Nokia and their Chinese supplier: a world apart

The video we watched during class has shown us, both Nokia, and the supplier company strive for legitimacy. This leads to companies becoming more similar. The process of becoming more similar can be described by three kinds of transmission: coercive pressure, mimicry and normative pressure. Coercive pressure is the pressure from either the governing organization, most of the time this is the national government, or the consumer/supplier. The government pressures through laws and fines, whereas the supplier or consumer can threaten with the stop of supply or demand when the company does not live up to their standards. Mimicry as a transmission of characteristics is the copying of other firms’ actions. This happens mostly if the firm mimicking is uncertain about how to proceed or what to do in cases. After all, you could fall behind in terms of competition when not mimicking, because the competition is doing something more efficient. Normative pressure is transmission of characteristics by professionalization. Colleges and universities ‘supply’ new or young employees, who then work by what they’ve learned. Essentially every company in a field changes because every company hires new employees at some point.

	Nokia	Chinese supplier
Coercive pressure	Customers demand sustainable products. Fear for lack of customers if details of manufacture become public knowledge	Chinese governmental laws; pressure from Nokia and possibly other customers. Possibly demands from their HQ in Germany, since they are a German company
Mimicry	Mimicking Scandinavian and/or competing companies (Apple, Samsung)	Mimicking other Chinese companies in terms of payment, working overtime, and housing. Manager mentions that Nokia will not find a different situation if they would look at other companies/competitors
Normative pressure	‘Expert’ on sustainability and ethics, Scandinavian based company	European/American manager, they are a German company

The table shows how both Nokia and the supplier of Nokia strive for legitimacy. Nokia is trying to persuade their supplier by using coercive pressure. But also by sending consultants to inspect their company, which can be divided to normative pressure; Nokia is trying to persuade them of changing their norms to a more European model. The documentary shows that the supplier does not immediately change, this is of course a process that takes time, but eventually they make small concessions. The next paragraph will discuss if the approach of Nokia is an effective way of diffusing their sustainability criteria.

Is Nokia effective in their approach?

I would argue that Nokia’s approach is a safe but slow way, possibly the fastest, of diffusing their sustainability criteria. You can summarize Nokia’s approach with the concluding meeting between the staff of Nokia and the managers of the Chinese supplier. Before the start of the meeting, the faces of the managers of the supplier show anxiety. In the last weeks (?) they’ve noticed Nokia is not happy with many things in and around their factory. They fear that they could lose their main customer. But Nokia handles it well, they mention things that are going well, and things they would like to have fixed (working overtime, having a choice between living on the site or elsewhere). Nokia even elaborates more things that they think are going well, rather than all the problems. The manager’s reply is that he is happy that they have found some good things as well. As cooperating companies, you do not want to obstruct your relation with one-another. Pressuring too hard might cause too much friction, which could stall improvement or even worsen the situation. This is why Nokia plays it safe; they are happy with any improvement and know that the process of improving the situation at the supplier’s factory will take time. Nokia also knows that if their relation turns bad, they might lose their supplier. Searching for a different one will take time and money, and moreover, they would have to go through the same process of diffusing sustainability again, because other companies are likely to have a situation that is very alike to the initial situation of the supplier. Therefor I think Nokia’s approach is an effective way of diffusing their sustainability criteria. 

Other coordination

Governance

Convincing the Chinese government to sharpen their laws and monitoring of those laws is an option for Nokia. This will probably speed up the process of improving sustainability of many factories in China, but it is not likely the Chinese government will change the laws because of Nokia alone.

Self-organization

If the supplier has own incentives of improving their sustainability other than through governance, they could improve through self-organization. Examples for incentives are a lack of employees because they do not want to work for the supplier any longer because of the working situation. This is example is also not likely, since these employees would need an alternative place to work. If the situation is the same at other factories, they will not have this alternative.