1. NOKIA
Nokia is a Finnish communications and
information technology multinational corporation,
and as an important actor in the organizational field of communication
technology, NOKIA is not exempt of striving for legitimacy.
In
his article, Paul DiMaggio explains that institutions within an organizational
field start to resemble one another, this resemblance or isomorphism, according
to DiMaggio, is better explained as a consequence of the search for legitimacy
from these companies (institutional isomorphism), and is described by three
basic mechanisms:
Coercive,
Normative and mimetic isomorphism.
I
will not elaborate on each mechanism, but just for the sake of clarity, I’ll
briefly describe each: coercive: due to external pressure, mimicry: derives
from uncertainty, so companies copy of successful players whenever they feel
uncertain about their actions, and normative: due to professionalization.
Out
of these three, I consider the first one to be the mechanism that most appropriately
describes NOKIA’s search for legitimacy.
Coercive
isomorphism emerges as a response to external pressures, by which companies
need to adhere to in order to gain legitimacy in the society within which they
function.
In the documentary, NOKIA’s representative
mentions at some point that as a response to pressure from their shareholders,
they were making an audit of their major suppliers in order to make sure that
they were complying to basic normative and social regulatory standards. By
doing this, NOKIA is responding to the external pressure and tacking action to
try to adhere to external demands and makes sure it’s activities are desirable
and appropriate to the eyes of their shareholder.
The
supplier case is much more evident, they must adopt the practices, performance
evaluation and plans that are compatible to their consumer’s view (in this case
NOKIA) so by external pressure of their consumer, they will need to adjust their
practice in order to preserve business but also gain legitimacy in the eyes of
NOKIA and other major tech organizations that might, (also by some isomorphic
change, mimicry maybe?) start imposing stricter supplier control policies in
order to gain legitimacy as socially responsible institutions.
The
approach taken by NOKIA has a good intention, or an apparent good intention
because it is not clear exactly where does this initiative come from other that
the slight comment about shareholder pressure and company image, but either way
I don’t think it is very effective.
The
audit only uncovered the tip of the iceberg I think of safety concerns and
labor conditions within the factory, it is also a snapshot in time for only one
of what I’m sure are many suppliers, so not only are they just focusing on one
factory of possibly many others, they had a short visit which they announced in
advance, giving enough time to the factory manager to cover (not very
effectively) the major flaws of their working conditions.
Also
they did a nice presentation at the end of it, and issued some recommendations,
but not major action was taken.
Provided
that I understood correctly this assignment, we were prompted to think of a
different coordination mechanism that would make the process of
diffusing sustainability criteria more effective. I have the confusion
because I did not understand if we had to talk about the three mechanism of
institutional isomorphic change, or the mechanisms of coordination of Self organization,
Private interest government, Self governance, and government.
As
I believe it is the latter, I should say that a more effective form of
coordination to diffuse sustainability
would be the government.
The
government could issue a regulation imposing fines to industries that are
working outside the law or under precarious circumstances, these fines could
extend to consumers of these industries, meaning that if after signaling a
provider for some reason, if the consumer keeps dealing with this company knowing
that they are outside the regulation, they could also be fined as “accomplices”
so, in a way, by external intervention both supplier and NOKIA would be obliged
to make sure that they stick to regulation and labor laws.
Dear Paulina,
ReplyDeleteReading your blog is a truly intellectually stimulating experience. The arguments you presented are well rounded and showed high clarity. In your arguments, you tied the theories we learned in the course to the examples in the documentary observations, which made the legitimacy analysis convincing. I especially appreciate the short summary of the three types of isomorphism before you brought them in the analysis.
-----Part 1-----
I completely agree that coercive isomorphism best describes Nokia and its supplier’s efforts to legitimize themselves. The external pressure from another organization provided both organizations driving force to change. However, I am not sure if I agree with you on the supplier’s effort to gain legitimacy being more evident. I feel that the supplier is deeper down the supply chain and its sustainability performance does not affect the overall image of Nokia product easily. After all, the components it produces is not very visible on a cellphone among thousands of other components. Therefore it’s easier for the supplier to get by without coping with the newly introduced policy.
In this case Nokia did not react strongly or provide any pressure for improvement. If the supplier’s business is truly at stake, we would probably see the management level doing a better cover up job in the factory rather than admitting hiring labors without a contract or paying lower than minimum wage. My guess is that this supplier might hold a critical technology for certain components and it has few competitors on the market. That’s why it did not seem to be afraid of its behaviour triggering negative results.
-----Part 2-----
I can’t agree with you more regarding the needs for more government intervention in ensure the sustainability standards can be met. To be in compliance would be a minimum requirement for a business to exist and therefore the basic code of conduct it subscribes to. If the supplier cannot even satisfy legal requirements, NOKIA also bears the responsibility of poor oversight. It came shocking to me that the NOKIA consultants has such limited knowledge of the local regulations. It’s either that NOKIA expects its supplier to be fully in compliance without a doubt or it does not care for the legal status more than low cost cellphone components.
If we come back to this case for the interactions between the organizations, maybe addressing possible actions that can be taken from NOKIA’s side to enhance implementation of sustainability standards at the Chinese supplier’s factory could be another direction to pursue. Since sustainability goes beyond the company and deeper into the supply chain, ultimately the goal is to mobilize a self-organization mechanism. Doing so, besides fulling the legal requirements, NOKIA and its business partners could have more capacity to make themselves more competitive in a market that values sustainability.
Thank you for the inspiring article. It really helps me understand the concepts of the reading assignments. I like the neutral tone you use in the article. It certainly makes the criticism more convincing. Great job!
Cheers,
Sho
Hi Paulina,
ReplyDeleteYour blog is easy to understand and very clear. You focussed this blog on the paper of DiMaggio and I think you give a good summary of what he explains in his paper. I agree with you about the approach of NOKIA but what do you think about the approach seen from the supplier’s side? I understand your confusion really good. I had the same problem. I’m not sure that you did it correctly, but I do think you explained the case of NOKIA very well according to the three basic mechanisms of isomorphism. About the other coordination mechanism that could improve the mechanism, I think you have to take the cultural differences of different governments into account. These cultural differences provide a lot of different views on these kind of cases.
Hope you can use the feedback,
Groetjes,
Romée