Role of Technology and Globalization, Lecture 9

Modern life needs large scale organization and bureaucratic system.

Role of technology:

- technology and organization is mutually enhancing;
- technology as a contingency factor:

• Formalization, depends on industry, whether it is manufacture or service sector, they found if it is manufacture, technology formalization is not emphasized, but in service sectors, need to be more formalization. That is due to in manufacture sector, dealing with machinery involved, standardization is automatically; while service section needs to standardize in order to use technology efficiently


• Centralization, depends on size of organization. Middle or small size organization, where one or two managers can process, technology can be centralized; large organizations, technology is routine and formalized.


• Complexity, technology is routine then can be used in large organization.

Hence, technology does not play determine role.

Bureaucratic capitalism depends on large scale organisation

Bureaucratic organisation
capitalism context

Four types of Economic sphere bureaucratic organisation which our life evolve around:-

1. Finance capital, deal with financial capital, trans-national boundary


2. Science and educational complex, university and research institution


3. Mass media, entertainment become lucrative business


4. Production and distribution of goods and services

Harrison Bennett "Lean and Mean"

In economic sphere, we are bombarded with expert opinion about how these and other big firms have lost their competitive edge because of organisational rigidities and obsolete technological capabilites; Are small firms the engines of economic growth?

Harrison thinks it is not the case.

Evidence:
- small firms are systematically technologically backward comparing to large firms, small firms are unwilling to invest in technology because it will be more risky.
- large firms can produce for both mass and niche markets,the argument that the proliferation of niche markets is inexorably driving a small firms renaissance reflects a misunderstanding of the nature of contemporary markets.
- The role of small firms are playing is typically that of follower, not leader. Small firms won't last, and end up to be brought over by large firms.

While it may be enhancing the agility and profitability of individual firms, the search fro flexibility- by the managers of both big and small firms- is also leading to practices that undermining the employment security and incomes of a growing fraction of the population, exacerbating inequality and contributing to the underlying sense of futility in politics.

Concentration without centralisation of large firms' playing in global capitalism

- concentrated economic power is changing the shape of production, by creating all manner of networks, alliance, financial and technology deals, with one another, with governments at all lever; and with small firms who act as their suppliers and subcontractors.
- decentralization of production, but power, finance, distribution and control remain concentrated among the big firms

Between big and small firm:

- emergence of "lean and flexible production"
- polarization of jobs. Management in big firms first defines the job into two types:

• permanent (core) jobs
• contingent (periphery) jobs on demand based

and the "core" is cut to the bone, along with minimization of inventory holding, that is why flexible practice is also called "lean" production.
- outsourcing certain contingent jobs to create flexibility
- division of labour is changing to polarization of jobs; outsourcing jobs/employments are physically pushed to contingent jobs. The growing inequality of two different types of jobs.
- Thus the inequality between large and small firms:

• workers in large firms earn higher wages
• employee of big firms enjoy better benefits and greater job security
• small firm more likely to be granted exemption from environment and health and safety regulation under government economic policy, that leads to workers in small firms are more venerable to be exposed in unhealthy and unsafe working environment; workers in small firms are more likely to quit.

Structure of flexible production


Such explicit reinforcement or creation of sectors of low wage, "contingent" workers, frequently housed within small business suppliers and subcontractors. These generally big firm-led core-ring production network is almost surely adding to the national and international problem of "working poverty" in which people work for a living but do not earn a living wage. As result, the core employees become increasingly segregated from outside peripheral employees- a gap that is measurably reflected in the by now widely acknowledged phenomenon of growing earnings inequality. That is "dark side" of flexible production.

By examining subcontracting practicing in Italy:

- First tier firms: perform R&D, design, high level manufacture function;
- lower tier firms: very small, highly specialized, wage way below national average
- Home worker: lowest tier

Dark side of flexible production:
- flexibility depends on the perpetuation of contingent work
- network forms of industrial organisation strengthen trend toward income polarization.
- resulting hourglass distribution of income, where there are lot of rich and the poor, and few middle incomers

Globalization dominance by large scale organisation, the more the economic is globalized, the more necessary it is accessible only to companies with a global reach.