Informal Dynamics of Agile Firm Organisation in the Greater Pearl River Delta
Final Report Abstract
It was the aim of the project to analyse the level, dynamics, and impact of agile firm organisation with a focus on 1) the informality continuum of governance and institutions facilitating agile firm organisation in the GPRD, 2) the regional economic rationale of agile firm organisations, and 3) social dynamics that stabilise and smoothen regional agility. It was envisaged to contribute to multiple core themes of the DFG priority programme "Megacities - Megachallenge: Informal Dynamics of Global Change" with an emphasis on the dominance and differentiation of urban economies, but with significant contributions as well to the other core themes by the strong integration of social aspects (labour, social networks), governability of global value chains, and resource flows (production factors, goods, and services). Agility has been defined within our consortium as a combination of flexibility and informality in business practices or regional economic and social configurations. The agility concept complements the flexibility concept by focusing on informality in business practices as a mean to reach flexibility. A firm’s need for agility depends on its competitive and institutional environment. Market volatility, competition, and a dominance of informal or incomplete institutions increase the need for agility. A firm’s means for agility arise from its internal and external capabilities combined with its strategic decisions about resource allocation and governance modes. The topics have been analysed by data from two company surveys in Hong Kong (HK) and the Pearl River Delta (PRD), an employee survey in the PRD, and in-depth case studies of workers and companies. Additional information from secondary data and experts interviews have been obtained. The empirical analysis of the applied governance modes to customers and producers within the value chain in the GPRD provided evidence of how those firms are connected. The majority of HK firms preferred a hierarchical relationship to their producers in the PRD, but some firms also opted for equity cooperation or non-equity cooperation. Taking a time dimension into account, our survey data provide evidence that an improving formal institutional environment in the PRD has encouraged more HK firms to opt for cooperative relationships or even market relationships with their PRD producers. We analysed the importance of personal relationships for companies’ decisions on their locations, partners and governance structures for production and innovation activities. Despite a still high importance of applying personal relationships for business in the PRD in general, companies tend to more strongly emphasise other hard economic criteria for deciding on the business locations and partners for production as well as innovation activities. With regard to innovation, companies generally tend to vertically integrate their activities rather than carrying them out under in cooperation with external actors. It was found that a core element of agility, the ability to respond to volatile demand, is transferred from firms to workers. From the employers’ perspective, the main requirement for a production worker – beside physical abilities – is to be flexible. According to five dimensions of worker flexibility that were assessed by the worker survey, 90 percent of the respondents are flexible according to at least three of the five mentioned dimensions. In addition to the results of the workforce survey, a previously undocumented phenomenon was discovered: the recent emergence of informal job brokers and commercial employment agencies in the PRD. This development is plausibly interpreted as a consequence in a socioeconomic environment where agile firms prevail. They operate with flexible ‘hire and fire’ practices, which leads to increased dynamics in the labour market, which in turn leads to an increased demand in information brokering.
Publications
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Kraas, F.
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Kraas, F.
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Revilla Diez, J., Schiller, D., Meyer, S., Liefner, I., Brömer, C.
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Schiller, D.; Meyer, S.
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Liefner, I.
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Beißwenger, S.
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Liu, W.-H.
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Kraas, F., G. Mertins
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Liu, W.-H.
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Liu, W.-H.
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Meyer, S.
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Bork, T.; Kilian, P.; Sterly, H.
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Bielinski, J.; Meyer, S.; Revilla Diez, J.
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Kraas, F., H. Sterly
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Liefner, I.
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Meyer, S.; Schiller, D.; Revilla Diez, J.
- (2010): Establishing an interface between public sector applied research and the Chinese enterprise sector: preparing for 2020. Technovation 30 (2): 117-129
Kroll, H.; Schiller, D.
- (2010): The Role of Personal Relationships for Doing Business in the GPRD China – Evidence from Hong Kong Electronics SMEs, Kiel Working Paper 1589. Kiel Institute for the World Economy
Bickenbach, F., Liu, W.-H.
