A new paradigm of industrial organization: The diffusion of technological and managerial innovations in the Brazilian industry

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A New Paradigm of Industrial Organization

The Diffusion of Technological and Managerial Innovations in the Brazilian Industry

BY

LEDA GITAHY

Comprehensive Summaries of Uppsala Dissertations from the Faculty of Social Sciences 93

ACTA UNIVERSITATIS UPSALIENSIS UPPSALA 2000

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Dissertation for the Degree of Doctor of Philosophy in Sociology presented at Uppsala University 2000

Abstract

Gitahy, Leda, 2000. A New Paradigm of Industrial Organization. The Diffusion of Technological and Managerial Innovations in the Brazilian Industry. Acta Universitatis Upsaliensis. Comprehensive Summaries of Uppsala Dissertations from the Faculty of Social Sciences 93. 48 pp. Uppsala. ISBN 91-554-4778-3.

Based on the concepts of techno-economic paradigm, network and production chain, the main purpose of this dissertation is to analyse the diffusion of technological and managerial innovations in the Brazilian industry during the 1980s and the 1990s. It consists of a summary and six selected papers. Empirical studies were conducted at different moments of the re-structuring process and at different points of the production chain. The samples cover large leading firms as well as small second and third-tier suppliers in the automotive and footwear industries. They throw light on the process of diffusion and establishment of a new paradigm of industrial organization, mostly in conflict with the Taylorist/Fordist.

Ideas, methods and management techniques were largely adopted and imitated from the so-called “Japanese model”, but the diffusion of the new paradigm in Brazil is also the result of adapting and modifying this model by trial and error. At the firm level, the adoption of these innovations entails a highly complex process of social change, reversing norms and models of behaviour hitherto dominant. They modify the daily practices at work, and the division of labour within and between companies, as well as between companies and other institutions, such as those within the educational system.

These transformations are studied by distinguishing competition, management, and technological patterns.

The results show that, under the conditions of a an extremely large domestic market, the re-structuring of the Brazilian industry occurs in a context characterized by crisis, economic instability, recession and unemployment as well as by political re-democratization and growing influence of the labour movement. The diffusion of the new paradigm of efficiency together with the increasing globalization of the economy and the ongoing abandonment of import substitution, transformed the organization of work and inter-firms relations, changing the volume, structure, and location of employment as well as the content and hierarchy of skills.

Keywords: technological paradigm, flexible production, network, employment, skills, education, Brazilian industry.

Leda Maria Caira Gitahy, Department of Sociology, Uppsala University, Box 821, S-751 08 Uppsala, Sweden.

© Leda Gitahy 2000 ISSN 0282-7492 ISBN 91-554-4778-3

Printed in Sweden by University Printers, Ekonomikum, Uppsala 2000

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“... Nations which adopt the new techniques from abroad always do so for a double and apparently self-contradictory motive: to become like their more advanced rivals, but to remain just as they are. They must at least meet the efficiency standards of their powerful competitors if they are to preserve their independence - hence the need to copy who ever has come up with the successful techniques of the day. But paradoxically, they imitate others the better to defend their individuality.”

Charles Sabel

“Just how to achieve self realization, to preserve freedom, and adapt society to both, seems increasingly harder to know; it is felt as a central, overwhelming problem of our days. … From finding security in a repetion of sameness, of only slight and slow variations, we are having to live with a very different kind of security; one that must rest on achieving the good life, with very little chance to predict the outcome of our actions in a fast changing world. … To manage such a feat, heart and reason can no longer be kept in separate places. … The daring heart must invade reason with its own living warmth, even if the simetry of reason must give way to admit love and the pulsation of life. No longer can we be satisfied with a life where the heart has its reasons, which reason cannot know. Our hearts must know the world of reason, and reason must be guided by an informed heart.”

Bruno Bettelheim

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LIST OF PUBLICATIONS

I. Gitahy, Leda (2000) Toward a New Paradigm of Industrial Organization? The concept of technological paradigm and its utility to study the diffusion of technological and managerial innovations in the Brazilian industry.

Accepted for publication in Portuguese as Gitahy, Leda (2000) Na direção de um novo paradigma de organização industrial? O conceito de paradigma tecnológico e sua utilidade para tratar o tema da difusão de inovações tecnológicas e organizacionais na indústria brasileira, Coleção Mundo do Trabalho, Boitempo Editorial, São Paulo (in print).

II. Gitahy, Leda (1994) Technological Innovation, Subcontracting, and the Labour Market.

Published in Portuguese as Gitahy, Leda (1994) “Inovação Tecnológica, Subcontratação e Mercado de Trabalho” in São Paulo em Perspectiva, Vol. 8 nr 1, pp 144-153, São Paulo.

(ISSN 0102-8839).

III. Gitahy, Leda, Rabelo, Flávio, and Costa, Maria Conceição (1990) Technological Innovation, Industrial Relations, and Subcontracting, version in English prepared as a paper presented to the I Symposium on “New Technological and Societal Trends” (Session IV) at XII World Sociological Congress, Madrid, July.

Originally published in Portuguese as Gitahy, Leda, Rabelo, Flávio, and Costa, Maria Conceição (1991) “Inovação Tecnológica, Relações Industriais e Subcontratação” in Textos para Discussão nr 10, DPCT/IG/UNICAMP, Campinas, pp 1-34.

Also published in Spanish as Gitahy, Leda, Rabelo, Flávio, and Costa, Maria Conceição.

(1992) "Innovación tecnológica: relaciones industriales y subcontratacción" in Boletin CINTERFOR, nr 120, julio-setiembre, pp 71-98, Cinterfor/OIT, Montevideo (ISSN 0254- 2439).

IV. Gitahy, Leda and Rabelo, Flávio (1991) Education and Technological Development: the Case of the Autoparts Industry.

Originally published in Portuguese as Gitahy, Leda and Rabelo, Flávio (1991) “Educação e Desenvolvimento Tecnológico: o caso da indústria de autopeças” in Textos para Discussão nr 11, DPCT/IG/UNICAMP, Campinas, pp 1-30.

Published in Spanish, as Gitahy, Leda and Rabelo, Flávio (1992) “Educación y Desarrollo Tecnológico: el caso de la industria de autopartes”, in Gallart, M.C.(ed.) Educación y Trabajo - Desafios y Perspectivas de Investigación y Políticas en la década de los Noventa - Red Latinoamericana de Educación y Trabajo CIID-CENEP y CINTERFOR/OIT, Montevideo, pp 107-140.

Published in Portuguese as Gitahy, Leda e Rabelo, Flávio (1993) “Educação e Desenvolvimento Tecnológico: o caso da indústria de autopeças”, in Educação e Sociedade, Ano XIV, agosto, pp 225-251, CEDES/Papirus, Campinas (ISSN 0101-7330).

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V. Gitahy, Leda, Ruas, Roberto, Rabelo, Flávio, and Antunes, Elaine (1997) Inter-firm Relations, Collective Efficiency, and Employment in two Brazilian Clusters.

Originally published in Portuguese as Gitahy, Leda, Ruas, Roberto, Rabelo, Flávio, and Antunes, Elaine (1997) ”Relações interfirmas, eficiência coletiva e emprego em dois clusters da indústria brasileira”, in Revista Latinoamericana de Estudios del Trabajo, nr 6, pp 39-78, ALAST, São Paulo (ISSN 1 405-1311).

An earlier version was published in English as Ruas, Roberto, Gitahy, Leda, Rabelo, Flávio, and Antunes, Elaine (1994). ”Inter-Firm Relations, Collective Efficiency, and Employment in two Brazilian Clusters”, World Employment Programme Research, WEP 2-22/WP.242, pp 1-55, ILO, Geneva, March (ISBN 92-2-109333-6).

VI. Abreu, Alice, Gitahy, Leda, Ramalho, José Ricardo, and Ruas, Roberto (1999) Industrial Restructuring and Inter-firm Relations in Brazil: A Study of the Auto-Parts Industry in the 1990s in Occasional Papers nr 21, Institute of Latin American Studies, University of London, London. (ISSN 0953 6825) pp 1-40.

Also accepted for publication in Portuguese as Abreu, Alice, Gitahy, Leda, Ramalho, José Ricardo, and Ruas, Roberto (2000) ”Produção flexível e relações inter-firmas: a indústria de autopeças em três regiões do Brasil”, in Abreu, Alice (editora) Produção flexível e novas institucionalidades na América Latina, Editora UFRJ, Rio de Janeiro (in print).

Reprints were made with permission from the publishers

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Contents

Acknowledgements Preface

1. Introduction 1.1 Objectives

1.2 Historical background 1.3 Basic concepts

1.4 Method 2. The studies

3. Conclusions and suggestions for further research 3.1 Main findings

3.2 Changes in the Brazilian industry, 1970-1999 3.3 Final discussion

References

Articles

I) Toward a New Paradigm of Industrial Organization?

II) Education and Technological Development: the Case of the Autoparts Industry III) Technological Innovation, Industrial Relations, and Subcontracting

IV) Technological Innovation, Subcontracting, and the Labour Market

V) Inter-firm relations, Collective Efficiency and Employment in two Brazilian Clusters VI) Industrial Restructuring and Inter-firm Relations in Brazil: A Study of the Auto-

Parts Industry in the 1990s

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Acknowledgements

As is the case for most PhD theses, there are many persons who, in different ways, have contributed to the fulfilment of the dissertation. Taking into consideration the period that has elapsed since I began my graduate studies at the Department of Sociology, Uppsala University, and the presentation of this dissertation, to name and thank all those that have been involved would amount to a very long list. To all of you who in one way or another have supported and trusted me, a collective and deeply felt: thank you! and, trust me, the memory is treasured.

Research reported herein has been partially financed by IIEP/UNESCO (France); IDRC (Canada);

ILO/OIT (Geneve); FINEP, CNPq , SEBRAE and DPCT/IG/UNICAMP (Brazil). In four of the six articles reported here, the following persons were my co-authors: Alice Rangel de Paiva Abreu, Elaine Antunes, Maria Conceição da Costa, Flávio Rabelo, José Ricardo Ramalho, and Roberto Lima Ruas, and I truely appreciate their collaboration.

I want to express my gratitude to the Department of Sociology at Uppsala University, which never gave up on me in all these years and especially to my supervisor Pablo Suarez. I hope I have somehow measured up to the high academic standards he set for his students. But his contribution goes beyond academic support; he is a friend, who understood my special situation and encouraged me to bring my studies to a close.

I am also very thankful to my second reader, Hedda Ekerwald who has critically read my work and offered valuable suggestions. Bo Lewin, Christine Roman and the administrative staff of the department, Kristina Jacks, Eva Henricson, Margareta Thomas, Margareta Mårtensson and Anders Hökback, who made my life easier and this thesis possible in various unforeseen ways. I thank them warmly. Many colleagues created an encouraging and stimulating environment during this critical Swedish summer. I want to thank Nora Machado for her friendship, Sandra Torres, Anne-Marie Kalliokoski, Astrid Kubis, Arja Lehto and Maria Eriksson for their collegiality and friendly support.

Regarding the final stage I would like to thank the discussants at my final seminar, Göran Ahrne and Johan Nylander, for their helpful comments. Tom Burns gave me valuable advice, for which he is thanked. Anne Posthuma has transleted one of the articles. John Humphrey and Luis Paulo Brescianni helped me with the technical terms. Peter Ekegren read the last version of the Comphehensive Summary and helped me when I was ‘blindfolded’. My dear friend Kersti Gløersen has revised the English language.

The Department of Science and Technology Policy, Institute of Geosciences, at Campinas University in Brazil was my ‘habitat’ during all these years. In the last few months some colleagues of mine were obliged to take care of my courses and duties and I want to thank them, specially Sandra Brisolla, Ruy de Quadros Carvalho, André Furtado, Newton Pereira and Sérgio Salles Filho.

To Adriana Garutti Teixeira, Juarez Costa, Neide dos Santos Furlan, Waldirene Pinotti and all other personnel who helped and supported me unhesitantly in my work I give my full thanks.

There are three teachers, Amílcar Herrera (in memoriam), Ulf Himmmelstrand, Juarez Brandão Lopes and two colleagues Elizabeth Souza-Lobo (in memoriam) and Helena Hirata who have deeply influenced my intellectual trajectory, and I want to express my particular gratitude to them.

Anne-Marie Morhed and Lennarth Wallström opened their home and their hearts to me during all these years and are therefore part of my thesis. I am greatful for their friendship. Special thanks to Magdalena Czaplicka, Gladys Goulborne, Aida and Lasse Lagergren, Elcira and Robert Liljequist and Alejandro Zamora, for their support, specially during the last and stressful period of completing the dissertation.

Finally, there are those who suffered and supported me out of all proportion. Thanks Berna, Gui and specially Chico, who travelled to Uppsala to take care of me; thanks to all my family, from my granny (the oldster) to my syster’s daughter Carolina (the youngster) and specially my mother Eunice Caira Gitahy, from the bottom of my heart!

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Preface

This thesis, which gathers together six papers written in Brazil during the 1980s and the 1990s, is marked by the reflections, dreams, and experiences of a long trip shared with my generation. We were born in the baby boom after the Second World War, and in our childhood, marked by the romanticism of the Hollywood films of the 1950s, we believed that “at the time of evil I think we had not been born yet” [“no tempo da maldade acho que a gente ainda não tinha nascido”] (“João e Maria”, by Chico Buarque de Holanda). We woke up at the end of the 1960s in a world divided by the violence of the Cold War and the scenes of the Vietnam War, which used to invade our TV screens every night. As it is said in the same song, “now it was inevitable that the make-believe ended like that, beyond that yard it was an endless night”, [“agora era fatal que o faz-de-conta terminasse assim, pra lá desse quintal era uma noite que não tem mais fim”] (“João e Maria”, by Chico Buarque de Holanda).

I entered the University in 1968 and, one year later, with Bernardino, my love and companion since then, I had to leave Brazil “running like crazy” [“num rabo de foguete”] (“O Bêbado e a Equilibrista”, by Aldir Blanc). We could only return in 1980, with our two sons: Guilherme, who was born in April, 1973, in Santiago de Chile, and Francisco, who was born in May, 1977, in Uppsala, Sweden, countries which have welcomed us in our successive exiles.

Ironically, it was as ‘survivors’1 of the totalitarian regimes which devastated Latin-American countries during our youth that we reached Europe, from where our great-grandparents have departed, as victims of the great migratory movements provoked by the social transformations which formed the Second Industrial Revolution. The seven years spent in Sweden during the 1970s have taught me that it is possible to build institutions which join democracy, development, and social welfare, depending on the characteristics, creativity, and modes of action of the social movements.

I have never been able to separate my intellectual work, strongly marked by rationalistic tradition and faith in Science, inherited from the Enlightenment, from my daily life, my emotions, and dreams. In this sense, my work means a kind of long return, marked by my experiences in Chile and Sweden. To live in different countries get me the ability to see Brazil in a new light on my return, and, in the beginning, the paradox of feeling a foreigner in my country. Little by little, through my research and teaching activities, in which I have sought shelter, devoting myself to understand the recent history of my country and continent, I have found that the magical realism of Latin-American literature is much more realistic than magical. Countries of the future with no memory from the past, we go on repeating the cycles of our “Hundred Years of Solitude”, so well portrayed by Gabriel Garcia Márquez.

My effort, together with that of colleagues who have collaborated in the researches giving origin to part of the articles which constitute this thesis, was to try, as much as possible with no prejudices, to open the ‘black box’ of concrete processes of industrial re-structuring. It would be impossible without the collaboration of all those present in the various investigations on which this thesis is based: managers, engineers, workers, and businessmen, actors and victims of the re-structuring processes at the time, who chose to share their experiences, knowledge, beliefs, and expectations with us.

1 For Primo Levi, who survived the Holocaust (cited by Hobsbawn, 1995:11), ”we survivors... are those who, by prevarication, skill or luck, have never touched the bottom. Those who have done it, and who have seen the faces of the Gorgons, did not return, or returned with no words”.

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1. Introduction

1.1 Objectives

The objective of this thesis is to analyse the process of diffusion of technological and managerial innovations in the Brazilian industry in the 1980s and the 1990s, based on:

(a) A theoretical-methodological discussion on the concept of techno-economic paradigm (Perez, 1985) and its utility to study the diffusion of technological and managerial innovations in the Brazilian industry 2;

(b) The use of the concepts of network and production chain to analyse concrete processes of restructuring;

(c) A set of four empirical studies based on different researches carried out at different moments and in different types of companies in the 1980s and the 1990s.

It is a matter of understanding how the introduction of a set of inter-related innovations, inspired in a new paradigm of efficiency, modifies:

(a) on one hand, the daily work activities (routines, procedures, modes of producing, indicators, criteria, status symbols, habits, and values);

(b) and, on the other hand, the division of labour within firms and among them i.e. inter-firm relations), as well as between firms and different institutions, including those of the education system.

The main idea is to show how the diffusion of a new paradigm of efficiency, associated with the process of globalization of the economy and the abandonment of the model of development based on import substitution, transformed the work organization and the inter-firms relations in the Brazilian industry, changing the volume, structure, and location of employment as well as the content and hierarchy of skills. Under the conditions of an extremely large domestic market (in spite of its great contraction, especially at the crisis peaks of 1981-1983 and 1990-1992), the re- structuring of the Brazilian industry occurs in a context characterized by crisis, economic instability, recession and unemployment as well as by political re-democratization and growing influence of the labour movement. It is within this scenario that the slow abandonment of the model of development based on import-substitution, the increasing integration to global economy and the diffusion of the new paradigm of industrial organization have taken place. In the beginning of the 1990s, the liberalization of the economy intensifies this process. It is through studies realized in companies at different moments that I try to retrieve the links between the change in daily practices and the constitution of a new production scheme.

This thesis consists of two parts: this summary, which discusses some central issues and the concepts used in the different studies which constitute the thesis, and six selected papers based on researches carried out in the 1980s and the 1990s. Among them, four are based on researches conducted at different moments of the re-structuring process and in different points of the production chain (articles III, IV, V and VI), and two are efforts of synthesis and theoretical comprehension of how the re-structuring processes in Brazilian industry have happened (articles I and II). Some studies have been carried out in large leading companies in the production chain and others intentionally seek to reach firms at the end of the chain, and even home-working (in the case of the shoe industry). The empirical studies allow us to understand, on one hand, changes in time (i.e., the different rhythms of innovations’ diffusion), and on the other hand, differences in various types of companies (from large firms to small second- and third-tier suppliers).

2 See also Dosi (1984) for the related notion of “technological paradigm” and Kuhn (1963) for the more general concept of “paradigm”.

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The aim has been not only to understand the evolution of the re-structuring process, but also how the actors’ perceptions have changed. At a different level the papers also show how I and my collaborators were changing our views about the processes being investigated and witness at the same time our theoretical and methodological evolution. My research was at first focused on the rise of women’s trade-union membership among the metal-workers in São Bernardo do Campo (Gitahy et al., 1982a and 1982b; Lobo et al., 1984). In these papers, we started from the social movements of female workers. Through the analysis of their claims and social practices (using documents and interviews in depth) we began to see, using the available bases of quantitative data, what was happening both on the labour market and within trade unions. Labour Process, Sexual Division of Labour, Labour Market, Trade Unions, and Social Movements were the keywords in these papers. Our premise was that women’s perceptions of their work, family life, and trade-union experiences were signs of important social changes both in the composition of labour market and in the very forms of women’s participation within trade unions, a hypothesis which was confirmed.

My subsequent research, also centred on the labour process, was aimed at investigating the social effects of the introduction of new technologies in companies in various industrial sectors (Peliano et al., 1987; Gitahy and Rabelo, 1988). Working in several projects carried out in the 1980s I realized, little by little, that the introduction of technological innovation was associated with the diffusion of a set of organizational innovations based on a paradigm of efficiency qualitatively distinct from the Taylorist-Fordist. I also realized that the process of diffusion of the new paradigm had the characteristics of a social movement. When searching for the effect of the introduction of machines, I found a social movement of engineers, businessmen, managers, etc (see articles I and III). From the middle of the 1990s onwards, I started to study transformations in several production chains, emphasizing the comparison among different regions in Brazil (see articles V and VI) and the location and relocation of employment (Gitahy and Cunha, 1999; Abreu et al., 2000). At the same time we began to link the results of these studies with those of the studies conducted on the action of trade unions during the last few years, which generated various papers (Gitahy and Bresciani, 1998; Araújo and Gitahy, 1998 and 1999).

Research on these processes led me eventually to a reconsideration of the understanding of links between changes in daily practices and the construction of a new productive and institutional scheme. The main issue was to understand how actions at the level of the firm, oriented by different perceptions of the paradigms in force, result in changes not only in the structure of employment and labour market, but also in the very structure and location of the industrial system. In my opinion, this may contribute to a better understanding of the linkages between daily work practices, on one hand, and processes of industrial re-structuring and re-ordering of production chains, on the other.

1.2 Historical Background

In the last two decades, Latin-American countries have witnessed profound changes in their traditional productive relations, which have been greatly affected by globalization and the associated international re-structuring process. This process is characterized by the diffusion of technological and organizational innovations through different production chains and by the markets re-ordering. At the core of these transformations is an intense process of labour reorganization and an increase in productivity, affecting the volume, structure, and location of employment, the level and hierarchy of skills, and patterns of work-force management. It is important to understand the dynamics and the nature of these changes in order to understand the transformations they entail. The relations between work and education and the dynamics of productive re-structuring in the region are particularly relevant in this context (Gitahy, 1994b:9).

In Latin America, these transformations have occurred at the same time as the replacement of the import substitution model. This project, which characterized different political and economic

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experiences3, has had as a common axis the establishment of a salary-based society founded on the domestic market, which allowed a sustainable income rise and the overcoming of poverty.

Paradoxically, it was precisely in the countries where more inclusive social structures had been brought about that, in the early 1970s, a succession of military coups were staged. Starting with Pinochet in Chile and followed by Argentina and Uruguay, the military regimes repressed violently parties, trade-unions, and other organized social groups while disorganizing the domestic economic basis. Strongly supported by the Reagan and Thatcher governments, Pinochet’s dictatorship in Chile opens a new perspective of development, oriented to a larger external exposition of economies, made possible by the financial internationalization trend which began to acquire importance in that period (Castro and Dedecca, 1998:10).

‘Adjustment’ policies associated with the liberalization of markets and to the fomenting of exports were implemented in a context marked by economic crisis and recession. To the already traditional problems of the region (such as structural unemployment, income concentration, deficiency of education systems) can be added the effects of crisis and recession, either by the consequences of inflation spirals, which concentrate income, or by the desindustrialization and dismantlement of public systems provoked by ‘shocks’ in adjustment and deregulation policies. Simultaneously, we witnessed a process of political redemocratization and reorganization of civil society, and efforts of economic co-operation and regional integration (Gitahy, 1994b:10).

The economic crisis in the beginning of the 1980s affects the countries of this region in different ways. In Brazil and Mexico, the process of foreign debt explains recession, whereas in Chile and in Argentina the crisis is produced by the effects of external exposition on the local market and by a disproportional rise in the availability of goods and services. Nevertheless, whereas in Brazil the crisis is concomitant with the slow process of political opening, redemocratization, and resurgence of social movements, in Chile and Argentina we have the binomial dictatorship/recession, i.e., the worst of all possible worlds.

In Brazil, the 1970s was characterized as a period of great industrial expansion and, although the symptoms of crisis and economical recession could be felt already in 1974, their negative employment effects were only visible after 1981. In this period, a great expansion in industry and industrial employment is verified, especially in terms of the increase in the amount of workers classified as semi-qualified. Another important element was the massive incorporation of women in direct production activities, especially in the metal-working industry (Gitahy et al., 1982a).

This process occurs under a competition pattern basically directed to an internal market in expansion and protected by the import-control politics. The capital-goods sector developed, on the one hand, to meet public-sector demand (large governmental projects in a variety of areas) and, on the other, to meet demand in the durable consumer-goods sector which was also growing.

Concerning the labour management pattern, we found, in mass-production industries, a model4 characterized by an extreme parcelization of activities, extensive use of non-qualified work-force, high and induced turnover5, extremely conflictive work relations, where discipline is obtained through authoritarian methods, associated, in the case of the auto industry, to salaries higher than in other sectors6. The crisis in the beginning of the 1980s and the process of political liberalization question the foundation of this model (Gitahy, 1988).

From the point of view of the competition pattern, the contraction of the internal market, associated

3 From democratic experiences to military governments, some of which have dissociated economic development from social development.

4 Which Fleury (1978) also called “routinization” and Carvalho (1987) “predatory ways for using the workforce”.

5 For a discussion on turnover as a management policy, see Stutzman (1981).

6 Humphrey (1982) adds to these elements the importance of work laws and jobs and wage structures used by large firms and relates the authoritarian character in work relations in the firms to the political context in which they are inserted.

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with the issue of the external debt, takes the firms to a new level of competition, in a moment of re- ordering of the markets on the international level. If the problem in the 1970s was producing

“quantity”, in the 1980s the keyword turns out to be “quality”. The increase in exports, on the one hand, and, on the other hand, the increased competition on the internal market made it vital for firms to increase their levels of productivity and efficiency. Concerning the technological pattern, we can notice the introduction of product and process innovations (use of systems CAD/CAM/CAE, NCMTs7, robots, introduction of Just-in-time, Kanban, cellular production, group technology, TQM systems with the use of SPC8), related to the process of diffusion of microelectronics accelerating during the crisis. The change in the labour management pattern, though, is the slowest one. It encompasses the implementation of more participative management methods, revision of jobs, and wage structures, work-force stabilization politics, ‘democratization’

of the use of restaurants, and greater concern with human-resource management. This change begins in the 1980s and is enhanced in the beginning of the 1990s, especially in the auto industry.

The great competitive pressures on course in the world auto industry9 (car assemblers and autoparts makers), brought by the entrance of Japan, caused deep and radical changes in this sector’s organization and forced the re-structuring of the frequently turbulent relations between the vehicle car manufacturers and their component suppliers. The pressure on auto assemblers to increase plant productivity and quality of the vehicles had a vital effect upon the autoparts industry (see articles II and IV).

Since the 1990s new and important changes can be noted in inter-firm relations, in product and labour markets, in worker’s mobility, and in skill requirements. At the same time, in a country like Brazil, some forms of flexible production are being established in a context of labour market deregulation and the atomization of collective action. These processes have emphazised the need for a simultaneous analysis of what is going on both within, between, and outside firms10. Hence, the social construction of production networks and the new forms of institutional articulation are a particularly relevant theme for social scientists (see articles V and VI).

7 CAD = Computer Aided Design; CAM = Computer Aided Manufacturing; CAE = Computer Aided Engineering);

CNCMT = Computer Numerical Controlled Machine Tools.

8 JIT - Just-in-time, a management system created in the Japanese car industry to adjust input demands and production, reducing stocks, and costs of production. It can be used within the firm (internal Just-in-time) or between client firms and suppliers (external Just-in-time). Kanban is a control system using cards to manage Just-in-time production.

Production and inputs are organized through cards containing information on each part being produced (name, code, number of pieces, and where in the prodution line it is used). TQM - Total Quality Management, a management system aiming at total quality in production. SPC - Statistical Process Control is a control system using statistics that transfer responsibility for quality to the shop-floor workers, eliminating the traditional quality control based on inspectors.

9 For the auto-world industry it was a decade of intense global competition and rivalry, and a new re-structuring phase was on course in Europe. The reality found by the most important auto manufacturers consisted of the reduction of the demand’s growth index and the increase in excess capacity, while the expansion of Japanese leading firms were going on in the USA and began to have a considerable impact on Europe (there was expectations of an increase in the participation of Japanese firms on the European market from 11% to 18-20%). The agreements and mergers, the increasingly faster technological change which induce the growth in R&D expending and heavy capital investments (related to severer environmental laws), and the innovations implemented by Japan in the production methods bring to the auto manufacturer’s mind a great variety of challenges. Between the end of 1989 and the beginning of 1990, Ford (USA) bought Jaguar (UK), GM (USA) bought 50% and the control of Saab (Sweden), Volvo (Sweden) joined Renault (France), Daimler-Benz (Germany) set up negotiations with Mitsubishi (Japan), while Ford and Fiat were negotiating a deal in the tractors and heavy-trucks sector (Financial Times, May 16th, 1990, cited in Article IV).

10 For Ahrne (1994:vii) “what is going inside, outside and between organizations is central in all analysis of society.

Organizations are the mechanisms that shape macro-processes at the same time as they are the preconditions for every day life. Action and structure are brought together in organizations.”

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1.3 Basic concepts

The theoretical and methodological effort of this thesis is directed toward the question of how to study an ongoing transformation process, which involves radical changes from the economic and social point of view (change in the model of development) associated with a change in the paradigm of efficiency. It is based on empirical studies conducted in industrial enterprises, which were undergoing re-structuring11 processes at different moments in the 1980s and the 1990s.

I started my study on the diffusion of technological innovations in Brazilian industry in the beginning of the 1980s. The initial studies are centred on the analysis of the introduction of new technologies based on microelectronics in companies of different sizes and sectors (Gitahy, 1983;

Peliano et al., 1987; Gitahy, 1988; Gitahy and Rabelo, 1988 and Article III).

During the researches carried out in this period I realized, little by little, that: a) the introduction of technological innovations was associated with the diffusion of a set of organizational innovations which used to modify radically not only labour organization and modes of working, but also the very form of conceiving productive efficiency; b) I was witnessing more than a diffusion of machines; it was a process of diffusion of ideas and social practices associated with such ideas, and c) this process of diffusion had the characteristics of a social movement of engineers, managers, businessmen, workers, etc.

During the interviews conducted at companies, I have faced a highly complex process of social change at the micro level, which turned the established norms and behaviour12 models familiar to organization members inside out, setting new systems of authority and control. This process transforms norms, values, and routines and creates new sources of insecurity, anxiety, and resentment (see Article I and II).

The diffusion of this set of innovations implies transformations in daily routines of labour13, in modes of producing, thinking, and feeling. Just to give an example, today, in many metal-mechanic companies, pride of being smeared with grease (which used to show hard work) was substituted for that of wearing, at the shop-floor, an impeccable white apron (synonymous with organization and

“quality”), after a successful 5 S programme14. This is something which is happening either in a traumatic way (as, e.g., at moments of downsizing or re-engineering) or in a gradual way with different degrees of visibility, either to the different actors involved in this process or to researchers who pass by with their questionnaires and interview guides (Gitahy, 1999).

Today, when this process is extremely advanced, the anguish of managers, engineers, technicians, and workers (direct actors in the process of change) is impressive, as it is said that everything they have learned before is no longer of use. In order to survive in the ‘magical world of globalization’, it is necessary to be modern, competitive, and to redesign daily practices based on a sort of perception of the underlying principles of a new paradigm of efficiency, which each and everyone interprets as they can, risking concretely to find themselves excluded both from the company and from the formal labour market, because they are too old, neither modern or updated, or whatever the discourse in fashion dictates.

At the common-sense level, the idea spreads that companies and individuals should become

“competitive”, “productive”, “modern”, “entrepreneurial”, “polyglots”, “multi-disciplinary”,

11 The empirical studies that make up this thesis are just a part of the researches carried out and published in the period, which have strongly influenced the theoretical approach I have developed throughout time.

12 For a discussion on technology, social action, and rule systems, see Burns and Flam (1987).

13 Even if this process is extremely heterogeneous, when compared to the contradictions among the “guiding principles”

and the “practices” effectively implemented, what changes is the everyday life at work: routines, procedures, modes of producing, indicators, criteria, status symbols, habits, and values (Gitahy and Cunha, 1999).

14A programme which aimed at constant improvement of 5 S: Seiri (clearing up - throwing away unnecessary items);

Seiketsu (things disinfected, hygienic etc.); Seiso (sweeping or cleaning - getting rid of dirt); Seiton (tidying - putting things in proper order); Shitsuki (discipline or self-discipline).

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“polyvalent”, “post-modern”, and “employable” in order to survive. To reach these objectives (which nobody knows exactly what they are and which individuals will interpret in their own ways) can be acquired through a set of recipes, methodologies, techniques, packages, etc., spread by an ample literature, courses, and the most diverse means of mass communication (Gitahy, 1999, see also Gitahy and Fischer, 1996).

According to the media, it is necessary to study and to recycle throughout life in order to, perhaps, get some kind of occupation; or, in the words of a worker at a large company of cellulose, interviewed in 1998: ”In order to stay in the job now we have to be scientists, real experts”, whereas another one, discouraged, states: ”I am a sparepart, which cannot be milled anymore” (Santos, 1999:IV).

Little by little, I realized that: a) the agents of change themselves, managers, workers, and especially engineers (strongly motivated by their firm belief in technological progress and interest in innovations), have not been able to see the results of their actions; b) we, the researchers, with our long questionnaires and our questions, have somehow been actors and agents of the same process, and none of us has seen the results of our actions; c) in reality, we have been working with a mix of perceptions, expectations, and values (theirs and ours), which biased our studies15.

Based on the contrast between the insights from my experience in the fieldwork16and the nature of the debate in scientific congresses (which, at that time, seemed to me locked into the dichotomy continuity/rupture or straitjacketed by the ”positive” or ”negative” effects of new technologies) that I was going to move away even more from the approaches influenced by structuralism (Braverman, 1974 and the French School of Regulation) and come closer to authors who, either in labour sociology or in innovation economics, seemed to me to be more influenced by empirical findings.

Taking for example economics and sociology, studies such as the one by Piore and Sabel (1984), which had a great impact, question the idea of the inevitability of technical progress via specialization (included in Adam Smith’s pin factory), and point toward the importance of the interaction among views, ideas, actors, and processes of institutionalization to explain the constitution and the hegemony of the system of mass production from the beginning of the century onwards. Also Neo-Schumpeterian economists (Dosi, Freeman, Perez), when studying innovation, borrow from epistemology the concept of paradigm17 (Kuhn,1963), which also assumes actors and views to explain the dynamics of generation, selection, and choice of innovations (see Article I).

As defined by Perez (1985:443), the concept of techno-economic paradigm makes reference to “a set of common sense guidelines for technological and investment decisions” which guides the actor’s choices. As such, the concept was deemed to be adequate to analyse the social and economic

15 Morin (1982) points out that one of the basic problems of modern science is the difficulty in thinking of itself due to the elimination, on principle, of the subject which observes, experiences, and conceives the observation, eliminating the real actor (scientist, man, intellectual, inserted in culture, society, and history).

16 During the 1980s, among different research projects, I think I visited more than 100 companies (from different industrial sectors), some of them many times. In the 1990s, I believe this number was doubled.

17 The concept of ‘technological paradigm’ appears in the literature on diffusion and the dynamic of innovation by means of an analogy borrowed from modern epistemology, based on Kuhn (1963). Dosi (1984:13-16) defines technology as “a set of pieces of knowledge, both directly ‘practical’ (related to concrete problems and devices) and

‘theoretical’ (but practically applicable albeit not necessarily already applied), know-how, methods, procedures, experiences of successes and failures, and also, of course, physical devices and equipment. Existing physical devices embody the achievements in the development of a technology in a defined problem-solving activity. At the same time, a

‘disembodied’ part of the technology consists of particular expertise, experience of past attempts, and past technological solutions together with the knowledge and the achievements of the state-of-the-art. Technology, according to this view, includes the ‘perception’ of a limited set of possible technological alternatives and of notional future developments.

This definition of technology is very impressionistic, but it seems useful for the exploration of the patterns of technical change. One can see that the conceptual distance between this definition and the attributes of science - as suggested by modern epistemology - is not so great.” Based on this definition, the author proceeds analogously, defining

‘technological paradigm’: “we shall push the parallel further and suggest that, in analogy with scientific paradigms, there are ‘technological paradigms’ (see Article I).

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dynamics of the diffusion of technological and managerial innovations in the Brazilian industry.

The paradigm is a “a general guiding model”, a kind of “ideal type of productive organization”18, which is used as “the most efficient and rational” during a certain period of time (Perez, 1985: 443) with a strong power of inclusion/exclusion (Dosi, 1984:16). It is worth mentioning that, used in this manner, the concept leaves an ample margin to exploit the nature of the performance of sociological variables in the diffusion process. There is something similar in Piore and Sabel’s (1984) view, when they analyse the confrontation of two production systems based on different visions of technological efficiency. In the same way as Perez, their approach presupposes social visions and actors who hold these visions. Chart 1, based on Perez (1985) and Piore and Sable (1984), shows the differences betwen the ‘old’ (Taylorist-Fordist or “mass production”) and the ‘new’ (Post- Fordist or “flexible specialization”) paradigm of efficiency (see Articles I and II).

The new forms of industrial organization has received various titles in the international literature:

“Neo-Fordism” or “Post-Fordism” (for the French Regulation School, e.g., Aglietta, 1976, Palloix, 1976, Boyer, 1987), “new techno-economic paradigm” (for the Neo-Schumpeterians, e.g., Perez, 1985), “PIW strategy” (for Björkman and Lundkvist, 1987), “flexible specialization” (for Piore and Sabel, 1984), "systemofacture" (for Hoffman and Kaplinsky, 1988), “lean production” (for Womack et al. 1990, from the world automotive study conducted at MIT). Despite the variety of terms used, all make reference to the same phenomenon. Owing to this and in order to avoid to contribute to the plethora of terms in the litterature, I will just call it the “new” paradigm (see Articles I and II).

The idea that attracted me in Perez’ (1985) definition of paradigm as common-sense principles- guiding decisions, in the analysis of processes of change, is that generally the mobilizing ideologies and the so-called common-sense principles19 usually take on a normative format20 and are based on the codification of some kind of mobilizing social experience. Distinguishing the model (paradigm) from reality, in its turn, allowed me to separate the ”recipes”21 from the practices effectively implemented. The model is always an interpretative construction of reality and should be distinguished from reality itself 22. This allowed me to move away from the views which took models for reality, either to claim that new forms of labour organization and use of technology should be followed in order to survive (Womack et al., 1990) or to reduce them to some sort of immanent logic (almost a natural law) of capitalism, which has risen both among the ideologists of the neo laisser faire and in variants of structuralist neo-Marxism.

18 Perez (1985:443) suggests “that the behaviour of the relative cost structure of all inputs to production follows more or less predictable trends for relatively long periods. This predictability becomes the basis for the construction of an 'ideal type' of productive organization, which defines the contours of the most 'efficient' and 'least cost' combinations for a given period. It thus serves as a general 'rule of thumb' guide for investment and technological decisions. That general guiding model is the ‘techno-economic paradigm'. As it generalises, it introduce a strong bias in both technical and organizational innovation. Eventually, the range of choice in technique is itself contained within a relatively narrow spectrum, as the capital equipment increasingly embodies the new principles. Furthermore, for each type of product, expected productivity levels, optimal scales and relative prices become gradually established, together with the forms of competition in each market”.

19 What my grandmother calls “the law of life”.

20From catechism to administration manuals and almost all the bibliography aimed at executives via cash on delivery and that invades bookshops and airport newspaper stands.

21 Which, in general, used to come in different packages sold by consultancy companies, and especially through programmes of Total Quality Management.

22One of the problems pointed out by Morin (1982) as a cause of scientist’s incapacity to thinking science is the belief that scientific knowledge is a reflex of reality.

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CHART 1: DIFFERENCES BETWEEN PARADIGMS OF INDUSTRIAL ORGANIZATION

Taylorist-Fordist Paradigm or Mass Production

Post-Fordist Paradigm or Flexible Specialization Size of

firm/plant

• Large (the corporation) • Small and large Organization of

the firm

• Analytical model, focuses on parts or elements of processes, it led to detailed definition of tasks, posts, departments, sections, responsabilities and to complex hierarchies

• Adapting demand to production

• Periodic planning

• Specialized plants and equipments

• Systemic model, focuses on links and systems of interrelations for holistic techno-economic co-ordination, merging activities into one single interactive system: managerial and productive, white and blue collar, design and marketing, economic and technical

• Adapting production to demand

• Dynamic "on line" monitoring

• Flexible production systems Technology • Specialized dedicated machinery • General purpose machinery Labour • Great number of workers

• Narrowly trained

• Separation of conception and execution

• Fragmented and routinized tasks

• Narrow job classification

• Reduction of the number of workers

• Broadly trained

• Integration of conception and execution

• Multi-skilled and varied tasks

• Broad job classification Characteristics

of the Worker

• semi-skilled or specialized • Skilled, multifunctional and co-operative Management • Hierarchical and formal • Flat hierarchy, informal

Managerial behaviour

• Strategy to control market • Fast adaptation to change, innovation Characteristics

of the Manager

• Intuition-based skills, that would lead to the right decisions in the face of scant information.

Information-based skill, a more integrated techno-economics skills and increased creative, intuitive skills.

Production • High volume, limited range of standardised products

• Large and small batch, single units varied/customised products Characteristics

of the products:

• Energy and materials intensity • Information intensity

Characteristics of the

production

• Automation

• Economies of scale, based on homogeneity

• "Minimum change" strategy

• Producer-defined products

• Systemation

• Economies of scope or specialization based on flexibility

• Rapid technical change strategy

• User-defined systems System of

control

• Hierarchical bureaucracies • Decentralized networks

Source: Gitahy (1994:148-149) charts 2 and 3, Gitahy (2000) charts 3 and 4; see also Faria (1999, 84-85).

Another theoretical-methodological problem I had to face was the fact that, when observing a process of change, we always find the coexistence of elements of transformation and conservation,

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and, in analysis, it is possible to privilege one or the other23. Depending on the stage of this process, it is possible to find more elements from the old than from the new24. In this sense, the survey, statistically representative, is not the most adequate instrument in studying changes in the period in which they are still embryonic and have not been expanded to the whole industrial fabric yet25 (see Article I).

To study a process of diffusion of innovations and its relation to social changes implies taking into consideration longer periods of time in order to understand their potential and their dynamics of diffusion. To study innovation, it is necessary to seek it where it is or where we think it has some possibility to occur, and to try, by means of successive approximations, typologies, scales, and reports, to reconstitute and understand its process of diffusion. This means, on the one hand, to identify the characteristics of the ‘old’ and the ‘new’ via the construction of ideal types or models, to identify the islands and their characteristics, and, on the other hand, to understand the timing and the dynamics of its process of diffusion (see Article I).

A way of overcoming this problem was to use the historical-comparative method. I have started with the hypothesis that the phenomena I was observing should be similar to those which occurred during the diffusion of Taylorism in the beginning of this century in the USA. Thus, using an ample bibliography about the social history of technology, I have compared the present debate and context with those contemporary of the process of diffusion of Taylorism (see Article I). Trying to answer the question of how the process of diffusion of the previous paradigm happened, helped me to think of possible forms of studying an ongoing process and to light up the path in order to understand the present moment.

In order to understand the dynamics of the diffusion of a new paradigm, one must distinguish between different ideas regarding the practice and timing of this process. Distinct differences in time and space exist between the emergence of ideas, the initial experiments to put them into practice, their systematization, and their diffusion in different societies. The ‘success’ of these first experiments induce a process of imitation and adaptation, leading to distinct outcomes in different contexts and situations. This process involves new actors, generating support and opposition, whereby new contributions and ideas are either transformed or “renamed”.

By means of this mechanism, it was possible to point out five basic issues: the context of diffusion, the contents of the changes, the mechanisms (paths) of diffusion, time, and finally the incentives and obstacles found in this process. Following this approach, it was possible to discuss:

1) The concept of paradigm: (a) as a managerial ideology (in the sense proposed by Bendix (1956) and Merkler (1980), i.e., as visions of the role of the worker, of the manager, and of technology); (b) as the organization of the labour process; (c) as the enterprises’ structure; (d) as work relations in terms of the enterprise (posts and salaries, policies of human-resources management); (e) as industrial relations (the relationship with the trade unions); (f) as an industrial organization (relationship among the enterprises); and (g) as a system, relations among parts.

23 An interesting interpretation of European history in the period known as the Second Industrial Revolution from the point of view of conservation and not of change is the work of Mayer (1981). This author’s thesis is that the two World Wars in the 20th century are the Thirty Years’ War of this century, and only after them the "ancien régime" disappears, and it is this permanence which is at the roots of wars. This work shows the existence of small "islands" of modernity immersed in a sea of "tradition”. A survey carried out in the USA or Europe during the Second Industrial Revolution probably would not catch the importance of Taylorism and mass-production system for the constitution of modern societies. However, Hobsbawm’s works in the same period show a reading from the point of view of change and innovation.

24 The theses which privilege continuity (Neo-Fordism, continuum of degradation, there is not enough empirical evidence, at the end everything is the same, in Japan yes in Brazil no, etc.). Even being important for the debate, these aproaches put too many demands and filters on the limit of a consolidated process in order to accept its existence.

25 A survey of the automobile industry in the beginning of the 1970s could not predict the emergence of the "Japanese challenge", even if at that time Japanese experiments were already quite advanced.

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2) The diffusion of the ideas and practices of paradigms, as a process of imitation and recreation, having diverse results depending on varying socio-economic contexts and the characteristics of the “actors” or “agents” in the process.

3) The adoption and institutionalization of paradigms26.

Hence, in order to analyse the diffusion of the new paradigm in Brazilian industry, it was necessary first of all to distinguish between the so-called “guiding principles” and those practices actually implemented. Secondly, one must take into account that re-structuring and implementation is a long and complex process, even in the same firm. Finally, one must identify which dimensions are affected by changes27.

In order to understand the actors or agents of the processes of change I was obliged to study: a) the dynamics of market niches where companies were inserted28; b) their relations with clients and suppliers; c) the characteristics of their products and production processes; and d) the characteristics of technologies and ”packages” of innovations in detail.

Charts 2 and 3 summarize the dimensions used to characterize changes within (Chart 2) and between (Chart 3) companies in the case of the automobile production chain.

CHART 2: CHANGES WITHIN COMPANIES

1. Technical basis (technological innovations)

• Higher use of process automation

• Flexible equipment

• Computerized systems supporting management 2. Production

organization and management

• Changes in plants lay-out (mini-factories, cells)

• Quality and productivity programmes aiming at continuous improvement, waste reduction and costs cutting (inventory, defects, materials flow time, equipment setup time and lead-time)

3. New methods of work organization and management

• Changes in the professional tasks of direct workers

• Multi-skilling process

• Greater responsibility for leading processes

• Introduction of teamwork concept 4. New ideas on

production management

• Hierarchical structure downsizing

• Technical and behavioural training

• New management attitudes

• Participatory programmes

• Variable payment- and profit-sharing systems

• New focus, specialized plants Source: Gitahy and Bresciani (1998:35).

26 Littler (1978), in his analysis of Taylorism, points at the importance of considering the process of institutionalization of different systems of ideas (and ideologies) taking into account the relation between ideas and structure. He shows that different ideologies and models cannot be treated as equivalent and in the same dimension, because if all ideologies have structural implications, some of them have more implications than others, and the difference is the process of institutionalization of the different systems of ideas: “... the knowledge and understanding derived fromTaylorism was institutionalized within industry in terms of practices of industrial and production engineers. It resulted in the creation of industrial engineering departments and became deeply rooted in the training of general engineers and managers.”

(Littler, 1978:187), (see Article I).

27 Such as management ideology, organization of the labour process, firm structure (hierarchical levels, organizational structure, and systems of authority and control), human-resource management policies (career and salary structure, training and use of participatory methods), industrial relations (union relations), and industrial organization (inter-firm relations, client-supplier relations).

28 Watanabe (1983) rejects the common practice of analyzing the structure of the market and the level of competition based only on data from industrial census. To analyse the relationship between competition and technology, a micro analysis based on field research is necessary. Not all enterprises included in the same industrial branch compete among themselves and it depends on specific characteristics of the products, location, etc. (see Article III).

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The dimensions used to characterize changes within firms are: a) technical basis, i.e., technological innovations in a strict sense (e.g., new machinery); b) production organization and management, i.e., systems of production control and planning (e.g., new layouts); c) methods of work organization and management, (e.g., changes in work-task assignments); and d) application of new concepts of production management such as downsizing, variable payment, and profit-sharing systems. Chart 3, in its turn, presents the dimensions used to analyse changes in inter-firm relations:

a) introduction of new strategies for market positioning (e.g., client redefinition); b) development of inter-firm networks with suppliers as well as with “external” and “internal” subcontractors; c) organizational changes such as establishment of “industrial condominiums”29 where various enterprises share a common plant to produce a variety of components (e.g., assemblers and auto- parts) for a particular product; and d) effects of the introduction of new materials or components such as the use of electronic devices in cars.

CHART 3: CHANGES IN INTER-FIRM RELATIONS

1. New forms of market positioning

• Introduction of the Just-in-time system in order to adapt firms’ structures to the market fluctuations

• Processes focusing, product and client redefinition (specialization)

• Flexibility of the company’s operational conditions

• redefinition of products (use of new materials and components) 2. Development of inter-

firm networks

• With suppliers – establishment-selected partners and a certain level of stability that guarantees the supplied-material quality and the delivery dates. This partnership often includes the technical assistance from the large firm to its productive suppliers

• With ”external” subcontractors – who start to carry out some production tasks or to make components and parts that will be included in the final products of the large firm, or to execute services outside its premises

• With ”internal” subcontractors – who start to carry out some supporting activities for the production system (as maintenance, tooling, process and product engineering etc)

3. Organizational changes

• Establishment of industrial condominiums

• ”Modular consortium” implementation 4. Effects of new

products

• Obsolescence of parts and models

• Use of new materials and components Source: Gitahy and Bresciani (1998:39).

Based on these main ideas and observations, I proceed to use the concept of flexible specialization (Piore and Sable, 1984) or flexible production, to describe the practices oriented by the new techno- economic paradigm (Perez, 1985) and to analyse the transformations whithin and between companies (inter-firm relations) in different production chains (see Articles III, V and IV). The pioneering work which developed the concept of flexible specialization (Piore and Sabel, 1984) refers to two cases of industrial organization, which have proved to be effective in adapting firms to unstable and more segmented markets through greater flexibility and lower cost production. These two cases are:

(a) the vertically integrated production chains commanded by large firms present in the Japanese car industry; and

(b) the association of more independent geographically concentrated groups or clusters of small- and medium-sized firms in certain regions of northern Italy.

The so-called Japanese production system (referred to as “toyotism” in some studies) has been widely discussed in organizational and managerial literature. Crucial to its success has been the ability to combine flexibility with standardization.

29 As the VW new plant at Resende/RJ (1996) and the Ford plant at Taboão/SP.

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