ORGANIZING IN TIMES OFCRISIS: THE CASE OF COVID19

Prof. Dr. Elke Schüßler

17.4.2020

Class 10: Organizing for Resilience in the Global Economy

https://timesofcrisis.org

LEARNING AIMS

¢ Understand how global supply chains for different goods and services have developed historically

¢ Understand how global supply chains are organized and governed, making them prone to risks

¢ Understand how global supply chains can be made more resilient

THE PHARMACEUTICALS SUPPLY CHAIN(S)

Lane (2008), Haakonsson (2009)

Research

Target identification/validation; lead

optimization

Development

Pre-clinical, clinical 1-3

Regulatoryapproval

Manufacturing Marketing and sales

10-15 years

Brandedproducts

Quality generics

Low-valuegenerics

THE GARMENT SUPPLY CHAIN

Lane (2008), Schüßler (2009)

Planningcollection

Designing and prototyping

models

Buyingmaterials

Manufactureand assembly Marketing

Distribu-tion Retailing

backward integration forward integration

Planningcollection

Designing and prototyping

models

Buyingmaterials

Manufactureand assembly Marketing Distribu-

tion Retailing

Planningcollection

Designing and prototyping

models

Buyingmaterials

Manufactureand assembly Marketing

Distribu-tion Retailing

Full package/full service

„New verticals“

GARMENT INDUSTRY (NOT RETAIL) IN GERMANYUnternehmen und Beschäftigte

0

1

2

3

4

5

6

1950 1960 1970 1980 1990 2000 2010Unternehmen in 1000 Beschäftigte in 100.000

Annual turnover in billion Euro

Number of companies in 1.000 Employees in 100.000

Statistisches Bundesamt (2006); cited in Schüßler (2009)

WHAT IS BEHIND INTERNATIONALIZATION AND FRAGMENTATION OF VALUE CHAINS?¢ Motives

£ Market access (export and labor)£ Efficiency considerations (cost cutting, focusing on core competences)£ Access to knowledge and expertise£ Escaping regulations and responsibility

¢ Main driver£ Trade liberalization, esp. WTO TRIPS (Agreement on Trade Related Aspects of

Intellectual Property Rights, 1994) and WTO membership of China (2001)£ Global competition spurring industry concentration and cost cutting

¢ Facilitator£ Information technology

KEY CONCEPTS

¢ Global…supply chains, commodity chains, value chains, value networks, production networks – common denominator: more than flows of goods

¢ Lead firms and suppliers, networked interorganizational relationships

¢ Buyer-driven vs producer-driven¢ Governance: coordination, but also specific allocations of resources and

distributions of gains – market, modular, relational, captive, hierarchy ¢ Inequality and upgrading

Gereffi (1999), Gereffi et al. (2005)

COMPLEXITY 1: PLURAL FORMS

Schematic picture ofgarment industryglobal value networks

Helfen et al. (2019)

COMPLEXITY 2: REGULATORY GAP

¢No „world government“ and multiple collective action problemsbetween firms, between suppliers and between nations

¢ International regulations such as the OECD’s corporate responsibility guidelines typically non-binding

¢Preferential trade agreements focus on market liberalization/protection rather than responsibility or resilience

¢Multinational Enterprises (MNEs) are called upon as political actors but face weak long-term incentives to act responsibly

e.g. Scherer & Palazzo (2011); Ashwin et al. (2020)

RESULT: GLOBAL PRODUCTION AS A CONTESTEDARENA

Sydow et al. (2016), based on based on Dicken (2004), Coe et al. (2008), Levy (2008)

Kuchler, H./ Findlay, S./Peel, M., Financial Times, 25.3.20

Kelly, A., The Guardian, 15.4.2020

FROM RISK TO RESILIENCE

§ Fine-grained supply chain structures

§ Resource dependence –increased through supplier consolidation

§ Outsourcing spirals and competency traps

§ Lean supply chains§ Systemic inequalities§ Weak regulation

From key risk factors…

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§ Intelligent mix of make, buy and cooperate/local and global on a whole network level to allow for lose coupling, diversity, redundancy

§ New technology, e.g. 3D printing§ Strengthening global governance and

collective action§ Changing regulations, facilitated by

sustained stakeholder pressure§ Sharing responsibility

…towards systemic resilience

SUMMARY

¢ States have a key role to play in setting the rules of the game of the global economy – supply chains as political arenas

¢ The current structure of global supply chains bears several risks for leadfirms, suppliers, workers and consumers, and risks are unequally distributed

¢ Resilience can be gained from taking a „whole networks“ perspective on managing supply chains, involving stakeholders and sharing responsibilities

CONTACT

Prof. Dr. Elke SchüßlerProfessor of Business AdministrationInstitute of Organization ScienceJohannes Kepler University LinzMail: elke.schuessler@jku.atWeb: www.jku.at/orgTwitter: @ElkeSchuessler and @OS4Future

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REFERENCES (1/2)

¢ Ashwin, S., Oka, C., Schüßler, E., Alexander, R., & Lohmeyer, N. (2020). Spillover effects across transnational industrial relations agreements: The potential and limits of collective action in global supply chains. ILR Review. In print.

¢ Coe, N. M., Dicken, P., & Hess, M. (2008). Global production networks: realizing the potential. Journal of Economic Geography, 8(3), 271-295.

¢ Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The governance of global value chains. Review of International Political Economy, 12(1), 78-104.

¢ Gereffi, G. (1999). A commodity chains framework for analyzing global industries. Institute of Development Studies, 8(12), 1-9.

¢ Haakonsson, S. J. (2009). The changing governance structures of the global pharmaceutical value chain. Competition & Change, 13(1), 75-95.

¢ Helfen, M., Schüßler, E., & Sydow, J. (2018). How can employment relations in global value networks be managed towards social responsibility?. Human Relations, 71(12), 1640-1665.

REFERENCES (2/2)

¢ Lane, C. (2008). National capitalisms and global production networks: an analysis of their interaction in two global industries. Socio-Economic Review, 6(2), 227-260.

¢ Scherer, A. G., & Palazzo, G. (2011). The new political role of business in a globalized world: A review of a new perspective on CSR and its implications for the firm, governance, and democracy. Journal of Management Studies, 48(4), 899-931.

¢ Schüßler, E. (2009). Strategische Prozesse und Persistenzen: Pfadabhängige Organisation der Wertschöpfung in der Bekleidungsindustrie. Kohlhammer.

¢ Sydow, J., Schüßler, E., & Müller-Seitz, G. (2016). Managing Inter-Organizational Relations: Debates and Cases. Macmillan International Higher Education.