Academic journal article Human Organization

From Kinship to Contract? Production Chains in the Javanese Woodworking Industries

Academic journal article Human Organization

From Kinship to Contract? Production Chains in the Javanese Woodworking Industries

Article excerpt

In many newly industrializing regions, locally owned small firms compete successfully with vertically integrated transnational factories. Their success has been attributed to "flexible specialization": localized clusters of very specialized, small-scale producers are linked by contracts into production chains for a particular commodity. In many cases the small firms are constituted by highly corporate, patriarchal households and this combination of "kinship and contract" has often been seen as critical to their success. The rapidly expanding Jepara export furniture industry is a paradigm case of flexible specialization, but Javanese households are neither corporate nor patriarchal. We propose a far more contingent connection between kinship and efficient commercial organizations. Key Words: small industry, flexible specialization, family firms, furniture, Java

In accounts of the Indonesian and other Southeast Asian economies, modern commodity production is often discussed as if it was synonymous with factory-based manufacturing (Wolf 1992; Ong 1990). The equation of modernity with large-scale industrialization is certainly understandable in Java, where rural farmland on the outskirts of large cities is rapidly being converted to industrial parks and where village daughters are becoming factory workers (Saptari 1991), but in this heavily populated island some of the most spectacular recent examples of successful manufacturing growth involve locally owned and relatively small businesses, rather than multinational factories (Hill 1994). A similarly rapid increase in the numbers of small and medium industries is also found in newly industrializing regions of other nations. For example, in the northeast Italian centers of the global fashion industry, more that 80 percent of firms have less than 10 employees (Blim 1992), and in the Taiwan electronic industry there is one small business for every 15 persons (Hamilton 1998:48).

Within the literature on economic development, explanations of the ability of locally owned small-scale industry to compete successfully-at least some of the time-with transnational, vertically integrated, firms have turned on the notion of flexible specialization. Pederson et al. ( 1994) argue that localized clusters of highly specialized, small-scale producers, linked by cooperative contracts rather than integrated into a single firm, can adapt more quickly to new opportunities or, for that matter, to economic adversity. Numerous different and not necessarily compatible reasons have been suggested to explain why clusters of small firms may be more efficient, or at least able to sell at lower prices, than their large vertically integrated competitors (Zukin and DiMaggio 1990). For example, cooperating clusters of small independent firms can spread development and tooling costs as well as rapidly diffuse innovations. Another advantage is that the narrow specialization of each firm makes possible the collective production of a complex commodity which is beyond the financial or skill resources of an individual small firm. In financial terms small, often household-based, firms have lower start-up costs and can mobilize cheap labor and local sources of finance in the initial stages of growth. From a broader theoretical perspective, it can be argued that a chain of firms in which production is coordinated by the market will be more efficient than a single large firm in which production is coordinated by an internal, hierarchical management structure (Williamson 1975).

There is now a sizeable literature analyzing the role of small firms in industrializing societies as diverse as Mexico, northern Italy, and Taiwan (e.g., Beneria and Roldan 1987; Bull and Corner 1993; Rabellotti 1994). Although sensitive to local cultural differences, a common theme in these studies is that the organization of small firms is embedded in distinctive forms of familial and community relations. An analysis of the development of industrial districts in Lombardy, for example, explains the development of successful manufacturing despite the absence of big factories, large towns, an industrial proletariat, or government assistance, as a product of the strength of the "pluriactive" peasant households, which had "the disposition to adapt to anything rather than accept the fundamental and final change represented by the breakup of the family" (Bull and Corner 1993:156, emphasis in original). …

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