subsidiary–subsidiary power relations and knowledge boundaries; and the evolution of insider networks that might overcome institutional and cultural distances within an MNC.

Strategic capabilities and the emergence of the global factory: Omron in China

Omron Shanghai provides a detailed case study of a multinational subsidiary's long-term evolution. The study assesses three streams of international business literature that emphasize the seemingly competing roles of parent firm strategy, national institutions or local management in the development of subsidiaries. It looks at each business function separately to reveal which capabilities were effectively transferred from Japan to China. In tracing Omron Shanghai's development from international joint venture into wholly owned enterprise and then global factory, it is the strategic intent of the parent multinational corporations that emerges as the consistent formative influence on management practices and capabilities.

Special issue of International Journal of Human Resource Management: Human resources in the global factory

Continuing globalisation has brought significant change to both the strategy and structure of multinational enterprises (MNEs). Widespread economic liberalisation, regional economic integration, an...

The Governance of the Global Factory: Location and Control of World Economic Activity

Recent years have witnessed major changes in the global location of economic activity, with the emerging economies assuming greater shares relative to the advanced economies. These developments have led many authors to refer to the idea of the global factory. But little attention has been given to who has control over the geographically dispersed activities—or, to put it another way, about the governance of the global factory. Have the changes in the global location of economic activity come about primarily through the growth of locally owned firms in the emerging economies, or through increased FDI by MNEs from the advanced economies, or through the proliferation of outsourcing arrangements coordinated by firms in the advanced economies? These control/governance issues have profound implications for the capture of the profits/rents earned in global value chains, and hence for the global distribution of income. This paper explores these issues, and considers who has benefited most from the contemporary phase of globalization.