The documentary, A Decent Factory, followed Hanna Kaskinen, the Head of Nokia's Ethics Department, from a boardroom full of top-level managers in Finland, to one of its vendor's factory compounds in China. This documentary, directed by Thomas Balmès, illustrated the effort of diffusing responsible policies, throughout Nokia's supply chain.
The first few minutes of the video show a meeting held in a small village in Finland, hosting a number of top-managers of Nokia. We see Hanna, trying to convince the participants in following a responsible policy towards the company's environmental and social impacts, and ultimately their consumers. This policy would encompass, mainly, the fabrication of mobile phones, gadgets and spare parts, which over the last few years has been contracted to offshore companies (operating mainly in China).
The first impression we get from her speech is that she is actually trying to convince the audience of the long-term benefits of this policy. Trying to induce a consensus around a beyond-compliance policy (as no regulation is forcing Nokia to undergo this project) is a hard thing to do, as the profitability of the policy cannot be objectively assessed. Furthermore, her role in the company limits her possibilities of coercively enforcing such a policy. As a result, she is trying to use her expertise in order to play a key role of building a shared vision and long-term thinking, through dialogue. This is what is called a leadership based process of policy making, within a firm.
The next step for Hanna is to travel thousands of miles to mainland China, and visit the industrial compound of one of Nokia's outside vendors. The goal of her visit was to take a general picture of their operations with regard to environmental regulations, labor rights, working, and (as it turned out) living conditions. Various comic sequences take place while she is there, starting with terrified workers trying to avoid their scrutiny, moving to a very cynic throughout the movie factory manager and ending with a grim image of the workers everyday lives at the factory. One characteristic example was the increase in the workers salary just two weeks before Hanna visited them.
All these comic (to viewers) events might make the movie enjoyable but they do also point out the defects of their approach. With the possibility of preemptive actions taken by the vendor company, this kind of audit would never give satisfying results. It can be valuable as a first view of their operatipns or creation of communication channels between the two companies.
This cannot be an effective way of diffusing sustainability criteria to Nokia's second-tier producers. Since decisions are taken under uncertainty, the decision making itself is influenced by inter-managerial interactions. This can be used by Nokia's managers, as they represent the top-managers of the system, to enforce these policies to their second-tier producers. This represents a power-based procedure a dominant company can employ in order to diffuse "unwanted" policies to external parties.
Another form of governance system can be a close collaboration with the Chinese government, ensuring that environmental, labor and hunan rights regulations will be enforced on the sites. These regulations have to be constructed in accord with governmental regulations, social and cultural criteria. But external structures like these cannot provide a solution by themselves. Internal factors need to coexist, like for example a monitoring mechanism (in place), working together with the government, exchanging information and expertise around the specific processes.
This institutional approach can be very valuable in this specific case since - if established - it can be diffused to a wide range of industrial activities, as many of the world's "second-tier" suppliers are situated in China. This can create an institutional isomorphic change through governmental mandates and regulations, and might create organizations structured to conform to these institutions.
On the same note, one more mechanism of isomorphism, can help in the creation of a different governance system. Apart from coercion, Nokia has in its disposal the market power (as the dominant brand), technological expertise and experience. By using this dominant place in the economy, Nokia can create inter-organizational networks out of its vendors as well as the second-tier suppliers, educating them in a sense, leading to the development of norms, licencing of technologies and diffusing of expertise. This professionalization represents a normative form of isomorphism and can lead to extending responsible policies through the supply chain. This can be accentuated by the already existant interaction of companies with the Chinese state, which can speed up the process.
On a more ternal basis, Nokia, as the focal company, has the opportunity to support the implementation of a sustainable supply chain management; supporting it with monitoring, reporting, evaluation and communication activities. Sanctions can also be imposed to the suppliers in order to ensure their compliance. Also Nokia can identify, through a structured procedure, supplier qualification prerequisites in order to ensure minimum performance, according to the standards in place.
This procedure should not be limited to environmental criteria but should also try to take into account the social dimensions of the issue, which are very important for suppliers in developing countries (like we witness in the documentary). This can start as a procedure to reduce risk towards the environmenta as well as the workers and to increase efficiency of the process. The latter can be a very good incentive for going through with the project. The final goal should aim on creating a supply chain management, capable of producing sustainable products. This would require extensive information gathering, mainly by using analytical methodologies (LCA) to create standards that can later be implemented in the supply chain.
Finally Nokia could, as a market leader, foster the creation of a sectoral organization, whose purpose would be to promote responsible strategies and policies throughout the sector, all the way to the second-tier suppliers. With sustainability as its main focus, it could be a key actor in transforming the relationships between the stakeholders.
Coming to decision making inside a firm, the main difficulty is explaining why the firm should adopt a policy that is not obligatory and its benefits are not easily and objectively measured. So Hanna's goal should be to show them that such a policy can provide legitimacy to the company, while serving long-term objectives (of economic growth, dominance in the sector). To do that, Nokia must design a policy while taking into account the preferences (and in some cases demands) of multiple stakeholders (consumers, NGOs, governments, media, international institutions).
No comments:
Post a Comment