Analysis of the CSR policies implemented in the Ludhiana ...
Transcript of Analysis of the CSR policies implemented in the Ludhiana ...
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Analysis of the CSR policies implemented
in the Ludhiana knitwear cluster
through the perspective of
MSMEs
Nameoftheprogramme:MScScinManagementofCreativeBusinessProcessesHandinDate:16.01.2017SupervisorName:PeterLund-ThomsenNumberofpagesandcharacters:72(188933)NON-CONFIDENTIALNONT
Master’sThesis
Author:GiudittaPresentatiCopenhagenBusinessSchool,2017
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TableofContentsAbbreviations...........................................................................................................................................IVAbstract.........................................................................................................................................................V1.Introduction............................................................................................................................................1
1.1Researchquestion.............................................................................................................................................31.3Researchdesign.................................................................................................................................................41.3.1Epistemologicalandontologicalconsiderations..........................................................................................41.3.2Researchstrategy......................................................................................................................................................51.3.3Researchmethod:Casestudy...............................................................................................................................61.3.4Datacollectionmethods..........................................................................................................................................71.3.4.1Insighttothesemi-structuredinterviews...............................................................................................................10
1.3.5Datacollectionanalysis........................................................................................................................................131.4Qualityassessmentapproach:ValidityandReliability............................................................................141.5Ethicalconcerns..............................................................................................................................................151.6Limitationsencounteredduringthefieldwork..........................................................................................151.7Chapters´overview.........................................................................................................................................15
2.LiteratureReview..............................................................................................................................162.1Clusters.............................................................................................................................................................162.1.1Definitionsandcharacteristicsofclusters...................................................................................................162.1.2Classificationsofclusters....................................................................................................................................182.1.3Relationsbetweenindustrialclusters,economicandsocialupgrading.........................................202.1.4IndustrialclustersandCSR.................................................................................................................................21
2.2MicroSmallMediumEnterprises(MSMEs)........................................................................................242.2.1DefinitionsandcharacteristicsofMSMEs....................................................................................................242.2.2MSMEsandCSR.......................................................................................................................................................26
2.3Informalisationoflabor...........................................................................................................................282.3.1Definitionsanddebatesoninformality.........................................................................................................282.3.2InformalityandCSR...............................................................................................................................................31
2.4CorporateSocialResponsibility(CSR).................................................................................................342.4.1Definitions,characteristicsandperspectivesofCSR..............................................................................34
2.5Initialconceptualframework.................................................................................................................373.Casepresentation..............................................................................................................................393.1BriefoverviewoftheLudhiana’sknitwearcluster.........................................................................393.1.1Horizontalties..........................................................................................................................................................433.1.2Verticalties................................................................................................................................................................463.1.2.1Backwardties.......................................................................................................................................................................463.1.2.2Forwardties.........................................................................................................................................................................47
4.Analysis.................................................................................................................................................494.1Ludhiana’sknitwearcluster...................................................................................................................494.1.1Classificationofthecluster.................................................................................................................................494.1.2CollectiveCSRinLudhiana.................................................................................................................................504.1.2.1CollectiveEnvironmentalCSR......................................................................................................................................514.1.2.2OthercollectiveCSRactivities......................................................................................................................................544.1.2.3SummarycollectiveCSRinLudhiana........................................................................................................................56
4.2Ludhiana’sMSMEs......................................................................................................................................564.2.1CharacteristicsanddifferencesoftheMSMEsinterviewed.................................................................564.2.2IndividualCSRinLudhiana................................................................................................................................584.2.2.1IndividualinternalCSR....................................................................................................................................................58
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4.2.2.2IndividualexternalCSR...................................................................................................................................................614.2.2.3SummaryindividualCSRinLudhiana.......................................................................................................................63
4.3InformalityinLudhiana............................................................................................................................634.3.1WorkforcecompositionandcharacteristicsinLudhiana.....................................................................634.3.2Informalisationoflabourinfactory-realmsofproductioninLudhianaandtheconsequentrepercussiononCSRimplementation.......................................................................................................................65
4.4CSRperceptionsinLudhiana..................................................................................................................664.4.1DefinitionsandperceptionsofCSRforLudhiana’sMSMEs.................................................................664.4.1.1DriversandrecipientsforCSRinvolvement..........................................................................................................674.4.1.2CommunicationofCSR.....................................................................................................................................................684.4.1.3ObstaclesandbenefitsofCSR.......................................................................................................................................69
5.Conclusion............................................................................................................................................696.Bibliography........................................................................................................................................737.Appendices...........................................................................................................................................82
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AbbreviationsBKTK–Bahadur-KeTextileandKnitwearAssociation
BRIC–Brazil,Russia,India,China
CICU–ChamberofIndustrialandCommercialUndertaking
CETP–CommonEffluentTreatmentPlant
CSR–CorporateSocialResponsibility
DIC–DistrictIndustryCentre
ESI–Employees’stateinsurance
FICO–FederationofIndustrial&CommercialOrganization
FMC–FoundationforMSMEClusters
GVC–GlobalValueChain
ILO–InternationalLabourOrganization
INTUC–IndianNationalTradeUnionCongress
ITI–IndustrialTrainingInstitute
LDA–LudhianaDyeingIndustriesAssociation
LKA–LudhianaKnittingAssociation
MSME–MicroSmallMediumEnterprise
MSME-DI–MicroSmallMediumEnterprisesDevelopmentInstitute
PDA–PunjabDyeingAssociation
PF–ProvidentFund
PPCB–PunjabPollutionControlBoard
STP–SewageTreatmentPlant
UP–UttarPradesh
ZLD–ZeroLiquidDischarge
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Abstract ThemainobjectiveofthisthesisistoinvestigateandunderstandtheCorporateSocialResponsibility(CSR)
practicesimplementedbymicro,smallandmediumenterprises(MSMEs)intheLudhianaknitwearclusterin
IndiaandhowCSRisperceivedbythem.CSRpracticeshasgainedanewresonanceintheglobaleconomyin
the last thirty year and it is a result of globalization and international trade. Despite this increasing in
attention,verylittleisknownonthepracticeofcorporatesocialresponsibleactionsindevelopingcountries.
Indeed,thereisawesterncentrefocusinacademicpublicationsonthistopic.Furthermore,theresearcher’s
choiceoffocusingonMSMEsisduenotonlytotheirnumericalstrength,butalsototheirlabour-intensive
productionprocesses,whichmakeMSMEscrucialinthedevelopmentprocessofrisingeconomies.Forall
thesereasons,thisresearchaimstofillinthegapintheliteratureprovidinganempiricalresearchbasedon
theLudhiana’sknitwearcluster.Inordertogainthenecessaryinformationtoanswertheresearchquestion
posed,17semi-structuredinterviewswithmanagersofMSMEsandexternalstakeholders(likegovernment
officialsortradeunions)havebeendone.Secondarydatahavebeenaddedonlywhenconsiderednecessary.
The findings show that no universal definition of Corporate Social Responsibility exist between the
respondentsandthemainconnotationsrefertolabourwelfareandenvironmentalwelfare.Furthermore,
CSRactionsareperceivedprimaryassupportactivitiesimplementedbythemonavoluntarybasisandnot
as ´monitoring systems´ imposed by outsiders. Regarding the typologies of CSR actions implemented,
informal individual activities mainly directed towards the labour force are dominating, followed by
environmentalactionsona collective level. The research is thenconcludedwith theprovisionof further
policyandresearchimplicationsregardingthisparticularcase-study.
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1. Introduction Thetitleofmythesisis''AnalysisoftheCSRpoliciesimplementedintheLudhianaknitwearclusterthrough
theperspectiveofMSMEs”.InthisresearchIwillexhibitandinvestigatetheCorporateSocialResponsibility
(CSR)practices/policies implementedbyMSMEs intheLudhianaknitwearcluster in IndiaandhowCSR is
perceivedbythem.
CorporateSocialResponsibility(CSR),isgenerallydefinedastheprocesswherebycorporateactorsintegrate
economic, social and environmental concerns into their core business activities (Lund-Thomsen& Pillay,
2012),hasattractedagreatdealofattentionworldwideandgainedanewresonanceintheglobaleconomy
inthe lastthirtyyears (Raynard&Forstater,2002).Thisgainofpopularity isaresultofglobalizationand
internationaltrade,whichinturn,hasbeenreflectedinincreasedbusinesscomplexityandnewdemandsfor
heightened transparency and corporate citizenship (Jamali & Mirshak, 2006). Moreover, processes of
privatisationandderegulationhavere-drawnthelinesbetweenstateandthemarket,changingthebasison
whichprivateenterprisesareexpectedtocontributetothepublicgood(Raynard&Forstater,2002).Inthis
situation, the spotlight is increasingly turning on the role of business in society and the consequent
importanceofCSRactivities.Inrecentyears,increasingattentionhasbeengiventoCSR,asapostulatefor
ethicalandresponsiblebehaviour inbusinessandvery little isknownon thepracticeofcorporatesocial
responsible actions in developing countries. Various scholars have highlighted awestern centre focus in
academicpublicationsonthistopic,andthefewpublicationsthatarepresentonCSRindevelopingcountries
areusuallyexcessivelyconcentratedonexport-orientedfirms(Lund-Thomsenetal,2016a).Mymotivations
for focusing on CSR in developing countries, as distinct from the developed world is manifold. Firstly,
developing countries are the fastest expanding economies and therefore themost lucrativemarkets for
business(IMF,2006inVisser,2008).Secondly,risingeconomiesarewhereglobalization,economicgrowth
andbusinessactivityare likelytohavethemost intensesocialandenvironmental impact,makingsoCSR
practices fundamental. Thirdly, developing countries present a different set of CSR agenda challenges
comparedtothosefacedbydevelopedcountries.
Globalization, economic liberalization and deregulation/privatization processes, have allowed developing
countriestointegrateintotheglobaleconomy.Thisprocessisseenasthebestwaytoovercomepovertyand
inequalities,bringingnotonlyeconomicgrowthbutalsosometimessocialupgrading(Raynard&Forstater,
2002).Thisiscrucialinthedevelopmentoftheprivatesector,inwhichmicro,smallandmediumenterprises
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(MSMEs)playa central role.MSMEs formaround90%of thebusinessesandaccount forat leasthalfof
employment in developing countries (Luetkenhorst, 2003). Apart from their strength in number, their
importance in the development process is also due to their labour-intensive production processes, that
usually distinguish them from larger enterprises. For this reason,MSMEs have a meaningful impact on
employmentand,consequently,theirengagementinCSRactivitiesiscrucial,havingasignificantinfluence
onsocietyaswhole.Forme,alltheseaspectsmakestudyingandfosteringCSRactionsinMSMEsatopicof
risingimportance.Lookingatthecontextofdevelopingcountries,MSMEstendtoagglomerateinindustrial
clustersinordertoovercomegrowthconstraints(e.g.lackofhumanorfinancialresources)andtocompete
in global markets (Lund-Thomsen & Pillay, 2012). Industrial clusters are geographical concentrations of
companies, operating in the same or related industries (Giuliani, 2005) and their organizational form is
usuallyseenasanencouragingriseinproductivityandincomesbetweenthememberfirmsandthelocal
communities(Nadvi,1999inPyke&Lund-Thomsen,2015).Eventhough,clustersareportrayedasbreeding
ground of local economic growth and innovation, few studies have shown whether their development
actuallyproceedsalsoinaneconomically,sociallyandenvironmentallyresponsibleway(Lund-Thomsenet
al,2016b).Moreover,rarestudiesrelyontheCSRdiscourse(Accountability,2006inIbid).Therefore,forall
these reasons, I chose to focus on researching CSR inmicro-small-medium sized industrial clusters in a
developingcountrycontext.
MyattentionwillbespecificallyfocusedonIndiawhereIfoundthreemainreasonsthataidtomychoiceof
choosingIndiaasmyresearchsubjectinthiscontext.Firstly,theIndianeconomyhasgrowntremendouslyin
the recentperiod,achievingnowthestatusof theBRIC (Brazil,Russia, India,China)countries (Mezzadri,
2014a).Secondly, Indianenterprisesnotonlysellproductssuccessfully in internationalmarkets,butthey
alsodetainincreasinglargeconsumer-basewithinthenationalborders,makingforaninterestingstudyon
CSRimplementationinlocalsuppliers.Lastly,severalattemptstopromoteCSRadoptioninIndiahavebeen
seen,directednotonlytowardsbigenterprises,liketheCompanyAct2013,butalsotowardsMSMEs(e.g.
IICAandGIZproject).TheseserveasapreviouslaboratoryforshadingsomelightonMSMEs’viewsonCSR
andunderstandingtheextenttowhichCSRhasbeenadopted.
MyinterestandfocusonthisthesisreliesandiscentredaroundtheIndianapparel,whichisoneoftheoldest
industries in the Indian economy but also one of themost important, nowadays. India has steadily and
progressivelyturnedintooneofthemajorglobalgarmentexporters,detainingin2016thesecondlargest
manufacturingcapacity intheworld(Make In India,2016).Thetextileandapparelsectorarethesecond
largest employment provider in the country, employing nearly 51million people directly and 68million
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peopleindirectly,onlyin2015-2016(Ibid).Moreover,itcontributesapproximately5percenttoIndia’sGross
DomesticProduct(GDP),makingitanimportantsectorforthenationaleconomicandsocialgrowth.Dueto
theimportanceoftheindustryforthenationaleconomyandforitslabour-intensivecharacteristic,whichis
reflectedinaheavilyexploitationof informalworkers(Mezzadri,2016b), itseemsrelevanttoexhibitand
investigate CSR implementation and perception in this sector. Therefore, I selected Ludhiana’s knitwear
districtinordertoexploreandinvestigate,inanIndiancluster,CSRperceptionandengagement.Thedecision
istwofold.Firstly,becauseatanational level,theLudhianacluster isoneofthemost importantgarment
centres, specifically the principal for producingwoollen knittingwearmainly dedicated to the domestic
market(Uchikawa,2012).SecondIgottheopportunitytoget intouchwithFMC(FoundationforMSMEs
ClusterDevelopment),aNGObased inDelhidedicated to thegrowthof clusteredMSMEs in India.After
talking to them, I got the suggestion to study in depth this industrial district, and their expertise and
knowledgeinthisfield,helpedtremendouslywithmyresearch.Forthisreason,Iwillfocusmyattentionon
CSRengagementintheLudhiana’sknitwearclusterinIndia,investigatingtheextentandexhibitingtheway
localMSMEsengageinsocialresponsiblepracticesandhowCSRisperceivedbythem.
1.1 Researchquestion Inmythesis,Iwillexplore,investigateandbeabletoanswer,thefollowingresearchquestion:
HowdotheMSMEsintheLudhiana’sknitwearclusterinIndiaperceiveandimplement
CorporateSocialResponsibilityactions?
TheresearchquestionsetsthecontextofmystudyanddeterminesitsmainvariableswhicharemainlyCSR,
industrial clusters and MSMEs. Informality, in the form of informalisation of labour, is another topic
influencingthisresearch,evenifnotexplicitlystatedintheresearchquestion.Eachtheoreticalthemewill
be described in details in chapter 2. Existing literature on the topic argues that threemain drivers lead
clusteredMSMEstobeinvolvedinCSRactivities,whicharestakeholderpressures(bothlocalandglobal),
business case to achieve efficiencies and profitability; personal/cultural values and the motives of
owners/managers.ItisbelievedthatacertaindegreeofCSRengagementwilloccurintheclusterinquestion,
but it is unclear towhich extent and inwhat form thiswill happen. It is also assumed that the specific
institutionalandculturalcontext,thenationalpolicyframeworkandthecharacteristicsandnatureofthe
valuechainsinwhichthelocalsuppliersareembedded,willinfluencethediscourse.Althoughitisnotknown
exactlyhowthiswillplayout.
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1.3Researchdesign
This sectiondescribes the researchdesignused to study the topic. Informing thisdecisionshouldbe the
epistemological and ontological dimensions considered or philosophy of science, the relation existing
betweentheoryanddataorresearchstrategy,theselectedstrategyofinquiryorresearchmethodandthe
specificmethodsofdatacollection,analysisandinterpretation.
1.3.1Epistemologicalandontologicalconsiderations
Epistemologicalandontologicaldimensionsrefer,correspondingly,tothetheoryofknowledge(Justesen&
Mik-Meyer,2012),andthenatureofsocialreality(Saunders&al,2008).Whileontology,inbrief,refersto
thequestionof“whatweperceivetobethenatureoftheworld”(Justesen&Mik-Meyer,2012),epistemology
isconcernedonwhatis,orshouldbe,consideredasacceptableknowledgeinaparticularsubjectareaand
myabilityastheresearcherinattainingthisinformation.Myresearchstartswithaweaksocialconstructivist
perspective. Social constructivism isaphilosophicalparadigmthat isbasedona relativistontologyanda
subjectivistepistemology(GubaandLincoln,1989)anditgenerallyassumesthatrealityisnotanindependent
entityandsomethingnaturallygivenordiscovered;butitisaconstructionamonghumans(Justesen&Mik-
Meyer,2012).However,amoderateorweakinterpretationofsocialconstructivismisquitedifferent.The
strongsocialconstructivismperspectivedeniesthepresenceofanindependentrealityoutsideahuman’s
perceptionof it. In turn, thisasserts thatboth these representationsmadeby individualsand theactual
entities to which these representations refer, are socially constructed (Ritzer & Ryan, 2010; Scott &
Hargreaves, 2015). In this case a weak or moderate viewpoint sustains the existence of a reality at an
ontologicallevel,whichisindependentofpeople’sperceptionsofit,thatinturnexertsaninfluence,inthe
wayinwhichitisrepresentedatanepistemologicallevel(Ritzer&Ryan,2010).Moreover,whatiscounted
asknowledge(theepistemologicallevel),isdependentnotonlybythecontextinwhichitiscreatedbutalso
bypeople’sperceptionofit(Ibid).Forthisreason,theobjectofstudyisalwayslookedbesidethespecific
contextofitsemergence,likethehistoricalandculturalconditions,aswellasthesocialprocesses.
The choiceof anontological andepistemological assumptionshas crucial consequences for thepractical
implementation of a study. The aim of this research, as stated earlier, is to understand the complex
phenomenonofCSRperception and implementation in the context of aMSMEs’ cluster in a developing
country like India. A weak, social constructivist viewpoint has been chosen because it allows, me the
researcher,inpresentingmyownspecificvisionofthesocialreality,whichhasbeendefinedbytheempirical
observations (locally socially constructed) andboundedbymy subjectivity. Thepurposeof the research,
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indeed,isnottofindonedefinitiveuniversaltruth(likecriticalrealistsdo)buttoacknowledgethepossibility
ofmultipleformsofknowledge(Järvensivu&Törnroos,2010).Moreover,thechoiceofamoderatesocial
constructivism perspective is evident at a number of levels. Firstly the way the research question is
formulated. Indeed, the attention is placed on the how, leading the interest towards the process of
implementingCSRactivities in clusteredMSMEs indevelopingcountries,which isbelieved tobea social
reality.Secondlyintheprocessofgatheringdatathroughpersonalorgroupinterviews,wheretheinterview
wasdevelopedinanactiveway.Thismeansthetalkisconsideredasanoccasionforproducingreportable
knowledgewherebothpartiesareactive,andknowledgeisbuiltcollaboratively(Holstein&Gubrium,1997
in Ibid). Thirdly the research question will be answered by different social actors, both engaged and
disengagedinMSMEs,andthiswillofferdifferentperspectivesaboutthesocialreality.Thiswillalsoallow
me, the researcher, to describe as many facets as possible, of this phenomenon, both complex and
ambiguous.
1.3.2Researchstrategy
Twogeneralrelationsbetweentheoryanddata(researchstrategies)exist;theorycancomefirstandguide
theprocessofgatheringandanalysisofdataortheorycanbetheoutcomeofresearchandanalysisofsome
or all data related to a research project (Bryman and Bell, 2015; Bryman, 2008). These twomethods of
reasoning are respectively called deductive and inductive and, when ‘combined together’, form a third
processofreasoningcalledabduction.Thisstudyisanabductiveresearchstrategy.Inthisparticularcase,
abductiveapproach,itismeantasaresearchstrategywhichoccupies“themiddlegroundbetweeninductive
and deductive approaches to knowledge production” (Järvensivu & Törnroos, 2010). Unlike induction,
abductionacceptsthepresenceofexistingtheoryinexplaininganempiricalphenomenon,butalsoenables
for a less theory-driven research process than deduction, and by that, allowing a data-driven theory
development(JärvensivuandTörnroos,2010).Inthisway,thesocialworldisseenasanempiricalsourcefor
theoreticalideas,ergoinvolvingme,astheresearcher,inabackandforthengagementbetweenthesocial
worldandliteratureinaso-calledprocessof“dialecticalshuttling”(Atkinsonetal,2003;Schwartz-Shea&
Yanow,2012inBryman&Bell,2015).Thiscontinuousmatchingandredirectionbetweenabstracttheory
and concrete data is well suitable for testing theories in unexplored contexts, likemy research project.
Moreover, during my research process, the conceptual framework initially developed was successively
modifiedduetotheempiricalfindings,asitcanbeseeninsection4.5,sobeinginlinewithanabductive
researchstrategy.Finally,Ididnotintendtoformulategeneralizedconclusionsortoinventnewtheories,
buttosimplyachieveaclearerpictureoftheresearchedphenomenaandtoanalysetheappropriatenessof
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theexistingtheoriesonthecasestudied.So, in linewiththeabductiveapproach,Iprovidedaninformed
‘guess’aboutthecase.
1.3.3Researchmethod:Casestudy
This research starts with a ‘problem to elucidate’: understanding how CSR (the social phenomenon of
interest)isperceivedandimplementedbytheMSMEsintheLudhiana’sknitwearcluster.Startingfromthis
point,itappearedcleartomethatthebestsocialscienceresearchmethodtouseisacasestudyapproach.
Indeed,casestudiesareempiricalinquiries,whichascopetoinvestigateacontemporaryphenomenon(the
caseinquestion)indepthandwithinitsreal-worldcontext,wheretheboundariesbetweentheeventand
thecontextarenotclear(Yin,2014).Iassumedandsubsequentlydiscoveredthatthisunderstandingislikely
toinvolveimportantcontextualconditionspertinentandspecifictothiscase.
The choice of a case study researchmethod ismanifested at different levels. Firstly, in the form of the
researchquestionposed;Iwantedtounderstandandexplain‘how’acomplexsocialphenomenon(CSR)is
perceivedandimplementedbyalocalcommunity(Ludhiana’sknitwearMSMEs).Thisunderstandinghasto
dealwithsocialandcontextuallinksthatneedtobetracedovertime,ratherthandescribetheincidenceof
aphenomenon,instead,typicalofsurveyorarchivalanalysis‘methods(Ibid).Secondlythechoiceisevident
in the lackof control fromme, the researcher,of thebehaviouraleventsexaminedandon the focuson
contemporary events as opposed to historical ones. Indeed, opposing to experiments, case studies are
preferredwhen the researcher cannotmanipulate the relevant behaviours andwhen currentevents are
explored.Moreover,theaspecttoexplainpresentcircumstancesismanifestedintheuseofinterviewsasa
datacollectionmethod,whichwouldnotbepossibleinthecaseofahistoryresearchmethod.Specifically,
thisresearchconsistsina“maximumvariationcasestudy”(Flyvbjerg,2006),whereitspurposewastoobtain
informationregardingtheimportanceandinfluenceofseveralcircumstancesforcaseprocessandoutcomes.
IwanttounderstandhowthephenomenonofCSRisseen,understoodandimplementedamongthedifferent
industrialunitsintheLudhiana’scontext.Thisisdonethroughtheuseofasmallnumberofunitsasasample,
where each are specifically selectedon thebasis of their information content. In order tomaximize the
diversity(andcomplexity),relevantinansweringtheresearchquestionposed,differentrespondentshave
been chosen, representing not only dissimilar MSMEs on different dimensions (like size, activity done,
marketsandcustomersdetained)butalsoexternalstakeholders,inordertoobtainoutsideperspectiveson
thetopic.Thebasicprincipleofthischoiceistogaingreaterinsightofthephenomenonbylookingatitfrom
differentangles.
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Regarding theselectionof thecase,aconveniencesamplingwasused. Indeed,afteran introductoryand
explanatorySkypecallbetweenmeandoneemployeeofFMC,whereIexplainedindetailtheresearchtopic
andpurposes,theNGOselectedtheLudhiana´sknitwearclusterastheunitofanalysis.Ipreferredtoleave
thisdecisiontotheFMCduetotheirexpertiseandknowledgeinthefield.
1.3.4Datacollectionmethods
With the term research strategy, Bryman (2008), means a broad orientation to the conduct of a social
research.Twomaingeneralorientationsinconductingasocialresearchexist:qualitativeandquantitative.I
consideredusefulforthereadertoexplainthedifferencesbetweenthesetworesearchstrategiesinorder
to understand the data collectionmethods used in this paper.While quantitative research, emphasizes
quantificationboth in thecollectionandanalysisof thedata,qualitative researchhighlightswords (Ibid).
However,thedifferencebetweenthetwo‘approaches’isdeeperthanthepresenceornotofquantification
in collection and analysis of the data. Therefore, the two lines of research differ with respect to their
epistemologicalandontologicalconsiderationsandontherelationshiptheoryandresearchused.
Theuseofaqualitativeresearchstrategywasthepreferredchoice,inordertogetaninsightandexplaina
complex social phenomenon, like how CSR is perceived and implemented byMSMEs in the Ludhiana’s
knitwearcluster.Ididnotapplyanymeasurement,insteadfocusinginthedataintheformofwords.Forthis
reason,Ipreparedadatacollectionstrategypredominantlyfocusingonsemi-structuredinterviews,which
are often referred to as qualitative research interviews (King, 2004 as cited in Saunders & al, 2008).
Particularly,thechoiceofsemi-structuredinterviewsarealsoinlinewithanexplanatoryanddescriptivecase
study, like this research, where a more flexible approach is preferable in order to explain and infer
relationships/connections between variables that describe themanifestation of a complex phenomenon
(Saunders&al,2008).
Mostoftheintervieweeswererecordedwiththeuseofadigitalaudio-recordingdevice,whenpermission
was given. This was done, in order to control bias and to produce reliable data for the research (Ibid).
Moreover, by audio-recording the interviews, I was able to concentrate on questioning and listening,
particularlyonthefacialexpressionsandtheothernon-verbalcuesgivenbytherespondents(Ibid).Forthe
interviewswherethepermissionofrecordingwasforbade, I tookdetailednotesoftheanswersgiven. In
ordertobeabletoprocessandanalysethedataobtainedthroughtheinterviews,Imadeatranscriptionof
therecordingandthenotestaken.Particularly,regardingtherecordedconversations,atranscriptionfrom
spokentowrittenlanguagewasmadebutfollowingsomeguidelines:suchasexcludingrepetitionofwords
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orpausesofself-reflectionwhennotconsideredrelevant.Sometimes,alsorephrasingoftheanswerswas
neededbecauseofthebadEnglishproficiencyoftherespondents.
Interviewswerethemainformofsourceofdataforthisresearch.However,secondarydataintheformof
previousformalstudies,officialwebsitesandpress-articleswasalsoanalysed.Specifically,throughSangeeta
Agasty,generalmanagerofFMC,IgotaccesstoapreviousDiagnosticStudyReportontheLudhiana’sdyeing
clusterdonebytheNGOfortheIndian‘Ministryofmicro,smallandmediumenterprises’,while,regarding
all theother secondarydata sources, the researchergainaccess to themthrough Internet searches.The
samplingofthesecondarydata,wasbasedontheassessmentoftheoverallandprecisesuitabilityofthe
datagainedtoanswertheresearchquestionandmeettheobjectivesofthepaper(Ibid).Attentionwaspaid
onthereliabilityandvalidityofthesecondarydatafoundonlineandaquickassessmentoftheseaspects
was done by looking at their sources. For this reason, only officialweb pages, national newspapers and
previous formalstudiespublished in international journalsorconductedbyvaluable institutions (e.g. the
NationalCouncilofAppliedEconomicResearch(NCAER))werepickedandanalysed.Finally,Ialsotookinto
considerationthepurposeforwhichtheexistingdatawasoriginallyintendedforand,regardingthisaspect,
onlydocumentsgeneratedforresearchpurposewereanalysed.
Thismulti-sourceapproach,ishighlyrecommendedwhendoingcasestudyresearchandthemainadvantage
ofusingmultiplesourceofevidence,istodevelopconverginglinesofinquirythatmakethecasefindings
more convincing and accurate (Yin, 2014). The following table summarizes all themethods used in this
research:
Overviewofthedatacollectionmethods
Datacollectionmethods Periodofcollection
Interviews • 16 semi-structured face-to-face interviews with
various MSME’s owners, governmental officials,
employeesintradeunionsandtraininginstitutions;
• 1 semi-structured group interview with
governmentalofficials.
25.04.2016–03.05.2016
Document
analysis
• Previousformalstudies:
Uchikawa S., “The Development of Apparel
Industrial Cluster in India. A Comparison between
LudhianaandTiruppur”,2012
Prior, during and after field
research
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MSME DI, “Brief Industrial Profile of district
Ludhiana”,2010
ACDS, “Ludhiana Knitwear and Apparel Cluster:
DiagnosticStudyReport2014”,2014
Sameeeksha, “Cluster Profile: Ludhiana knitwear
cluster”,2011
FMC, “Diagnostic Study Report: Dyeing Cluster –
Ludhiana”,2016
Tewari M., “Successful adjustment in Indian
industry: The case of Ludhiana'swoolen knitwear
cluster”,1999
NCAER,“Assessingtheprospectsfor India’stextile
andclothingsector”,2009
• Analysisofwebpages:
http://www.ppcb.gov.in/
http://aepcindia.com/
http://www.bktkindia.com/
http://www.cicuindia.org/
• Pressarticles:
“Three years on, CETPs for dyeing units hanging
fire”,2013(industantimes.com)
“TirupurshowsLudhianahowitisdone”,2003
(economictimes.indiatimes.com)
“Dyeing units seek years? Time for setting up
treatmentplants”,2009
(timesofindia.com)
Table1:Overviewofthedatacollectionstrategy;Source:theauthor
Inthefollowingsection,Iwillpresentanin-depthdescriptionoftheinterviewsundertakenandthesampling
methodused.
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1.3.4.1Insighttothesemi-structuredinterviews
With the purpose to get information on how MSMEs in the Ludhiana’s knitwear cluster perceive and
implement economic, social and environmental responsibility of business, I needed to gather in-depth
informationfromdifferentpeople,bothinsideandoutsidetheindustrialunits.Thiswasdonethroughthe
useofsemi-structured interviews, conductedboth face-to-face/individuallyand inagroup.Thechoiceof
conductingsemi-structured interviewswasmainlydue tomychoice inbeing flexible, towards the inputs
givenbytherespondents;keepinga listofquestionsandspecific themesreferredasthe interviewguide
(Saundersetal,2008;Bryman,2008).Particularly,threedifferentinterviewguideswerepreparedforthe
respondents(Appendix1,2,3);onefortheMSME’sowners/managers,oneforthegovernmentinstitutions
andthe last forthestakeholders interviewed,suchastrade laboursandatrain institution.Theseguides,
containanoutlineofthetopicstobecoveredandalistofquestions,whichhelpedmeleadtheconversation.
However, they also allowed for the process to be flexible towards the respondent’s inputs, letting the
sequenceofquestionstovary,inordertofollowuptheconversationandtheanswersgivenbythesubjects
(Kvale,1996).Consequently,thisleadtotheexplorationofnewanglesoftheresearchproblem,(howCSRis
perceivedand implemented inadevelopingcountrycluster)previouslyconsidered irrelevantbyme.The
threeinterviewguidescontainedsomecommonandstandardquestionsmainlynecessaryingivingabrief
descriptionofthecompanyorinstitutioninquestionandtofollowforamorerelaxedatmosphere.Theyalso
enclosedspecificinquiriesthatdifferedfromrespondenttorespondentbasedontheirposition(e.g.inside
oroutsidetheindustrialunits)andtheirrelationshipswiththeMSMEs.Furthermore,theinterviewquestions
wereallbasedontheresearchquestionposedandonthetheoreticalassumptionspreviouslyundertakenby
methus,alwayscoveringthefourmaintopicsofthisresearch:MSMEs,clustering,workforce&informality
and CSR. In regard to the interview guide prepared for theMSMEs, the interviewwas quite long and it
contained around 50 questions; in order to allow for fluidity in the conversation, the questions were
distributed in categories covering the previous listed topics. Finally, the 17 semi-structured interviews
conducted,lastedfromaround25minutesto1hourand23minutes,dependingontheavailabilityofthe
participants.Beforestartingtheconversation,abriefdescriptionoftheresearchwasalwaysgiventhrough
theprovisionofaparticipantinformationsheet(Appendix4).
Thereareseveralwaysandstrategiestogetaccessintospecificsocialsettings,dependingiftheyareaclosed
oropen/publicsettings,accordingtoBryman(2008).Thisstudyisbasedonclosedsettingscharacterizedby
differentMSMEsandotherinstitutions/organizationsofvariouskindsintheLudhiana’scluster.Thestrategy
used,wastoplayanovertrole,whichmeansthatIdisclosedthefacttobearesearcherinordertogetaccess
11
toorganizations(Ibid).Initially,thiswasnotdonedirectlybymebutbyFMC(FoundationforMSMEclusters)
aNGOspecializedinpromotingMSMEsbasedinDelhibutdetainingabranchofficeinLudhiana;andthus,in
directcontactwithlocalindustrialunitsandinstitutions.Theorganizationvouchedformeandthevalueof
the research, placing themselves in the role of a ‘sponsor’ (Ibid). The selection of the interviewees,was
directlydonebythembutwiththeadviceandundermysupervisionwhereIdecidedtoapplyapurposive
sampling.Thissamplingtechnique,isessentiallystrategic(Ibid),andtheselectionoftherespondentswas
basicallybasedonmyjudgment“toselectcasesthatwillbestenabletoanswertheresearchquestionposed
andtomeettheobjectives”(Saundersetal,2008).Forthisreason,therespondentshavebeenselectedwith
theaimtorepresent,ononeside,all thedifferentcore-clusteractorspresent intheLudhiana’sknitwear
cluster and, on the other side, the main external stakeholders directly and indirectly related with the
industrialunits regardingthe implementationofCSRpractices. Iwantedtoachieveagoodvarietyof the
samplesrelatedtomyresearchandthelogictopickparticipantsalsooutsidetheindustrialunitsistoprovide
different perspectives about the social reality studied and to reduce the risk of formulating conclusions
reflecting only one point of view. Table 2 shows in details the participants, length and location of the
individualandgroupinterviews.
Typeofindustrialunit
Initialsrespondents
Roleoftheinformant
Dateoftheinterview
Location Lengthoftheinterview
Dyeingunit R.V. Director 26.04.2016 Industrialunit
00:45:16
Dyeing&Printingunit
V.M. ManagingDirector
26.04.2016 Industrialunit
01:08:08
Dyeingunit V.J. Director 27.04.2016 Industrialunit
00:42:56
Dyeingunit B.J. Partner 27.04.2016 Industrialunit
01:22:34
Knittingunit H.J. Director 27.04.2016 Industrialunit
00:46:29
Knitting&Printingunit
A.S. Manager 28.04.2016 Industrialunit
01:18:57
Knittingunit R.G. Director 28.04.2016 Industrialunit
00:51:43
Subcontractingunit
V.K.T. GeneralManager
28.04.2016 Industrialunit
01:23:23
Embroideryunit A.K. Partner 29.04.2016 Shop NotrecordedEmbroideryunit M.K. Owner 29.04.2016 Shop NotrecordedEmbroideryunit S.K. Owner 29.04.2016 Shop Notrecorded
12
Typeoforganization
Initialrespondents
Roleoftheinformant
Dateoftheinterview
Location Lengthoftheinterview
GovernmentInstitution
M.K.&unknown Groupinterview:GeneralManagerandEmployee
25.04.2016 DICOfficeLudhiana
00:47:26(severaltakes)
GovernmentInstitution
R.K.R. DirectoroftheregionalofficeLudhiana-IV
25.04.2016 PPCBOfficeLudhiana
Notrecorded
GovernmentInstitution
A.P. Assistantdirector
25.04.2016 MSME-DIOfficeLudhiana
Notrecorded
TrainingInstitution
S.S. Headmaster 02.05.2016 ITIWomenLudhiana
00:57:49
TradeUnion S.S. DirectorLudhianaLabourOfficezonen°2
03.05.2016 LabourOfficeZonen°2
01:06:58(severaltakes)
TradeUnion unknown EmployeeattheIndianNationalTradeUnionCongress
03.05.2016 OnthestreetoutsidetheLabourOfficeZonen°2
Notrecorded
Table2:Overviewoftheinterviewedfirmsandotherinstitutions;Source:theauthor
As previously stated, 17 interviews were conducted that also included a group interview with two
governmentofficials,fromDIC.Thischoicewasduetoconveniencereasonsregardingtimingandavailability
oftherespondents.Particularly,agroupinterviewdiffersfromanindividualoneregardingthenumberof
participantsinvolved,andunlikeafocusgroupitisprimarilyinterestedincollectingindividualopinionsabout
the same topic without encouraging group discussion or interaction (Eriksson & Kovalainen, 2008). The
interviewswiththeindustrialunits,wereusuallyfollowedbyatouroftheproductionfacilities.Themain
purposesofthesevisitsweretounderstandtheproductionprocessandhaveanopportunitytoevaluatethe
workingandenvironmentalconditionsoftheMSMEs.Duringthetours,theresearchertooksomepictures,
whichwillbeincludedintheanalysischapter.
Finally,itisimportanttounderlinethatalltheinterviewscarriedonconsistincross-culturalinterviewsand
theycanbequitedifferentfromintra-culturalinterviewingbecauseoftheinvolvementoftranslators(Griffin,
2015). Even if I have conducted individual interviews, they all involveda thirdparty consisting in a local
interpreter.ThepersoninquestionisanemployeeofFMCandhewasknownfrommosttherespondents.
The presence of a third party directly acknowledged from the interviewees did not affect the social
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interaction,however I facedsomelimitationsduetotheuseofatranslatorandtheywillbeexplainedin
greaterdetailinsection1.4.
1.3.5Datacollectionanalysis
Inthefollowingparagraphs,thestrategyusedtoprocessandanalysethedatacollectedwillbepresented.
Datacollectionandanalysisshouldbecarriedconcurrently,allowingtheresearchertocollectnewdatato
fill in gaps or to test new hypothesis that emerge during the analysis (Miles et al, 2013). Following this
recommendation, every day after the interviews had finished, I started to process and transform the
scribbledfieldnotesinwrite-ups,makingtherawmaterialprocessablefortheanalysis.However,duetothe
lack of time during the fieldwork, the transcription of the recorded interviews was done afterwards.
Subsequently, Icodedallthedatafirstly inanExceldocumentandthenintheNVivoprogramandfinally
analysedthem.
Thecodingprocesswasdividedintwocycles.DuringtheFirstCyclecoding,Iassignedcodestopieceofdata-
chunkswithapurposetosummarizesegmentsofdata(Ibid).Mostofthefirstcategoriescreatedwerebased
onaprovisionalstart-listofcodes(deductivecoding)thatwasbuiltonthekeyvariablesthatIbroughttothe
study(e.g.labourinformalisation,MSMEs),whiletheothercodes,stillemergedprogressivelyduringboth
thedatacollectionandtheanalysis.Furthermore,differentapproachesforcreatingthecodeswereusedand
themostresultedindescriptivecoding,whichconsistinawordorshortphrasetosummarizethebasictopic
ofadataportion(e.g.governmentaction,MSMEsissues).Inalessamount,processcodingwasappliedwhich
ischaracterizedbytheuseofgerundstoconnoteactioninthedata(e.g.trainingworkforce,outsourcing,
job-working).Simultaneouscoding,(theapplicationoftwoormorecodestoasingledataportion)andsub
coding, (assignationofa tagafteraprimarycode)werealsoused.The latterwasconsideredparticularly
appropriatewhengeneralcategorieswereinitiallyassignedbutamoreextensivelabellingwasconsidered
asnecessary.Itcanbeconcludedthat,theanalysisfollowedbothadeductiveandinductivecoding,however
thecoding framebuiltmainlymaturated fromthetheoreticalvariablesonwhich Iconstructedthe initial
conceptualframework:MSMEs,cluster,workforce&informalisationandCSR.
TheSecondCycleofcodingworkedwiththeresultingFirstCyclecodesandhadapurposetosummarize
themintoasmallernumberofthemesandcategories,alsocalledpatterncodes(Ibid).Inthisphase,Imainly
tried to find the emergent themes that haveoccurred from thedata,which resulted in cluster,MSMEs,
workforceandCSR,anddevelopedahierarchymapshowingtheinterconnectionsbetweenthecodesfound
14
intheFirstCyclecoding.Oneexampleofthefinaloutcomesoftheprocessisthefollowingtree-mapthat
showthehierarchyofthepatternsinregardoftheclustertheme(Appendix5).
1.4Qualityassessmentapproach:ValidityandReliability
Projectvalidityandreliabilityareimportantcriterionforjudgingthequalityofaresearchdesignand,more
generally, of any empirical social research. Four tests and specific tactics for each standard have been
suggestedbyYin(2014),whendoingacasestudyresearch,andsupervisedbymeduringtheallresearch
process inorderto increasethecredibilityofthestudy.Thesefourtestsare:construct, internal,external
validityandreliability.
Firstly,constructvalidityensuresthatcorrectoperationalmeasureshavebeenidentifiedandchosenforthe
concepts being studied (Ibid). Tomeet the test of construct validity, in this case study research, I used
multiple sources of evidence during data collection. Consequently, this encouraged the development of
converging lines of inquiry (data triangulation) and essentially providedmultiplemeasures, of the same
phenomenonmaking the findingsandconclusionmoreconvincingandaccurate. Secondly, regarding the
externalvalidityortheextenttowhichthestudy’sresultscanbegeneralizedbeyondtheparticularstudy
andtheresearchmethodused,Ididnotmaketheflawtoconsiderstatisticalgeneralizationasthewayto
meet this criterion. Rather than thinking aboutmy case as a sample, I shed some empirical light to the
theoreticalpropositionschosenintotheinitialdesignofthestudy/initialconceptualframework(analytical
generalization).Inthisway,Igeneralizedfromthespecificstudytoatheory,helpinginthedevelopment,
definitionandtestingofthetheoryof´CSRimplementationandperceptioninclusteredMSMEsintheIndian
context´.Thirdly,theconceptofreliabilitydemonstrateswhetherastudyanditsoperationscanbereplicated
withthesameresults.Toovercomethis,acasestudydatabasewasdeveloped.Thisdatabaseconsistsofan
orderlycompilationofallthedataanalysedfortheresearch,whichincludesextensivefieldnotes,interviews
recordingsandtranscriptsandexternaldocumentanalysis.IhavedecidedtoencloseintheUSB(Appendix
6)theelectronicfoldercontainingallthematerialexamined, inordertoallowthereadertoexaminethe
data researched themselves. Lastly, concerning internal validity,which isdefinedas thedegree towhich
causalconclusionscanbederivedfromastudy,thistestwasinapplicablebecausemainly/onlyrelatedfor
explanatoryinvestigations,notdescriptiveones.
15
1.5Ethicalconcerns
Ethicsisanimportantelementofresearchandshouldnotbeoverestimated.Indeed,itismyresponsibility,
astheresearcherofthisthesis,tosafeguardtherespondentsandavoidanythingthatwillcreateddoubtand
concern.Iinformedtheparticipantsinregardtothenatureofthestudyandassuredprivacyandanonymity.
Thefirsttwoaspect,wereensuredthroughtheprovisionoftheparticipantinformationsheet(Appendix4),
apagedescribingindetailboththetopicandpurposeoftheresearchandassessingtheparticipantsabout
their rights (for instance, theirpossibility towithdraw from the studywhenever theywant).Moreover, I
always asked permission regarding both the recording of the interviews, the visit of the units and the
possibilitytotakepictures.Thiswasdoneinordertorespectthewishesoftheparticipants(Lichtman,2014).
Finally,regardingtheanonymityandprivacyoftheparticipants,theresearcherorallyagreedwiththefirms
thattheywillnotbementionedinmyresearchinordertoensureprivacyandthefreedomtospeakfreely.
1.6Limitationsencounteredduringthefieldwork
Assustainedbysocial constructivists, the reality is collectivelyconstructedand, in thespecific, collective
entities like language, discourses or objectified institutional structures, are the contexts in which the
individualsrelateandinteract(Berger&Luckmann,1966ascitedinJustesen&Mik-Meyer,2012).Forthis
reason,thespecificlocallanguage(inthiscasePunjabi)hasacrucialroleincreatingrealityandknowledge.
Abiglimitationofthisthesisconsistsinthelanguagebarrierfacedbyme.Eveniftheinterviewsweremainly
taken in English, the level of proficiencyof the respondentswas not ‘sufficient’ and someparts of their
answersweredoneinHindi.Forthisreason,theuseofalocaltranslatorwasnecessaryinordertograbthe
slightest culturalmeaning and values ladenon thewords,which areof crucial importance froma social
constructivismpointofview.However,eventhepresenceofaninterpretercannotbecomparableorhaving
thesameresultsofbeingfluentinthelocallanguage.Anotherlimitationencounteredandalwaysrelatedto
thetranslationprocessconsistedintheincompletenessofthetranslationreceived.Ofcourse,Iperceived
theinterpreterwasclearlygivingmeonlyapartialandsummarizingtranslationofwhattheparticipantswere
actuallysaying.Itseemedimportantformetoacknowledgetheseissuesencountered,becausetheycould
providemisunderstandingsorincompletenessinthedatacollected.
1.7Chapters´overview
Theresearch isstructuredas follows.The introductionhasbothgivenadescriptionofthefield,research
questionandreasonsthatguidethisthesis.Italsoexplainedthemethodologyusedinordertoanswerthe
researchquestionposedandtomeettheobjectivesfixed.Followingthisoverview,adetaileddescriptionof
16
the literature and the debates around the main theoretical variables related to the research will be
presented.Attheendofthesecondchaptertheinitialconceptualframeworkwillbeillustratedhighlighting
the relations, between the theoretical concepts previously introduced. Before the main analysis, the
Ludhiana’s knitwear cluster case will be presented, describing in detail both the composition and the
horizontalandverticaltiesthatareexisting.Inchapter4theanalysiswillbedisclosed,combiningthedata
obtainedfromtheinterviewsandsecondarysourceswiththetheoriesoutlinedintheearlierchapter.Finally,
inchapter5,thethesiswillbeconcludedwiththerestatementoftheresearchquestion,theoutlineofthe
mainfindingsandoftheresearchandpolicyimplications.
2.LiteratureReview ThischapterwillexploretheexistingliteratureregardingthetopicsofclusterandMSMEs,informalisationof
labourandCorporateSocialResponsibility(CSR).Firstly,Iwillinvestigatetheexistingtheoreticalliterature
andthemainempiricalstudiesdoneonthedifferenttopics,then,intheconclusionpartaninitialconceptual
framework will be outlined stressing the interrelations between the different theoretical concepts
introduced. The purpose of this chapter will provide the reader with a broad overview of the existing
researchesonthemainvariablesrelatedtothisthesisandthemaingapsstillpresent.
2.1Clusters
2.1.1Definitionsandcharacteristicsofclusters
Clustershavelongbeenpartoftheeconomiclandscapeandtheconceptofclusteringcanbetracedbackin
Marshall’searlyworkonagglomerationeconomies(1920).Marshall(Ibid),firstintroducedtheconceptof
industrialdistrictdefiningitasa“concentrationoflargenumbersofsmallbusinessesofasimilarkindinthe
samelocality”.Throughthegeographicalproximity,firms,usuallyengagedinthesamefield,areinaposition
toshareknowledge,technology,markets,labourandinfrastructure,whichwouldnotbepossibleifthefirms
wereoperating individually. Theseare localizedexternal economies of scaleand scopeobtained through
cooperationthatlowerthecostsforclusteredunits.Longafterthiscontribution,theItalianscholarGiacomo
Beccatini (1979 inGiuliani,2005)comparedandstressedthesimilaritiesbetweentheproducingareasof
GreatBritaindescribedbyMarshallandcertainzonesofItaly,referringtoMarshall’sindustrialdistrictasa
‘localizedsocialandproductivethickening’.Theindustrialdistrictmodel,wasthenproposedasanalternative
tothelargeFordistfirm,assigninghissuccesstoseveralinterconnectedmeso-levelfactors,suchastheco-
17
existenceofcompetitiveandcooperativebehaviours,ahighdegreeofverticaldivisionof labourandthe
flexibleuseofskilledworkers(Giuliani,2005).
The industrial districtmodel introducedbyMarshall, represents thehistorical conceptualpredecessorof
mostclusterstudies.Muchafter,aseriesoftheoreticalandempiricalstudieswereproduced,bothinthe
developed and developingworlds. Among themost relevant there is Porter (1998),who introduced the
importanceofclustersforcompetitiveness.Indeed,hearguedthatdespitemoreopenglobalmarketsand
faster transportation and communication, location remains fundamental to competition, even if its
traditional role differs from the past. In his work, he defined clusters as “geographic concentrations of
interconnectedcompanies,specializedsuppliers,serviceproviders,firmsinrelatedindustriesandassociated
institutionsinparticularfieldsthatcompetebutalsocooperate”(Ibid).Itappearsclear,thatafundamental
conditionfortheexistenceofaclusteristhepresenceoflinkages,notonlybetweenthefirmsbutalso;and
more importantly, between companies and institutions. These close linkages, particularly influence
productivityandespeciallyproductivitygrowthand,asstatedbyPorter,“contributeimportantlynotonlyto
efficiency but to the rate of improvement and innovation” (Ibid). In thisway, clustering of firms has the
potential topromotecompetition inthreeways:by increasingtheproductivityofthefirmsbasedonthe
area, by stimulating the formation of new business in the field and finally, by enhancing innovation. It
represents a robust (meso) organizational form, that brings advantages like efficiency, effectiveness and
flexibilitytothecompaniesbeenpartofit(Ibid).AccordingtoPorter,whileprimaryimportanceisgivento
thepresenceof close linkages, looser consideration is attributed to the social and cultural aspects. Even
though,hementionedthatthepresenceof“repeated,personalrelationshipsandcommunitytiesfostering
trustfacilitatetheinformationflowwithinclusters”(Ibid).
WhileresearcherslikeMarshallandPorter,havebeenfocusingonlyonclustersindevelopedcountries,a
lineofresearchonindustrialclustersinemergingeconomiestookoffattheendoftheEightiesbutfroma
differenttrajectory:itgrewoutofthesmall-scaleindustrydebate(Schmitz&Nadvi,1999;Lund-Thomsen&
PIllay,2012).Inthecontextofdevelopingcountries,industrialclusterstendtobedominatedbymicro,small
andmedium-sized enterprises (Sachdeva & Panfil, 2008), that see clustering as a strategy to overcome
growthconstraints.Therefore,inordertoanalysetheCSRengagementofMSMEsintheLudhianaclusterin
India, it would seem more consistent to apply developing country literature to my research. A central
assumption in the literature on rising power clusters has been thatMSMEsmay benefit from collective
efficiency (Nadvi,2015).SchmitzandNadvi(1999),defineditas“thecompetitiveadvantagederivedfrom
localexternaleconomiesandjointaction”.Thismodelwasbasedontheideathatstaticefficiencygainswere
18
notsufficienttoallowfirmsinrisingeconomiestocompeteonahighroadofdevelopment.Instead,thiswas
possibleonlywhenfirmsimplementedjointactionsandthereforebothhorizontalandverticalcooperative
attitudeswiththeothercompaniesandwiththelocalinstitutionalbodies(Pykeetal.,1990inGiuliani,2005).
MSMEs,areusuallydescribeddisadvantagedincomparisonwithlargerenterprises.Forinstance,theymay
lackofenoughfinancialandhumanresourcesorsufficienteconomiesofscaleinordertocompeteinnational
orinternationalmarkets(Lund-Thomsen&Pillay,2012).However,throughtheagglomerationinindustrial
clusters,MSMEscanfacetheabove-mentionedchallenges.Indeed,thegeographicalproximitymayenhance
the flow of knowledge between these enterprises, thus facilitating innovation and the sharing of ideas.
Moreover,MSMEsmayalsobenefit inapassivewaythroughtheaccessto important inputs, liketrained
workers,serviceprovidersandsuppliers, reducingthetransactioncostsat the individual firm level (Ibid).
Finally, MSMEs can actively cooperate through business associations or public-private partnerships and
engage incollectiveactions inordertosolve issuesthatthreatenthesurvivalofclusteredfirms.This last
aspect is particularly relevant for small andmedium sized´ clusters,where the collectivebodies need to
assumescale-sensitivefunctions(Porter,1998).Localcollaborationisnotanobviousoutcomeofclustering
anditneedsanactiveintentionfromthelocalactors(Nadvi,2015).Moreover,inordertoensurethesuccess
ofthesecollectiveactions,effectiveformsoflocalgovernance(e.g.sharednorms,localgovernmentagencies
etc.) and strong institutional support are required, if not competition can undermine any co-operative
actions.SchmitzandNadvi’s(1999),simplisticdefinitionofclusteras“sectorialandspatialconcentrationof
firms”seemstoperfectlyfittheanalysisofclustersinadevelopingcountrycontext.Thisdefinitiondoesnot
imply, that in the global south a cluster is nothing more than geographic proximity and productive
specialization, but that which is present (like social linkages or institution bodies) is not subsumed by
definitionandit isamatterforempiricalresearch.Forinstance,Porter’s(1998)moreclassicdefinitionof
clusters,alreadygivenbefore,seemsunsuitableforthisresearchbecauseinmostrisingpowerclustersthe
relationshipsbetween firms, arenot as formal and thepresenceof advanced structures, like specialized
providers,seemtoberare.
2.1.2Classificationsofclusters
Clustersarefarfromhomogenousentities(Nadvi,2015)anddifferentclassificationsexist.Forinstance,in
the contextofdeveloping countries, Sandee (1995 in Lund-Thomsenet al, 2016a)distinguishesbetween
‘dormant clusters’,which tend to servepoor consumers andproduce low-income formsorwork, versus
‘dominant clusters’, characterized by firms closely networked and competing in globalmarkets. Another
classification,basedonthedevelopmentstagereached,istheonegivenbySchmitzandNadvi(1999),which
insteadspeaksabout‘incipient’and‘matureclusters’.Theformer,describesclustersthatareinanearlystage
19
ofindustrialdevelopment,locatedinlow-incomeareasandproducingwiththeuseofsimpletechnologies
andlabourskills.Thisnotion,isalsosimilartotheonegivenbyAltenburgandMeyer-Stamer(1999inNadvi,
2015)of‘survivalclusters’.Incontrasttotheformerones,thematureclustersarerelativelymoreadvanced
intheproductiontechnologiesusedandoftencompetinginglobalmarkets.Forthisreason,theyarealso
characterizedbydifferentpatternsofupgrading respects the incipientonesandbyhigher levelsof joint
action(Nadvi,2015).However,evidencefromclusterstudies(Sachdeva&Panfil,2008)suggeststhateven
inmatureclusters jointaction is far fromuniform(Nadvi,2015).Adifferentkindof taxonomy is theone
suggestedbyParto(2008),whichdistinguishesbetweentwomaintypologiesofclusters:‘verticalintegrated’
and‘horizontalintegrated.’Theformerconsistsofenterpriseslinkedthroughbuyer-sellerrelationswhilethe
latteraremadeoffirmsthatsharethesamemarketandusesimilartechnology, labourforceandinputs.
Anotherinterestingclassificationandpertinentforthisresearch,istheoneprovidedbyGiuliani(2016),which
distinguishes clusters according to their firms’ human rights engagement and explicit CSR adoption. She
stylizedthreetypesofclusters:
1. ‘Low-roadclusters’whoseenterprisesneitherimplementanykindorCSRpracticesnorrespectthe
negativedutynottoinfringeothers’humanrights;
2. ‘Window-dressingclusters’whosefirms’extensiveadoptionofCSRpoliciesismerelysymbolicwhile
regularlyviolatinghumanrightsand
3. ‘Rights-oriented clusters’ which instead are formed by firms respectful of human rights whilst
conductingbusinessoperationsbutdoor donot adopt explicit CSRpolicies (Ibid). In this group
clusters,whosefirmshavenotundertakenexplicitCSRpractices(silentCSR)butactuallyrespectthe
locallaborenvironmentandtheirrights,arealsoincluded.
Finally,clustersarenotonlyinhomogeneousentitiesbutalso‘farfromstaticagglomeration’(Nadvi,2015)
andtheytendtoevolveanddevelopovertimeasfirmstrytoupgrade.Becauseoftheirchangingnature,
theyarealsodynamicwithdifferentwinnersandloserswithinthecluster.AsclearedbyGiuliani(2005),the
dynamicgrowthofaclusterdependsonitsabsorptivecapacity,whichisdefinedas“thecapacityofacluster
toabsorb,diffuseandcreativelyexploitextra-clusterknowledge”.Itdependsboth,ontheknowledgebases
ofitsmemberfirmsandtheintraandextra-clusterknowledgesystem(Ibid).Anothertaxonomy,basedon
the dynamismof a cluster,whichmeans its capacity to growover time, is presented inGiuliani’s paper
“ClusterAbsorptiveCapacity:Whydosomeclusters forgeaheadandothers lagbehind?” (2005),stylizing
threetypologiesofclusters:“static”,“dynamic”and“leadingclusters”.Theformer,ischaracterizedbyno
relevant growthover timewhereasdynamic clusters are theonedistinguishedby a rapidand sustained
growthachievedrecently.Finally,leadingclustershaveconsolidatedgrowthtrajectory.Basedonthecluster
20
absorptivecapacityandtheirdynamism,Giuliani(Ibid)developedaframeworkexplainingthedifferentialsin
clusters’growtharoundtheworld.
2.1.3Relationsbetweenindustrialclusters,economicandsocialupgrading
Industrialclusters,haveoftenbeenportrayedintheinternationalliteraturereviewasabreedinggroundof
local economic development and innovation especially in the global south. Theorigins of thedebateon
industrialclustersandCSRindevelopingcountries,beganwiththisfocusbackintheearly1990s,thanksto
theresearchesofNadviandSchmitz(1994,1999).Theverdictappearedtobe,thatindustrialclusterscould
playanimportantrole,infosteringindustrialandeconomicupgradingespeciallyinthepoorregions,thanks
to the clustering’s ability to open opportunities for economies of scale and scope and by promoting
specializationthrough“small riskablesteps” (Schmitz&Nadvi,1999).Finally, italso facilitates local joint
actionstoaddresscommonproblems(Gereffi&Lee,2016).However,asarguedbyParto(2008),whethera
cluster contribute to local economic growth depends on different factors; like its sectorial and physical
location, the institutional landscapeand theexternalenvironment.Therefore, it isessential to study the
institutionalcontextthroughwhichtheclusterisgovernedfromwithinandwithout;withoutexcludingthe
lessinformalinstitutions,e.g.recognizablesocialhabits,individualandcollectivementalmodelsetc.Recent
contributions,havestressedthatmoreattentionshouldbepaidtotheexternallinkagesandtheroleplayed
bythekeyexternalactors(Giulianietal,2005).Inparticular,Giuliani,PietrobelliandRabellotti(Ibid),intheir
studyofLatinAmericanSMEs,discoveredthatfirms’upgrading,isaffectedbyfirm-specificeffortsandbythe
externalenvironment,which ischaracterizedbytheotherenterprises in theclusterandthe localand/or
globalvaluechainsinwhichtheyoperate.Specificallyforthem,theexternalenvironmentisshapedbythree
characteristics:thecollectiveefficiencyofthecluster,thesectorialspecificitiesinupgradingandinnovation
andthepatternofgovernanceofthevaluechainsinwhichtheyparticipate.Intheirpaper“Economicand
SocialUpgradinginGVCsandIndustrialClusters:Whygovernancematters”,GereffiandLee(2016)mention
thatakeydeterminantforeconomicandsocialupgradinginindustrialdistricts,isthegovernancestructure
present. This last aspect is complex and it involves both public, private and ‘social’ actors as well as
internationalandnationalformsofregulation.Usuallyresearcherswhostudythisphenomenontendtofocus
ondifferentlevelsofanalysis(localorglobalrespectively)andamoreintegratedapproachshouldbeused,
encompassing both vertical (GVC) and horizontal (cluster) linkages. Sometimes, this can be in conflict,
creatingvariouskindsoftensionsattheclusterfirmslevel(Ibid).
Insomepolicycircles,thereisageneralassumptionoftheexistenceofanautomaticcausallinkbetween
economicgrowth;broughtonbythepresenceofindustrialdistrictsandsocialupgrading(Perryetal.,2006
21
in Pyke & Lund-Thomsen,2015) which is referred as “the process of improvement in the rights and
entitlementsofworkers,associalactors,andtheenfacementofthequalityoftheiremployment”(Barrientos
etal,2011inGereffi&Lee,2016).Specifically,socialupgradingnotonly involvesaccesstobetterworks,
which can be a consequence of economic upgrading, but it also includes improvingworking conditions,
protectionandrights,therebyenhancingtheoverallwell-beingofworkersandtheircommunities(Ibid).Even
ifsomeempiricalstudiessupportthisrelation,liketheTorreonbluejeansclusterinMexico,otherevidence
pointsoutthatsignificantproblemsofthepoorconditionsofworkers,insecurityandlowpaycanarisein
smallandmediumsizedclusters(Lund-Thomsenetal,2016b).Nevertheless,labourstrategies,inresponse
tocommercialandcompetitivepressures,canvarybetweena“lowroad”and“highroad”path,depending
onthetypeofeconomicupgradingpursued(Gereffi&Lee,2016;DeOliveira&Fortes,2014).Forinstance,
ifeconomicgrowthreliesmainlyoncuttingof labourcosts,theworkscreatedarelowpaidandinformal,
bringing social downgrading within the community. Pyke and Lund-Thomsen (2015), argued that social
conditionswithinclusters,are influencedbydifferentfactors likestatemacropoliciesandregulations,as
wellasbydynamicprocessesofagencyamongkeyclustergovernanceactorse.g.employers,workersand
community organizations. As stated before, also Gereffi and Lee (2016) stressed the importance of
governance(horizontalandvertical,aswellasprivate,publicand‘social’)inaffectingeconomicandsocial
upgrading.Specifically,theyhighlightedsixpotentialpathwaysofsocialupgradinginindustrialclustersand
GVCsdependingonthekeyactorsinvolvedandthemainmechanismsfollowed.However,theysuggested
thatinordertoadvancetoamorecomprehensiveandsustainableformofeconomicandsocialgrowth,the
presence of a hybrid system of regulation, also called “synergistic governance”, is necessary,where the
differenttypesofgovernancecomplementinsteadofdisplaceeachother.
Theupshotisthatthereisnoautomaticcausallinkbetweeneconomicgrowthandimprovementinsocial
conditionsindevelopingcountryindustrialclusters(Barrientosetal,2011inPyke&Lund-Thomsen,2015;
Gereffi and Lee, 2016). Indeed, as concluded by Pyke and Lund-Thomsen (2015), economic upgrading is
conducivetoimprovingsocialconditionsindevelopingcountry’sclusters,however,social improvementis
notanecessaryconsequencebutamorecomplexfunctiondependingon“thelocalcontextinwhichGVCs
touchdownandonhowsmallclusteredfirmsareinsertedintothesechains”(DeOliveira&Fortes,2014).
2.1.4IndustrialclustersandCSR
Withtheturnofthemillennium,theacademicdebateonindustrialclustersindevelopingcountriesdidnot
movea lot fromthetraditional focusofenhancing localeconomicdevelopment (Lund-Thomsen&Pillay,
2012).Innovationonlycamefrommorepolicy-orientedworks,mainlydrivenbyUNIDO,whichtookplaceon
22
industrial clusters and poverty reduction (Ibid). Only from 2005, a number of studies started to explore
whetherclustershavearoleinpromotingCSRamongsmallandmediumsizedfirms(Accountability,2006in
Lund-Thomsen&Pillay,2012).Itappearedthatbothglobalandlocalfactorsinfluencedthediscussion(Lund-
Thomsen&Pillay,2012);ononeside,globalbuyersincreasinglyrequiredtheirdevelopingcountrysuppliers
theso-called“codesofconduct”tomaintaintheirlicensetooperateintheglobalmarkets.Atthesametime,
local factors like, the thickening of environmental and social regulations, media reports, protests and
activisms,increasedtheawarenessofsocialresponsiblepracticesandputpressureonanumberofthird-
worldclusters(Ibid).Additionally,asarguedbyKnorringaandNadvi(2016),greaterimportancehastobe
givenalsototheconceptoflocalandnational‘socialcontract’withinwhicheachindividualclusterissituated.
With the term social contract it ismeant “the formal and informal institutional arrangements, rules and
norms inasociety,andrefersamongothers tohistoricallyandculturally shapedexpectationsconcerning
acceptable social and environmental behaviour” (Ibid). Particularly relevant for the discussion, is the
theoreticalmodelofCSRadoptionandnon-adoption, indevelopingcountryclusters,developedbyLund-
Thomsenetal (2016b).Afteranalysingtheprevious literatureonCSRand industrialclusters, theauthors
providedanoverviewofthefactorsthatenhancedorchallengedtheinstitutionalizationofCSRnormsinsuch
districts.Twomainfactorscameout:theglobalandlocalvaluechainsinwhichtheclustersparticipateand
thenationalinstitutionalcontext,wherethedistrictsareembedded.Regardingthefirstaspect,itisgenerally
assumed that the incorporation of clusters in GVCs imply their social and environmental responsibility.
However,thisalsodependsonthevisibilityofthevaluechainandonthenatureofthelinksamongclusters
andinternationalbuyers(Ibid).Forinstance,participationinregionalornationalvaluechainsitislikelyto
indicatesocialandenvironmentalirresponsibility.Regardingthesecondfactor,thepresenceofstrongformal
rulesandregulations,aswellasofinformalsocietalnorms,usuallyfacilitatetheadoptionofCSRnorms.This
isparticularlytrueiftheyhavebeennegotiatedandiftheyreflecttheconsensusofgovernment,civilsociety
and firms at the national context (Ibid).Moreover, the implementation of independent CSRmonitoring
systems, done by international or local non-governmental organizations, trade unions ormedia outlets,
usuallyimprovethechancesofCSR’sadoption.Thepresenceofstrongbusinessassociationsthatpromote
social responsible behaviours, enhance the institutionalization of CSR practices as well as the spread of
normative institutions, likebusiness schools,universitiesorother support institutions. Finally, settings in
whichregularandorganizedformsofdialoguebetweenunitsandtheexternalstakeholdersexists,positively
influenceacompany’sbehaviour.TheresultsfromtheoveralldebateonCSRandindustrialclusters,show
the clustered firm’smeeting of environmental and social standards as a complex function of both local
attitudes,institutionsandagenciesaswellasthepressuresonCSRissuesthatpermeatedownthe(global
andregional)valuechains.
23
LiteratureonindustrialclustersandCSRindevelopingcountrieshasbeendevelopedmainlyonthreemajor
themes,respectively;moregenerally,workconditionsmoregenerallyandpovertyreduction(Lund-Thomsen
etal,2016b). StudiesonCSRandenvironmentalmanagement,mostly investigate the roleof clusters, to
addressenvironmentalpollutionproblemsandtheemerginganswerisindicatingthatclusteredMSMEshave
mainlynegativeenvironmentalconsequences,especiallyinlabour-intensiveindustrieslikethetextilesector
(Blackman, 2006 in Ibid).Anotherdebate regards thepreferenceof pre-versus end-of-pipe treatmentof
environmental issues deriving from clustered MSMEs. An emerging consensus, appeared to show the
introductionofcleanertechnologiesandmachineries,whichispreferablebutnotsufficient.Suchsolutions
shouldbecombinedwithend-of-pipetreatmentssuchas,forinstance,effluenttreatmentplantsforleather
tanneriesandtextileunits(Lund-Thomsen,2009inIbid).However,end-of-pipetreatmentsarenotwithout
challenges.Theysometimesnotonlyunderperform,becauseofthe lackofpropertechnicalcapacity,but
also suffer of free-rider problems (Lund-Thomsen, 2009 in Lund-Thomsen et al, 2016b). Beyond
environmentalmanagement,somestudiesexploretheuseofCSRactivitiestoimproveworkingconditions
indevelopingcountryclusters.Majorityof this literature, focusesonchild labourconcernsbutmainly in
export-orientedclusters(Ibid).Generally,thesolutionadvancedinordertoimproveworkingconditionsin
developingcountryclusters, relyontheethicalguidelinesorcorporate“codesofconduct”,developedby
globalbuyersandwhichdirectlyaffectworkers.However,thissolutionisseeninascepticalwayfortwomain
reasons.Firstly,thesecodesareelaboratedasfactory-basedregulations,soonlyprotectingworkersboth
formal and enjoying a permanent status, which counts for only a small portion in developing country
contexts.Secondly,theWesternguidelinesareelaboratedwithlittleornoconsultancyoflocalproducers
andworkers,ignoringsotheirneedsandwaysofdoingthings.Finally,regardingthethirdthematiconwhich
theliteratureonindustrialclustersandCSRindevelopingcountrieshasbeendeveloped,afewauthorshave
investigatedtheroleofCSRinreducingpovertyindevelopingcountryclusters.TheonlyexceptionisNadvi
andBarrientos(2004)(Ibid).However,thisnewliteraturesuffersfromtwomainpoints;thereisaneedofan
in-depth investigation of what ‘poverty’ and ‘development’ means and, the previous literature on the
relationsbetweenbusiness and local social upgrading/poverty reduction shouldbe incorporated (Prieto-
Carrónetal,2006).
To sumup, cluster literature provides important tools to understand the actual functioning of it and to
examineintern-firmrelations.Nevertheless,untilnowlittleworkhasbeendonetoinvestigatethelinkages
between industrial clusters and CSR in developing country contexts (Lund-Thomsen & Pillay, 2012).
Moreover,asstatedbyLund-Thomsen,LindgreenandVanhammeintheir“SpecialIssueonIndustrialClusters
24
and CSR in Developing Countries” (2016a), CSR and developing country cluster literature is excessively
focusedonexport-orientedfirmsandclusters,ignoringtheexistingtiesofindustrialdistrictswithlocalvalue
chains. Hence, furtherwork should be done in order to understand the role that clustersmight play in
fostering economic, socially and environmentally responsible business actions in rising countries. The
purposeofthisresearchistofillinpartthisgapprovidinganempiricalstudyfromanIndianmanufacturing
cluster.
2.2MicroSmallMediumEnterprises(MSMEs)
2.2.1DefinitionsandcharacteristicsofMSMEs
ThereisnouniversaldefinitionofMSMEs,whichiswidelyaccepted,andusuallyitvariesincontextacross
countries,industries,agenciesandscholars(Inyang,2013).MSMEscanbedefinedstatistically,onthebasis
ofquantitativecriteria,andthisisoftenbasedontwomainfactorsacceptedattheinternationallevel:the
numberofemployeesengagedand/orthevalueofthetotalnetassetsoftheorganization(Ibid).Forinstance,
withintheEuropeUnion,anenterpriseiscategorizedasaSMEif“itemploysfewerthan250personsand
which has an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not
exceedingEUR43million”(EURecommendation2003/361).Theceilingsbetweenthedifferentcategories
areillustratedinthetablebelow.
Companycategory StaffHeadcount Turnover or BalanceSheetTotal
Microsized <10 ≤€50mil ≤€43mil
Small <50 ≤€10mil ≤€10mil
Medium <250 ≤€2mil ≤€2mil
Table3:FactorsdeterminingSMEsinEU;Source:Growth,2016
TheforegoingdefinitionshowsthatMSMEsencompassesaveryheterogeneousrangeofenterprisesfrom
establishedtraditionalfamilybusinesseswithover200workerstosurvivalistself-employedpeopleworking
ininformalmicrofirms.Forthisreason,thedefinitionresults‘narrow’andnotapplicableacrosscountries,
sincewhatislabelledSMEinEurope,maybeconsideredalargefirmelsewhere,forexampleinadeveloping
country. In the Indian context, MSMEs are defined by their investment in plant and machinery for
manufacturingenterprises;andonequipmentforfirmsrenderingservices(MSMEDevelopmentAct,2006).
AccordingtotheMSMEDevelopmentAct(2006),amicroenterpriseiswhentheinvestmentinmachinery
25
andplantdoesnotexceedtwenty-fivelakhrupees,whileinasmallonetheinvestmentisincludedbetween
twenty-fivelakhrupeesandfivecrores.Incontrast,inmediumenterprises,theinvestmentismorethanfive
crorerupeesbutdoesnotexceedthetencrores.Thisclassificationregardsonlymanufacturingenterprises.
Evenifsmallandmediumenterprisesaredefinedinseveralways,theircharacteristicsaresimilar.Beyond
thequantitativecriteria,whichvarybetweendifferentcontexts,therearealsoqualitative factorsusedin
definingMSMEsthatdonotchangebetweencountriesorindustriesand,forthisreason,moreappropriate
toadopt.Someexamplesare,servinglimitedcustomerbases,personalmanagementbytheowner,lackofa
formal bureaucratic system and so forth. Spence (1999) notes that MSMEs are companies that are
characterized by a little distinction between the role of management and ownership; mainly oriented
towardssolvingday-to-dayproblemsanddominatedbyinformalrelationsandcommunicationstyle.Enderle
(2004),addsthat,theyarealsocharacterizedbyahighdegreeofinterrelationwiththecommunityandthe
environmentwhich are subject to themarket dynamics and are determined by the large enterprises. It
follows thatMSMEs can be distinguished from large companies by characteristics such as; independent,
owner-managed,multitasking,firefighting,cashlimitedand informality.SoMSMEsarenotsimplysmaller
versionsoftraditionallargecompanies,butdetainmanydifferencesregardingownershipstyle,availability
ofresources,organizationalstructureandmanagementsystem.
Asstatedinthepreviouschapter,MSMEshaveoftenbeendescribedasdisadvantaged,comparedwithlarger
firms,mainlybecauseoftheir limitedfinancialandmanagerial resources,personnelandcapabilities.This
determines that their traditional disadvantages are due to their size limitation. In general,MSMEs have
overcomethebarriersduetotheirlimitsinresourcesthankstotheirastuteuseofalliances(Narula,2004),
andtheirco-locationinindustrialclusters.ItfollowsthatitistheisolationofMSMEsandnottheirsizethat
mayactuallyactasanobstacle intermsofcompetition(Gulati,2012).AnotherlimitationofMSMEs,that
especiallyconcernsthesmallerones, is the lackofaprofessionalmanagementsystemandawidespread
managerialinexperience(İPLİK&KILIÇ,2009).Thisisduemainlytostaffinglimitations(Ibid),deficiencyof
specialized staff and the little distinction between the role of management and ownership. However,
comparedtomultinationalcompanies(MNCs),smallerfirmsareunfetteredbybureaucracyandhierarchical
thinking(Ibid),enablingthemtobemoreflexibleandtohaveaquickerresponsetothechangesinmarket
demands.FlexibilityisarguedtobeoneofthemajorcompetitiveadvantagesofMSMEsbyNarula(2004).
26
2.2.2MSMEsandCSR
Smallandmediumenterprisesareconsideredthebackboneofalleconomiesandtheirpredominanceisseen
inbothdevelopedandemergingeconomies.Theyconstitutemorethanthe90%oftheworldwidebusinesses
andaccountbetween50to60%ofallemployment(Vives,2006).Moreover,Luetkenhorst(2003),notesthat
theyform90%oftheenterprisesandaccountforatleasthalfofemploymentonlyindevelopingcountries,
whichisalsoduetotheirlabour-intensiveproductionprocesses.ThismakesMSMEsasignificantcontributor
tonationaleconomies,notonlyintermsoftheemploymentgenerationbutalsodevelopmentandgrowth
impacts.ForthesereasonsMSMEsengagementinCSRactivitiesiscrucial.ThesameLuetkenhorst(2004),
arguesthatMSMEsarecriticalinsupportingeconomicgrowthandlivelihoodsinrisingeconomiesbecause
they,
• Are involved in more labour-intensive production processes than large firms, thus boosting
employmentandenhancingtomoreequitabledistributionofincomeinsociety;
• Supportentrepreneurship;
• Providelivelihoodopportunities;
• Encouragethebuildingupofsystematicproductivecapacitiesandthecreationofresilienteconomic
systems.
Alltheseaspectshavebeenbroughttoarecentawakeningofinterestamongscholarsandresearchersinthe
MSMEs-CSRdiscourse,especially in thedevelopingworld. In truth, in thepast, the literaturewasmainly
undertakenontheengagementoflargeenterprisesinCSRactivitiesduetothehigher“CSRprofile”(Inyang,
2013).ThiswasdoneeventhoughtheaggregatecontributionofallMSMEscanbeconsiderableinsizeand
resulting into important contribution to national economies (Ibid). This emerging literature on CSR and
MSMEs has shown that MSMEs are not “little big firms” and thus should not be treated like them.
Undoubtedly,theuniquecharacteristicsofMSMEsmakeitessentialforacademicstostudythisspecialform
ofbusinessorganization,insteadofpresentinggeneralizationsbasedonCSRunderstandinginlargefirms.
Specifically,moreattentionisrequiredtounderstandthespecificcontributionsofMSMEsinrelationtoCSR,
especiallyindevelopingcountries,wherethefirm’sfeaturesandstructureoftendifferfromindustrialized
countries (Jamalietal,2015).For instance, inemergingeconomiessmallandmicro firms tendtoexhibit
orientationtowardsbasicsocialandenvironmentalfunctionsandusuallythisbehaviourisconsideredasa
wayoffilling“governmentgaps”(Visser,2008inDemuijnck&Ngnodjom,2013).Becausebasicneedsare
notcoveredbytheweakandsometimescorruptgovernments,MSMEstakeoverthisresponsibility,willing
tocontributetothedevelopmentoftheircommunity(Demuijnck&Ngnodjom,2013).
27
Todate,thediscourseonCSRandMSMEsindevelopingcountrieshasmainlypointedouttothepositive
affinitiesofSMEstoCSR(Jamalietal,2015).Thisismainlyduetothestrongerpositionwheretheowners
have in their firms and their power to imprint their personal ideologies and views throughout the
organizations(Ibid),whichinturnismirroredintheirimplementedCSRagenda.Thisisalsoshowedbythe
empiricalstudyofVives(2006),onCSRimplementationinLatinAmericanSMEsandbytheUNIDO’sstudy
reportonsevengeographicalclusterinthedevelopingworld(Sachdeva,2008).Theybothfoundoutthat
SMEs’levelofsocialresponsibilitymainlydependsonthepersonalvaluesoftheowner-managerandontheir
closenesswiththeworkforceandlocalcommunity(Vives,2006;Sachdeva&Panfil,2008).MSMEstendto
bestronglyembeddedintheirsocietyandgenerallyclosertotheirworkforcethanbiggerfirms(Jamalietal,
2015). However, despite this characteristic, in the literature of MSMEs and CSR there is an over
representationofmanager’sandowners’perspectivesat theexpenseofemployees (Ibid).Researchalso
points out that MSMEs primarily tend to implement informal CSR practices (Ibid; Vives, 2006; Tran &
Jeppesen,2016),andthisisinturn,wasreflectedinanot-systematictranslationoftheseactionsintothe
firms’corporatestrategies(Vives,2006).Intruth,asarguedbythisauthor(Ibid),SMEsinvolvementinCSRis
usuallynotonlyinformalbutalso“gradual,almostimperceptibleandfocusingononeissueatatime”.For
thisreason,possiblestrategiesforfosteringCSRengagementinMSMEsindevelopingcountriesshouldbeas
simpleaspossibleandnotbe imposed(Ibid).Nevertheless,apartfromthistrendofportrayingapositive
affinitybetweenMSMEsandCSRinthedevelopingworld,thereisanotherrecenttendencyintheliterature
which pictures MSMEs as socially and environmentally risk-prone enterprises (Jamali et al, 2015). For
instance,inthisrespect,someauthorsperceivejointactionsCSRinitiativesasanotherformof“SMEgreen
washing”where firms try toportray themselvesas socially responsibleat theeyesof thepublicwithout
knowingiftheseactivitiesmakeapositivecontributiontothelocalwelfare(Ibid;Lund-Thomsen&Pillay,
2012).Intruth,theexplicitCSRadoptionmaysayverylittleabouttheactualresponsibleconductoffirms,
especiallyinadevelopingworldcontext,andthisisalsodemonstratedbythestudyoftheJalandharcluster
in India by Jamali, Lund-Thomsen and Khara (2015) where they discovered that SMEs were behaving
responsiblyandirresponsiblyconcurrently.Particularly,localclusteredfirmsstaycoupledandlegitimatedat
theeyesoftheexternalstakeholdersthroughjoint-actionCSRinitiativesfocusedonhighvisibleissues;for
example,childlabour,whilenotcomplyingwiththedemandforotherhumanandlabourrightissues(Ibid).
This phenomenon is described as “decoupling” or “loose coupling”. Another recent contribution to this
debateonsmallbusinesses’irresponsibilityinthedevelopingworld,isprovidedbytheempiricalresearchof
Soundararajanetal(2016)ontheTirupurclusterinIndia.Intheirpaper,theresearcherswentastepfurther
explainingtheconditionsunderwhichsmallenterprisesevadethe institutionaldemandcomingfromthe
nationalregulationandtheglobalbuyers.This“evasion”ofinstitutionalworks,takethreemainforms:
28
1. “theundermineofvaluesandassumptions”,wherethemanagersdisruptinstitutionaldemandsby
employingavarietyofpracticesthatweakenthecorevaluesandbeliefsofthoseinstitutions;
2. “the dissociating consequences” under which the owners destroy the institutions through the
creationofanegativeimageoftheassociatedactorsorbyemphasizingtheiractions;andfinally
3. “theenhancementoftheirpoliticalautonomyandstrength”,donethroughavarietyofelimination
strategies(Ibid).
The context then seems to be vital in this debate and particularly how the relevant institutional and
contextual factorsmediate CSR expressions. However, as argued by Jamali et al (2015), in a developing
country context the traditional discussion on how institutional constellations have a deterministic
constraininginfluenceintheadoptionofCSRpracticesbyMSMEsneedtoberevisited.
Giventhisscarcityofresearch,wheremoreovertheexistingworkstendtofocuson‘whatMSMEsshoulddo
regardingsocialresponsibleactivities’,followingonwhatlargefirmsimplement,thispapercontributestofill
thegap,examiningMSMEs‘intheirownright’andpointingtotheinformalapproachesofsmallfirmstoCSR
inadevelopingcontext.Furthermore,theresearchwillmovebeyondafirm-centredanalysisincludingon-
the-groundperspectivesoftradeunions,governmentofficialsetc.,henceunderlyingtheimportanceofhow
the institutional constellations, independently from their formality, affectMSMEs’ engagement in social
responsibleactivities.
2.3Informalisationoflabor
2.3.1Definitionsanddebatesoninformality
Nowadaysarenewedinterestonthe informaleconomyhasappearedworldwide,mainlybecausea large
shareoftheglobaleconomyandlabourforceisinformalandbecauseofitsgrowthinmanycontextsandits
appearanceinnewguises(Chen,2012).However,anearlydiscussionofeconomicinformalitystartedback
in the seventies and eighties, where the debate was mainly focused on definitional and conceptual
controversy.ItisbelievedthattheBritishanthropologistHartcoinedthefirstdefinitionof“informalsector”,
during his study of urban labourmarkets in Ghana (Hart, 1973). Even though, one of themost quoted
definitionsistheonegivenbyCastellsandPortes(1989),whichdescribestheinformaleconomyas“aprocess
ofincome-generationcharacterizedbyonecentralfeature:itisunregulatedbytheinstitutionsofsociety,in
a legaland social environment inwhich similaractivitiesare regulated”. Following the ILO (International
LabourOrganization)terminology,instead,economicinformalitycanbedescribedintermsofthreecentral
concepts:
29
1. The“informalsector”,whichreferstoboththeproductionandemploymentinunregisteredfirms;
2. The“Informalemployment”thatfocusesontheemploymentnotprotectedbyregulations,whether
informalorinformalenterprises,and
3. The“informaleconomy”,whichcoversalltheactivities,firmsandworkersthatoperateoutsidethe
legalregulatoryframeworkofagivensociety(Meagher,2013).
Fromthesedefinitions,itappearsclearthattheinformaleconomyishighlyheterogeneous(Chen,2012).Yes,
referringonlytotheworkersemployedintheinformaleconomy,RalfHussmanns(2004)gaveusauseful
framework,dividingthebroadgroupbetween‘personsemployedintheinformalsector’and‘personsinthe
informal employment outside the informal sector’. The first category comprises all employment in
unregulated firms (including owners, employees, self-employed persons etc.), while the latter includes
employeesinregulatedfirmswithoutsocialprotection,workersinhouseholdsnotcoveredbysocialsecurity
schemesandfamilyworkersinformalenterprises.Inthispaper,thefocuswillbeonthissecondcategoryof
theinformalemployment.
Informalemploymentorinformalisationoflabourhascausedworldwiderenaissancefromthebeginningof
the seventies until the end of the nineties (Mezzadri, 2010). The increase of informalworkwas initially
attributedtotheendof theso-called“goldenera”,characterizedbyastablegrowthtrend(Chen,2012).
However,thisexplanationseemsincompatible,becauseitexcludedthepresenceoftheinformaleconomy
duringthetimeofeconomicgrowthwhenboththeformalandinformalsectorswereexpanding.Recently,
two different approaches for the explanation of the growth of the informal employment have been
developed: the “overregulation-centered theory of informalisation” and the “neoliberalism-centered
approach”.Ononehand,thefirstapproach,mainlyassociatedwiththeworkofthePeruvianeconomistDe
Soto(1989,2000inChen,2012)takesintoconsiderationtheinstitutionalcontextanditisbasedontheidea
thatinformalisationisjustareactiontothe“excessivedistortionscausedbygovernmentinterferenceina
marketeconomy”.Inotherwords,informalisationprocessesreflectrepressedentrepreneurshipsthatcannot
operateintheformalsector,duetothehightransactioncostsnecessary.Thismodel,however,presented
some issues. Indeed, it overlooked some major facts regarding the historical conditions in which
informalisation has taken place. For instance, government regulations in rising economies (specifically
regarding labourmarkets)havebeendiminished inthepasttwodecadeswhile informalisationhasrisen.
Consequently,thereasonstoevadegovernment’s lawsshouldhavealsodeclinedandtheinformalisation
practicesaswell.Ontheotherhand,the“neoliberalism-centeredapproach”connectstheriseofinformality
to the spread of neoliberal political practices in the late seventies, which mainly consist in the
implementation of a free-market capitalism and the reduction of government interventions (Mezzadri,
30
2010).Thesepoliciesbroughttoaslowereconomicgrowth,whichinturnreducedeconomicopportunities,
andthepressuretoofferdecentjobs.Inthisway,theprocessofinformalisationisseenasa“viciouscycle”
(Ibid) where informal work arrangements flourish when workers have few alternative economic
opportunities.Indeed,thespreadofinformalisationwillputdownwagesandworkingconditionsofformal
jobs,lettingbecomewhathadoncebeenformaljobsprogressivelyinformalizedovertime.
Indevelopingcountries,theimportanceofsocialregulationoflabourstartedbeingstudiedintheseventies,
when the informal sector was ‘discovered’ (Mezzadri, 2010). Lately, four dominant schools of thought
developed,underlyingdifferentperspectivesregardingtheinformaleconomyintheglobalsouth.ForHart
(1973),andthe“DualisticSchool”,theinformaleconomyiscomprisedofmarginalactivitieswhicharenot
directlyrelatedtotheformalsectorandwhichprovideincomeforthepoor.Inthiscase“informalityisaby-
product of poverty” (Rauch, 1991 in Chien, 2012) and a consequence of the emargination of developing
countriesfromtheprocessofcapitalisttransformation(Hart,1973).Instead,thesupportersofthe“Legalist
School” see the informal economymade up of ‘brave’ firms who choose to operate in an unregulated
environmenttoavoidcosts,timeandeffortofformalregistration(DeSoto,1989inChen,2012).Thisschool
sustainedthe“overregulation-centeredtheoryofinformalisation”,previouslyexplained,highlightinghowthe
presenceofahostileandbureaucratic legalsystemmainlydirectedto“inward lookingdomesticpolicies”
pushedtheeconomytobecome“underground”(Ibid).Boththeseapproacheswerecriticizedbyauthorslike
Castells and Portes (1989), that see the informal enterprises in developing countries as subordinated
economicunitsandinformalworkersasmeanstoreducelabourcostsoflargecapitalisticfirms.Particularly,
thisviewisalsoknownasthe“StructuralisticSchoolofThought”.Finally,thereisthe“VoluntaristSchool”,
whichwasintroducedquiterecentlythankstoMaloney(2004inChen,2012).Likethe“LegalisticSchool”,he
sees the informaleconomyascomprisedof firmswhovoluntarilychoose tooperate informally, toavoid
taxation,however,hedoesnotblamethelegalsystemandthecumbersomeregistrationprocedures(Ibid).
Instead,hesustainsthatinformalityisanintentionalchoiceoftheenterprisesinordertoenjoythebenefits
related(Ibid).Giventheheterogeneityoftheinformaleconomy,itisimportanttogivemerittoeachofthese
schoolsof thought,becauseeachapproachreflectsonepartof the informaleconomy.For this reason,a
“HolisticModel”ofthecompositionandcausesofinformalitywaspresentedbytheLatinAmericandivision
of theWorld Bank in 2007 (Perry et al., 2007 in Chen, 2012). Particularly regarding the composition of
informality,theauthorsidentified“threepairs”ofeconomicagents,whicharelabour,micro-firmsandfirms
(Ibid).Thelaboureconomicagentiscomprisedofthoseinformalworkers,whocannotaffordtogetaformal
jobbecause‘characterized’byinsufficienthumancapitalandbythosewhoquitaformaljobtoenjoythe
benefitsofinformality,suchasavoidtaxation,makemoremoney,enjoyflexibilityetc.Unregulatedmicro-
31
firms, instead,arecharacterizedbythosesmallenterprisesthatarestymiedbyhighentrybarriersorthe
onesthathavenopotentialtogrowhencenointentiontoengagewiththestate.Instead,informalfirms,are
theenterpriseswhoavoidtaxationorotherregulations,andthefirmsthatregister,butonlypartially,their
incomeoremployees.
2.3.2InformalityandCSR
Informal employment has characterized the era of neo-liberal globalization especially in the developing
countries. Indeed, globalization and the increase in international trade have affected the industrial
trajectories of transition countries producing a crescent disconnection between the management of
productionandtheregimesoflabourcontrol(Mezzadri,2010).Whiletheproductionprocesseshavebeen
projected into the global arena, labour regimes seem to have maintained a strong embeddedness to
regulatory frameworks provided by local social structures and gone through an increasing process of
casualization and informalisation (Ibid;Mezzadri, 2012). This process of informalisation, as described by
Mezzadri(Ibid)involvesa“systematicexploitationofinformalmechanismtocontrolthelabourforce,based
ondeeply-rooted inequalitiesand structuraldifferences, likegender,age,geographicalprovenienceetc.”.
Particularly,thisprocessoflabourinformalisationentailstwomainpaths:the‘informalisationoftheformal’
inside global firms and the incorporation of informal production and labour structures into bigger
manufacturingcircuits,throughdecentralizationprocesses(Mezzadri,2016a).Thefirstdynamic,onwhich
thispaperwillfocustheattention,consitsinthechangeofmorestableandformallabourstructuresinto
precariousworkalternatives.Thesetrendsaffectbothdomesticandexport-orientedmanufacturingsectors
(Ibid) and since the garment industry is a labour-intensive sector, it is highly characterized by this
phenomenon.
ConcernsofCSR,especiallyintheformofcodesofconduct,havebeenelaboratedasapotentialwaytoface
this“racetothebottom”forlabourandsetgivengloballabourstandards.However,asshowedindifferent
studies(Mezzadri,2012;DeNeve,2014),thesecodeshadalimitedimpactonimprovingworkingconditions
or even opposing results to those initially expected. Themain reason for this failure is due to the clash
between“codesofconduct”andtheeffective“codesofpractice”imposedbythefirmsandlocalactors.The
“codesofconduct”,taketheformoffactory-basedregulationsandproposetheimpositionofgloballabour
standardsforworkersintheproductionnodesofGVC.Thesestandardsaresignificantlyshapedbythe“codes
of practice” which are elaborated instead by the companies to guarantee labour control and cost
minimization.AssuggestedbyKabeer(2004)themainpitfallofmanyCSRlabournormsrelyontheirfactory
bias(inMezzadri,2014b).Thesecodesareelaboratedasfactory-basedregulationsandsoexcludeallworkers
32
innon-factoryrealmsofproduction.Theyarealsodevelopedtoonlytargetaworkforceenjoyingpermanent
status.Unfortunately,bothformalandpermanentlabourrelationsarerareinthesettingofsmall-medium
sized clusters in developing countries,where the clearmajority ofworkers are temporary and casual or
occupied not in a factory realm base (Barrientos et al, 2010 inMezzadri, 2014b). Looking at the Indian
garmentindustry,whichisthefocusofthisresearch,itischaracterizedbyhighlevelsoffragmentationand
localizationofproductioninindustrialclusters(Ibid).Thisstructureissimplifiedbythecomparisonproposed
byMezzadri (2014b),whoreimaginestheIndiangarment industryasa ‘giantmall’describedbydifferent
floors, each specialized in selling distinctive garment collections. Particularly, each floor represents a
differentregionalproductioncentrewhichischaracterizednotonlybydistinctiveproductandproduction
specializations but also by different local sweatshop regimes of production (Ibid). Here, local sweatshop
regimesaredefinedas“manifestationsofthe‘sweatshop’[…]entailingaspecificsetoflocallabourrelations
andoutcomes” (Mezzadri,2014a). It thenresults thattheproductionofeachgarmentcommodity isalso
linked to specificworking conditions and rhythms, hosting different classes and genders of labour (Ibid;
Mezzadri,2016b).Forinstance,Mezzadri(2014a;2016b),foundoutthatinNorthernIndia,wherenicheand
women’swearisproduced,factory-labourispredominantlycharacterizedbymalemigrants(mainlyfromUP
and Bihar),while different feminised non-factory realms of production are employed for value-addition.
Instead,acrossSouthern India,garmentcentresaredefinedbystrikingdiversesweatshopsystems.Here,
wheremass-basicitemsareproducedandproduct-cyclesarelessfragmented,thesweatshopdeploysmainly
low-paid female factory workers (Ibid). These different local sweatshop regimes, which are strategically
employedbylocalfirmstominimizelabourcostsandrisks(Ibid),inturnmakethe“universalapproach”to
labourstandardsproposedbyCSRnormsas‘useless’(Mezzadri,2014b).Forthisreason,manyIndianclusters
workas‘informalproductionregimes’,whereinformalityandlabour-intensityaresystematicallyreproduced
forattainingflexibilityadvantagesandasuccessfulincorporationinGVCs(Ibid).Inthissense,poorworking
labourconditionsbecomeanoutcomeimposedbycapitalontolabourandnotsimplyby‘global’ontothe
‘local’ (Mezzadri, 2014a). This aspect is successively highlighted by the recent rise of processes of back
shoring, in India(donebyapowerfulgroupofPan-Indianbuyers/exporters),whichfurtherreinforcesthe
regionalizationofproductionandconsequentlytheresilienceoflocalsweatshopregimes,henceadditionally
institutionalizingthelimitationsofCSRnormsonlabourstandards(Ibid).Forthesereasons,studiesonGVCs
and production networks have stressed the need to develop labour rights agendas which take in
consideration local institutions and specificities; and not simply focusing on one-size-fits-all approach
(Mezzadri,2012;Mezzadri,2014b).
33
Anotheraspect,thatisahurdlefortheimplementationofCSRnormsintheglobalproductioncircuits,isthe
useoflabour-intermediaries,alsocalledbyBarrientos(2008)asthe“Achilleshell”ofCSRnorms(inMezzadri,
2016a). Indeed, the mechanisms through which precarious working conditions are reproduced both in
formalizedandinformalizedsettingsaremainlyduetothepresenceofacategoryofactorscalled“labour
contractors”(Barrientos,2013inIbid).Theseactorsshapethelabourchainsina‘cascadesystem’makingso
more complex adirect control, and implementationofCSRnorms (Ibid).While themethodsof informal
workforcerecruitmentinIndiavaryalot,dependingforinstanceonthegeographicallocationorthesector,
thepresenceof labour intermediariesseemsaconstant (Ibid).Themain reason,why firmsprefer touse
labourcontractors,istheflexibilityadvantagetheyreachthroughintermediationpractices,givingthemthe
ability to thrive on aworkforce that can increase and decrease as required (DeNeve, 2014). Twomain
contracting labour dynamics are seen: while the first is operating in factory settings and involve the
recruitmentofworkersinexchangeofacommission,thesecondistakingplaceoutsidefactoryrealmsof
production and consist in the organization of auxiliary economic activities. Castells and Portes (1989),
respectivelydefinethemas“in-contracting”and“out-contracting”practices. In-contractingpractices,still
mediatetherecruitmentprocessesofanimportantpartofIndianworkforce(Srivastava,2005inMezzadri,
2016a) and in-contractors primarily perform a function of “intermediation aimed at disguising thewage
relation” (Mezzadri, 2016a). Contrary, out-contractors’ function is not only of mediation, but also of
organizationofspecificactivitiesoftheproductionprocess.Mezzadri(2016a),inherstudyofout-contracting
practicesinthehome-basedembroideryindustryinBareilly,India,discoveredthatworkers’precariousness
isnotduetothesimpleintermediationprocessbutalsototheinterlockingstrategiesoflabourandcredits
implementedbythecontractors.Inthisway,whilethesimplisticpolicyofcuttingthemiddlemencouldwork
forlabourin-contracting,itresultsaninadequateinrelationtoout-contracting.
Finally,anadditionalconditionshapingthefunctionofCSRnormsintheIndiancontext,isthelabouragency
in the formofworker’s everyday decisions around employment, livelihoods and social reproduction (De
Neve,2014;Carswell&DeNeve,2013).Indeed,evenifCSRinterventionsintheformofcodesofconduct
are developed to reshape production processes and protect workers, labourers’ voices and preferences
regardingemploymentandworkregimesarehardlytookinconsiderationinsuchdebates(DeNeve,2014).
ForinstanceDeNeve(2014),discoveredaworkers’tendencytoavoidemploymentincompanieswhereCSR
policiesareimplemented,duetodeliberatechoicestoworkinmoreflexible,casualandinformalsettings.
Thisismainlyaconsequenceoftwofactorssuchastheirlivelihoodneeds,whicharehighlygenderedand
changealonglifecycleandmigrationstatus,andtheirsenseofindependenceanddignityatwork(Ibid).To
conclude,itappearsclearfromtheoveralldiscussiononinformalityandCSRthat,thelimitedimpactofCSR
34
norms in improvingworkingconditions in the Indiancontext is twofold. Firstly,CSR’suniversal approach
aimedatsolvingissuesinacountrycharacterizedbyagreatdiversityandfragmentationofproductionand
laboursolutions,isineffective.Secondly,theirformulationwithlittleifanyconsultationwithlocalproducers
andworkersisignoresanddevalueslocaltraditionsandwaysofdoingthings,makingthemuseless.
2.4CorporateSocialResponsibility(CSR)
2.4.1Definitions,characteristicsandperspectivesofCSR
LikeMSMEstheconceptofCorporateSocialResponsibility(CSR),isnotamenabletoauniversallyaccepted
definition.CSRhasalonghistoryandtheconcepthasevolvedwiththedevelopmentofbusinessesandthe
emerging needs of the society. CSR, also called corporate citizenship, social performance or sustainable
responsible business consists, generally, of “the responsibility of firms for their impacts on society”
(CommissionoftheEuropeanCommunities,2011).Oneofthemostfrequentlyciteddefinitionsistheone
provided by the European Commission (2001), which explains CSR as “a concept whereby companies
integratesocialandenvironmentalconcernsintheirbusinessoperationsandintheirinteractionwiththeir
stakeholdersonavoluntarybasis”.Theaspectofvoluntarinessseemsblurredespecially ifappliedtothe
developingworldcontext.Thisdefinitionassumestheexistenceandpresenceofstrongnationalsocialand
environmentallegislation.ThismightbethecaseofWesternEuropeorNorthAmerica,butinthecontextof
developing countries it cannot be counted for granted. Moreover, debating if firms operating in rising
economiesshouldgobeyondtheirlegalobligationandimplementvoluntaryinitiatives,whicharenotseen
as having immediate economic returns, makes little or no sense. Indeed, the challenge in developing
countriesseemstogetfirmsmeetingbasiclegalobligations,beforehopingtoimplementvoluntaryactions.
Forinstance,lookingattheIndiancontext,therecentlyformulated‘CompaniesAct,2013’mandatesallfirms
tospend2%oftheirnetprofitinCSRactivities,iftheirnetworthissuperiorof500crorerupeesduringany
ofthepreviousthreefinancialyears.This,forinstance,excludesthe“voluntarybasis”aspectofCSRactions.
Forthesereasons,itseemsmoreappropriateforthecontextofthisresearchthebroaderdefinitiongivenby
Blowfield andFrynas (2005),whichencompass thedifferentperceptionsonCSRactivities fromNorth to
South.TheydefineCSRas“anumbrellatermofvarietyoftheoriesandpracticesallofwhichrecognizethe
following:
a) That companies have a responsibility for their impact on society and the natural environment,
sometimesbeyondlegalcompliance;
b) Thatcompanieshavearesponsibility forthebehaviorofotherswithwhomtheydobusiness (e.g.
withinsupplychains);andthat
35
c) Businessneeds tomanage its relationshipwithwider society,whether for reasonsof commercial
viability,ortoaddvaluetosociety”(Ibid).
Empiricalstudiesdoneindevelopingcountriesshowdifferentkindofclassificationsregardingcategoriesof
CSRactivitiesundertakenbyMSMEs.Thefirstoneconsistsofthedistinctionbetweenformalandinformal
practices(Tran&Jeppesen,2016).Theformerpracticesincludeactionslikeoccupationalsafetyandhealth,
labourstandards,workingandenvironmentalconditions.The latterones, instead,coveramorebroaden
areaand canbe characterizedby themoredisparateactions. Someexamplesare loansprovidedby the
managementtotheworkers,theprovisionofextraholidaysforfamilyorreligiouseventsandphilanthropy
contributionbyMSMEsto localcommunitygroupsorassociations.Thisdistinctionbetweeninformaland
formalCSRpracticessuggeststhemaindriverswithinwhichCSRestablishesitselfinMSMES,whichcanbe
internal versus external factors (Von Weltzien Høivik & Shankar, 2011). For instance, informal kind of
practices are usually driven by internal factors like the ethical and religious values and principles of the
ownersormanagement.Ontheotherside,formalactionsareusuallyimposedbypressurescomingfromthe
external stakeholders, such as global buyers, governments or the civil society and then enforced using
certifications and regulations. Another classification given by the literature, regarding categories of CSR
activities undertaken by cluster-based MSMEs, both in developed and developing world, are: internal,
external and collectiveCSR actions (Sachdeva&Panfil, 2008).With internal activities, it is referred those
actionsconductedwithinthefirmthathaveadirectimpactontheworkingconditions,whileexternalCSR
arethoseactionsbenefitingtheoutsideenvironment.Finally,forcollectiveCSRareintendedthoseactions
conductedjointlywitheitherotherclusterfirmsorsupportingorganizations.Anotherdistinctionistheone
givenbyMattenandMoon(2008),whichdistinguishesbetweenexplicitandimplicitCSR.ByexplicitCSRthey
refer to those responsiblebusinesspolicies,whichareundertaken“for somesocietal interests”and they
normallyconsistinvoluntaryactionsthatrestsoncorporatediscretion(Ibid).WithimplicitCSR,instead,they
refer “to corporations’ role within the wider formal and informal institutions for society’s interests and
concerns”(Ibid).Theseactionsarearesultofcompulsoryrequirements,usuallyalsocodified,imposedtothe
firmtoaddressstakeholder issues.ThepredictingnatureofCSRactionsundertakenreliesonthespecific
institutional framework of the country (Ibid). Indeed, liberal market economies, which encourage
individualism and discretionary agency, will be mainly characterized by explicit CSR practices, while
coordinatedmarketeconomies,whichfor instancecharacterizetheEuropeangovernancesystem,willbe
describedbymoreimplicitCSRactions.
36
NotonlydifferentdefinitionsandclassificationsofCSRexist,butalsodifferentperspectivesonthisargument,
especiallywhenthosepracticesareimplementedinthedevelopingworld.Forexample,emergingliterature
have started to approach amore critical viewpoint of CSR actions undertaken byMSMEs in the South,
consideringtheCSRagendaasawayof‘WesternculturalandeconomicImperialism’imposedbytheglobal
buyers(KhanandLund-Thomsen,2011).Particularly,intheirstudydoneinthesoccerballindustryinSialkot,
theydiscoveredthatlocalmanufacturerswereforcedtoimplementWestern-basedCSRactivitieswithout
sufficient forms of economic assistance by their international customers (Ibid). In this way, local
manufacturersperceivedCSRas “a tool for extracting furthereconomic surplus”,which couldplease the
Westernpublicbutdoesanything to improveeconomicconditionsof local firms (Ibid).Moreover, in the
developmentanddeterminationofthesepractices,localcompanieshavenopowerofdecisionandforthis
reasonCSRinitiativesareperceivedasaformofculturalimperialismwherelocalvaluesandtraditionsare
marginalizedinfavourofWestern‘superior’ideals(Ibid;Dolan,2010inDeNeve,2014).Apossiblesolution
to these CSR challenges in developing world is moving from a “compliance-based approach to a more
commitment-basedapproach”,whereCSRnormsarenotorderedbythebuyers’codeofconductsbutseen
asanoutcomeofinformationexchangebetweenlocalsuppliers,workersandcommunities(Ibid).Another
criticalperspectiveonCSRarguesthatjoint-actionCSRclusterinitiativesareprimarily“SMEs’greenwashing”
(Lund-Thomsen&Pillay,2012).Followingthistendency,MSMEsandclustersattempttoportraythemselves
associallyresponsibleactorsattheeyesoftheexternalstakeholdersandthepublic,withlittleornoevidence
tocontributetolocaleconomic,socialandenvironmentalwelfare(Ibid).Anexampleisgivenbytheempirical
studyofJamalietal(2015),inthefootballmanufacturingindustryofJalandharinIndia,wherethefindings
illustratehowfirmsgainedcreditbyfocusingonhighvisibilityCSRissueswhilecontinuingtooverlooksome
specificdimensionsofCSR.Finally,inthelastdecades,theliteratureoncorporatesocialresponsibilityhas
taken a ‘political turn’ with the birth of the term ‘political CSR’ (PCSR). This political aspect of CSR is
interpreted,ononehand,asacorporateattempttoclosegovernancegapspresentatthenationalorglobal
level; and, on the other hand, it is related with the changing role of state agencies and the following
redistributionofgovernancetasksbetweenpublicandprivateactors(Schereretal,2016).Asamatterof
fact, during the past decades, globalization and the following privatization of governance have brought
business firms to engage in activities traditionally regarded as governmental actions (Scherer& Palazzo,
2011). This aspect is especially true formultinational corporations, but it has been seen thatmainly in
developing countries even smaller firms have begun to assume a “state-like role” as a way to plug
‘governmentgaps’(Ibid;Demuijnck&Ngnodjom,2013).ThispoliticalaspectofCSRconsidersthespecific
contextanditusuallyoccursincaseswherethestatesystemfailsandbasicneedsarenotprovidedbyweak
orcorruptedgovernments (Demuijnck&Ngnodjom,2013).Related to thisphenomenon,severalauthors
37
concludethatthefamousCarroll’spyramidofCorporateSocialResponsibility(1991),whichrankeconomic
obligations as first, followedby legal, ethical andphilanthropic duties, should be reversed in developing
countries(Demuijnck&Ngnodjom,2013).
2.5Initialconceptualframework
Afterhavingintroducedtheliteraturereviewbyme,thepurposeofthissectionistosketchandillustratethe
relationsbetweenthetheoreticalconceptspresentedinthischapter.Aconceptualframeworkisnecessary
andconsideredabettersolutionthanatheoreticalframework.Indeed,inthiscaseI“synthetize”theexisting
viewsintheliterature,bothfromtheoreticalandpreviousempiricalfindings,inregardofagivensituation
orproblemaddressed(Imenda,2014).Onthecontrary,atheoreticalframeworkistheapplicationofone
uniquetheorytoexplainoneprecisephenomenon(Ibid).Inthecaseofsocialsciencesresearch,thereisno
singletheorythatcanshedsomelightonaparticulareventandthatiswhyaconceptualframeworkwas
preferred.Thisabstractframeworkcanthenbemodifiedthroughconcretedatacollectionandanalysis,that
isinlinewiththeabductivemoderatesocialconstructivismapproach,whichhasalsobeenusedingathering
and analysing the data. Figure 1 below shows the initial conceptual framework that I elaborated to
conceptualizethelinksbetweenCSR,clusteredMSMEsandinformalisationoflabourandwhichwillenable
metoanalysehowCSRimplementationandperceptionisshapedintheLudhianaknitwearcluster.
38
In developing countries, MSMEs tend to be clustered in order to overcome growth constraints and to
competebothinlocalandglobalmarkets.Insidetheindustrialclusters,MSMEsnotonlyinteractbetween
themselves but they also interact with external stakeholders like business associations, government
institutions or suppliers. These different local institutions, affect MSMEs and their practices and
consequently, they also affect their involvement in CSR practices. The principal local social institutions
directlyrelatedtotheimplementationofCSRpracticesbyMSMEsare;thegovernmentwiththeirlawand
regulations,theindustryassociationswiththeirsetofstandardsandcodesofconductandlastly,thecivil
society,NGOsandtradeunions,whichaffecttheirinvolvementinCSRdependingontheir´powerandvoice´.
Apartfromlocalclusterdynamics,therearealsoglobalpressuresthattendtoaffectMSMEsandthatdrive
theimplementationandinstitutionalizationofCSRinclusteredmicro,smallandmediumenterprises.GVCs
andtheglobalbuyers,whittheir increasingrequesttotheirsuppliersto implementeconomic,socialand
environmentalguidelinesintheformofcodesofconduct,arepartofthem.However,therearealsostrong
internalfactorsthatinfluencecompaniestopursueCSR.InthecaseofMSMEs,thesearemostlylinkedwith
themotivesandvaluesrepresentedbytheowner/manager.Thecluster,isthencharacterizedbyhistorical,
political,economicandsocialpeculiarities,whichinfluencethewaytheCSRagendawillbeimplemented.
Figure1:Initialconceptualframework.Source:theauthor
Industrial Cluster
MSME
MSME
LOCAL SOCIAL INSTITUTIONS • Government• Industry
associations• Community• NGOs• TradeUnions
MSME
MANAGER VALUES & MOTIVES
CSR practices implemented
C O N T E X T
GVCs & Global Buyers
Codesofconduct
39
Onesocialpeculiarity,characterizinginspecificdevelopingcountries,isthehighleveloflabourinformality.
This peculiarity, not only affects the production but it also seems to entail different processes of
informalisationofsocialresponsibility,especiallyoverhealthandsafetyconcerns.
3.Casepresentation Beforeexaminingtheempiricaldata,inrelationtotheresearchquestionposed,Ihavedecidedtoexamine
theLudhiana’sknitwearcluster,investigatingindetailitscharacteristics,compositionandthehorizontaland
verticallinkages,presentinordertoprovidethereaderswithabriefoverviewofthecasestudy.
3.1BriefoverviewoftheLudhiana’sknitwearcluster
Ludhiana,isanimportanttextile-manufacturingclusterlocatedinPunjab,India,anditisconsideredthemost
significantatthenationallevelfortheacrylic/woollenknitwearproduction(ACDS,2014).Itisestimatedto
cornernearly90percentofthenationalmarketforwoollenknitwearproducts(Sachdeva&Panfil,2008),
andthatiswhy,itisalsocalled“theManchesterofIndia”(28.04ThirdInterview,2016;reference10).Even
ifLudhianaismainlyknownforwoollenknitwear,theclusterproducesalsosummerclothing.Thischange
happened in thepost eightieswhen the eruptionof a newgenerationof entrepreneurs also decided to
expandtheirproductmixtosummerwears(ACDS,2014).However,asstatedbymostoftherespondents,
theproductionisstillseasonaland,whileduringwintertimetheunitsusuallyprocess“summerfabrics”,in
summertheproductionworksoppositelytotheproductioninwinter.Asexplainedbytheownerofadyeing
unit “December to April it'smostly summer production […]while around June to October/Novemberwe
processwinterfabrics”(27.04FirstInterview,2016;2).
Regardingtheproducts,theyrangefromhigh-fashiongarments,mainlydestinedtointernationalmarkets,
tolowerqualityandcheaperclothes.ComparedtotheTiruppur’scluster,themostfamousoneinIndiafor
thecottonknitwearproduction,theLudhiana’soneismostlycateringtothenationalmarketand,asstated
byUchikawa (2012), nowadays itmostlymonopolizes thewinter production for the Indianmarket. Few
export-orientedunitsarepresent,andtheirsharerespectsthetotalturnoverinLudhianaamountstoonly
the 25 per cent (Ibid). This is also pointed out by the outcomes of the interviews. Between all the
respondents,onlytwounitsarealsoexportersandthemainmarketsresultedintheMiddleEastcountries
(27.04Third Interview,2016;2) andEurope,USA,Australia,Canada (28.04First Interview,2016;1). The
product portfolio of the units varies a lot. Apart from clothing and accessories, like “saari, anarkali suit,
40
lehanga,ghagra,kurtas, skirtsandgilet” (29.04Third Interview,2016;1),“scarfandshawls” (28.04First
Interview, 2016; 1) and “t-shirts, sweatshirts, lower parts, track-suits” (28.04 Third Interview, 2016; 1),
beddingandcurtainsarealsomanufactured.Thesearedifferentiatedbymarketsegments,which inturn
exert distinctive pressures to the enterprises. As stated byMeenu Tewari (1999) and confirmed by the
researcher’sfieldinterviews,fivekeymarketsegmentscanbeidentified:
• thegovernmentprocurement(alowcostandhighvolumemarketsegment);
• thelow-endmassmarket,characterizedbylowqualityandprices;
• themiddlemassmarket,withcompetitivepricesandaconcernforquality;
• thepremium“highfashion”domesticmarket(whichusuallysupplydomesticupper-endbrands)and
• theexportsegment.
Obviously,thecustomerrequestsvaryandtheexporterunitsaremorefocusedon“qualityanddeliverytime”
(28.04FirstInterview,2016;2)and,asforthedomesticproducerspricingisalsorelevant.
Regardingthedirectandindirectemploymentofthecluster,itisestimatedthatintheyear2009/2010the
industrywasgivingworktoaround400.000people(MSMEDI,2010).However,therecanbealargevariation
inthisfigurebecausealotofthemicroandsmallunits,arenotregistered(ACDS,2014)andsothenumber
doesnottakeaccountofallthepeopleworkingintheinformalsector.Approximately,microunitsarethe
mostspreadintheclusterandtheyprovideemploymentforupto54%oftheworkforce(Ibid).However,
smallandmediumenterprisesofferworkrespectivelyto22%and14%ofthetotallabour(Ibid).
Onthegeographicalspreadofthecluster,themainhosieryknittingcentresarelocatedwithinLudhianacity
onlyandtheclustercanbedividedinfourmainblocks(ACDS,2014;FMC,2016):
1. TheFocalPoint;
2. TajpurRoad;
3. IndustrialAreaand
4. BahadurKeRoad.
The three major areas of concentration for the dyeing units, as stated by one respondent (26.04 First
Interview,2016)andconfirmedby theDiagnosticStudyReportprovidedbyFMC(2016),areFocalPoint,
TajpurRoadandBahadurKeRoad.Themaindifferences,asexplainedbythesameinterviewee,regardthe
marketsegmentsthattheyaddress;“…whileFocalPointisfocusingonthebrandandithasalittlehigher[…]
segment,Tajpurmostly[…]aredoingverycheap,lowerquality.[…]InsteadBahadurisdoingboth”(26.04
FirstInterview,2016;1).
41
Around14.000registeredMSMEsformthecluster(Anon,2016;ACDS,2014)ofwhich9800(around70per
cent) are micro units, 2800 are small and 1400 are medium size firms (Sameeeksha, 2011). Ludhiana’s
knitwearclusterisahighlydiversifiedindustrialbaseandeveniftheknitwearmanufacturersareatthecore
ofthevaluechain,otherkindofunitsalsogivesignificantcontributiontowardtheclusteractivities.Thecore
clusteractorsdirectlyinvolvedinthegarment(knitwear)manufacturingprocessare:
1. Thedyeingandprocessingunitsthatareabout200/250innumber;
2. Theprintingunits,around100/125firms;
3. Theknittingunits,whichconsistofaround8000enterprises;
4. Thesub-contractinggarmentunits,whichareengagedmainlyinstitchingandtailoringtasksandare
countedabout3000innumberand
5. Theembroideryunits,moreorlessaround1250firms(ACDS,2014).
Besides the ‘real’manufacturing firms, there are also independent jobworkers that knit or process the
garmentsforotherfirmsininformalsettings;thisgroupingincludesalsohundredsoffemalehome-based
workerswhodoembroideryandrelatedworks(Gulati&Dhanda,1997inTewari,1999).Finally,thecluster
hasanetworkofdistributors,traders,exportersandancillaryunitsaswellasseveralsupport institutions
(Tewari,1999).Whentherespondentswereaskedtolistthemajororganisationspresentinthecluster,apart
from the industrial units, different type of answers cameout. I noticedmost of the firmswhen directly
inquiredonthecompositionoftheclusterandthenatureoftheorganizationspresent,declaredthat“No
NGOs,nogovernmentalofficials,nobusinessassociations”(26.04SecondInterview,2016;2)exist.Aswell,
the owner of amicro embroidery unit stated: “No relations […] with government offices and NGOs are
present.Notradeunionsexistforus”(29.04FirstInterview,2016;1),underlingthatevenifaninstitutional
set-upisthere,isperceivedasnotactive.However,throughindirectquestions,like“Doyou,asaMSME,get
supportfromanyinstitution?“or“DoyouworkwithanyotherenterprisesorinstitutionsinacollectiveCSR
initiative?”,IwasabletogetageneralprofileoftheLudhiana’scluster.Itcameupthatthemajor‘actors’
existent and excluded in the value chain can be categorized in three main groups, that are industry
associations, training institutesand thegovernmental set-up.Also,NGOs, financial institutionsand trade
unionsarepresentbuttoalesserextent.Whatseemsrelevanttohighlight,frommypointofview,itisthat
evenifa‘flourished’ institutionalset-upispresent, it isperceivedabsent/notactivebymostoftheunits,
especiallywhensupportingthem.Apartfromthepreviousquotations,otheronesexplicitlydeclared:“The
attitudeofgovernmentisnotgoodtowardsSMEsintheindustry”(28.04ThirdInterview,2016;1)or“No
governmentschemestosupportus[microenterprises]arepresent.”(29.04FirstInterview,2016;1)andfinally
“We would like to have more protection from the government!” (29.04 Third Interview, 2016; 1). The
institutionalactors,whichIaccessedtobethemostrelevantforthestudy,are:
42
• MSME-DevelopmentInstitute(MSME-DI);
• DistrictIndustryCentre(DIC);
• PunjabPollutionControlBoard(PPCB);
• IndustrialTrainingInstituteforWomen(ITIWomen)and
• ApparelExportPromotionCouncil(AEPC).
Belowabriefdescriptionofeachorganizationandtheiraimswillbegiven.
MSME-DI
MSME-DI isagovernmentof India institution,which isdedicated to thesupportof thesmall sector.The
institute, apart from providing “30 schemes of development for industries and firms in this area […]
Technologicalandcommercialkindofschemes”(25.04ThirdInterview,2016;2),alsooffertrainingsupport
to the industry and conduct entrepreneurship development programs (ACDS, 2014). As stated by one
employeeinterviewed,“notdirectedrelated[schemes]toCSRarepresent[…]butregardingenvironmental
concerns,wehaveISO14001,whichisaglobalstandardsystem”(25.04ThirdInterview,2016;3).TheISO
14001standardshelporganizationstominimizetheirenvironmentalimpact.Anotherimportantschemeis
theTechnology andQualityUpgradation support toMSMEs (TEQUP): “SMEsare encouraged toupgrade
technology,useofpollutioncontrolsystem.Inthiscase,the15%ofthetotalinvestmentdoneisrefundedto
them”(25.04ThirdInterview,2016;4).
DIC
DIC is a district level office of the Department of Industries and Commerce under the Punjab (State)
government.Theinstitutionworksforthedevelopmentofthesmallandmediumindustriesinthedistrict
andtheirpurposes includethe implementationofGovernmentSchemes,understandingandmeetingthe
needsofthefirmsandassistingself-employment(ACDS,2014).AsstatedbyoneemployeeoftheLudhiana’s
DICoffice,“weguidethem[referringtotheMSMEs][…]andwealsohaveawebsite,www. dcmsemi.gov.in.
ThisisasiteofwelfarecommissionerofmicroandsmallbusinessenterprisesofGovernmentofPunjaband
fromthatsitetheentrepreneurisaccessorizedaboutsomanypromotionalschemes,promotionalprograms,
clusterprogramsandmanymore.Andtheymayhavehelplinealsoonthat,ifheisinneedbecauseofany
kindofimpedimentthroughthecentralgovernmentdepartment.”(25.04FirstInterview,2016;3).
PPCB
ThePPCBwasconstitutedin1975underthePunjabGovernmentandithasbeenentrustedtoimplement
environmental lawsallovertheStateofPunjab(Ppcb.gov.in,2016).Themainobjectivesoftheboard,as
statedbythewebsite,aretocontrolandrestorethelevelofpollutionofwaterandair(Ibid).
43
ITI(Women)
TwoGovernmentalIndustrialTrainingInstitutesarepresentinLudhiana.Oneisformenandtheotherfor
women.TheITI(women),providestrainingprogramsonknitting,embroideryandgarmenting(ACDS,2014).
The main courses offered are: WET Processing Technician, Fashion Technology and Design, Swing
Technology,SurfaceOrnamentalTechniqueandArchitectureAssistanceTechnician(02.05First Interview,
2016;2).Thecourseslastusually1yearapart,fromtheTextilecourse,whichis2yearslong.
AEPC
AEPC,istheofficialbodyofapparelexportersinIndiaanditofferssupportandassistancetoIndianexporters
andimporters,aswellas internationalbuyerswhoselectIndiaastheirsourcingdestinationforgarments
(Aepcindia.com, 2016). As stated by one shawls’ exporter who was interviewed “this association is a
governmentsupportingassociation.Theyaresupportingusinthetextilesector[…]Timelytheygiveussome
notificationsregarding[…]thesebenefitsyougetifyouexporttoUSortospecificcountries[…]andtheyalso
supportusforparticipatingininternationalshows.”(28.04FirstInterview,2016;1).Moreover“theymade
someworkshopsforthedevelopmentofworkers[…]buttheworkshopsareusuallyinDelhiorinotherbig
cities,notinLudhiana”(28.04FirstInterview,2016,2).
Toconclude,thecollectiveefficiencyintheLudhiana’sclusterisconsideredasfunctioningwell(Uchikawa,
2012;Tewari,1999).Theclusterdoesnotonlygeneratelocalizedexternaleconomies,likeaflowofshared
knowledgeoninputs,productionprocess,marketsandtheaccesstoacommonlabourpool,inputproviders
and distributional network (Uchikawa, 2012); but there is also an evidence of local joint action and
cooperation especially at the vertical level (Tewari, 1999). Yet there are several local associations
representingvariousinterestgroupslikedyers,knitters,spinnersetc.Inthefollowingsections,Iwilldescribe
indetailthecompositionofthecluster,analysingboththeverticalandhorizontaltiesexisting.
3.1.1Horizontalties
Regardingthehorizontalties,thatconsistintherelationsbetweenlocalfirmswithinthecluster,jointaction
throughlocalmultilateralinstitutionsseemstobethemostimportantaspect.Indeed,whatcomeoutfrom
thefieldwork,itseemsthatnoactualstrongrelationsarepresentatthehorizontallevelandthattheone
existing aremainly personal or friendship kind of connections. For example, the owner of a dyeing and
printingunit stated,“Wehavepersonal relations [with theotherunits]andweattendbirthdaysorother
functions.Butonlypersonal,noworkkindofrelationships.”(26.04SecondInterview,2016;2).Particularly,
wheninquiredifanypartnershipsexistwithotherunits,todividecustomer’sordersmajoroftheunit’sactual
44
capacity,aroundalltheparticipantspreferto“ignoretheorder”(29.04FirstInterview,2016;1)and“produce
whatwe [they] can do” (28.04 Second Interview, 2016; 1) or “managewith the customers” (28.04 First
Interview,2016;1).
Atthehorizontallevel,thebusinessrelationspresentmainlyappearattheassociationlevel.Theownerofa
knittingunithighlightsthispoint:“[Wehavebusinessrelationswiththeotherunits]mainlyattheassociation
level. In putting up fights against government and to protect our industry [or] in guiding each other in
purchasingrawmaterials”(27.04SecondInterview,2016;3).Indeed,around70associationsarerunningin
thecluster(ACDS,2014)defendingdifferentinterestgroupssuchasdyers,knittersetc.,however,onlyfew
of them are active and take initiatives as stated by the interviewees. The recurrent names during the
conversationsandtheonesthatappearedtobemostactiveinrespecttotherespondent’spointofviews
are:
• Bahadur-KeTextileandKnitwearAssociation(BKTK)(28.04FirstandSecondInterview,2016);
• LudhianaKnittingAssociation(LKA)(27.04SecondInterview,2016);
• ChamberofIndustrialandCommercialUndertaking(CICU)(25.04FirstInterview,2016;26.04Second
Interview,2016);
• PunjabDyeingAssociation(PDA)(25.04FirstandSecondInterview,2016;26.04SecondInterview,
2016;27.04FirstandSecondInterview;2016);
• Ludhiana Dyeing Industries Association (LDA) (26.04 Second Interview, 2016; 27.04 Second
Interview,2016);
• FederationofIndustrial&CommercialOrganization(FICO)(26.04SecondInterview,2016)and
• TheKnitwearClub(28.04ThirdInterview,2016).
Abriefdescriptionofthemaincharacteristicsofthebusinessassociationspreviouslylistedisgiveninthe
tablebelow.
BKTK Established in 1985 (Bktkindia.com, 2016), this association is for “allmanufacturers in the
area” (28.04First Interview,2016), referring to theBahadurKeRoadblock, andhavingas
member’sbasemorethan100unitsworkinginthedyeing,knitting/weaving,packagingand
garmentingarea(Ibid).Themainaimoftheorganizationistoprovidesupportandpossibility
ofupgrading toall theMSMEspresent in themicro-cluster,offering, for instance, training
programsorcommonfacilities(likethepossibilitytoparticipateininternationalexhibitions).
45
CICU Founded in 1968, the Chamber is registered as a non-profit making society and is an
autonomous and regional organization (Cicuindia.org, 2016). The main mission of the
institution istodevelopactionsforthedevelopmentofall theMSMEsector inPunjaband
someexamplesoftheactivitiesimplementedare:“skilldevelopmentseminars[fortheunit’s
workers], quality seminars, even some lean manufacturing seminars and ISO related
[seminars]...awarenessprogramsarealsobeingconducted”(25.04FirstInterview,2016;3).
PDA PDAistheumbrellaorganizationregardingthedyeingindustryinallPunjab.Itsmainaimsare
to improve the dyeing industry and collectively solve the principal issues they face, for
instancetheconstructionofaCommonEffluentTreatmentPlant(CETP).Theyhavealready
initiatedworkfor“setting-up3CETPinLudhiana”(25.04FirstInterview,2016;1).
LDA LDAisaramificationofthePDAanditisconsideredtheapexassociationforclustereddyeing
firms in Ludhiana (FMC, 2016). It is an active organization of progressive dyerswho keep
upgradingthemselvesmainlyregardingenvironmentalissues(TheEconomicTimes,2016)and
itisconstitutedofaround240members(FMC,2016).Theownerofadyeingandprintingunit
explainedtheworkdonebytheLDAwiththisself-explanatorysentence:“Whateverproblem
comestothedyeingpeople,wedomeetanddiscusslikecustomersatisfaction,paymentson
the people, the quality parameters to be followed, and problems of increase in cost of
productionorenvironmentalissues”(26.04SecondInterview,2016;3).
Knitwear
Club
Established in 1984, the KC is the biggest and the most operating association of hosiery
manufacturersinLudhianaanditcountsaround418members(TheEconomicTimes,2016).
It’sanot-profitmakingbodycontributingtotheimprovementoftheknitwearsectorandan
exampleoftheactivitiesimplementedconsistsin“trainingcamps,whereallthe‘raw’workers
comeandwetrainthem”(28.04ThirdInterview,2016;1).
ItisalsooneofthefoundermembersofFEKTAA(FederationofKnitwear,TextileandAllied
IndustriesAssociation),whichwasformedbackin2001underthesupportofUNIDO,withthe
mainobjectivetotakeaunifiedviewoftheknitwearindustry(ACDS,2014).
Table4:PrincipalindustryassociationsinLudhiana.Source:theauthor
Regardingtherestoftheindustryassociations,mostofthemaresimplyengagedonfiscalandlegalmatters
with the government and they rarely promote linkages with other support organizations or technical
institutionsortakeactionstoimprovebusinesspractices(FMC,2016).
46
3.1.2Verticalties
WhilehorizontallinkagesbetweenLudhiana’sknitwearfirmsmaybeweak,verticalcooperationamongthe
enterprisesintheclusterisstrong(Tewari,1999).Indeed,thecoreclusterunitsofallsizeshavestrongties
withinputproviders,machineryproducers,sub-contractorsanddistributionnetworks.Asexplainedbyone
respondent“Normally,it'sareallynormalpracticethattheunitsbuyfromthelocalsuppliers...thisisavery
big cluster” (28.04 First Interview, 2016; 2). Particularly, these vertical ties have grown closer and have
becomemorecalibratedintheprocessofovercomingthedualcrisisthatLudhiana’sclusterhasfacedin1991
(the collapse of the ex-Soviet Union, Ludhiana’s former primary exportmarket, and the opening of the
domesticmarkettofreertrade)(Ibid).
3.1.2.1Backwardties
Asstatedbefore,whileknitwearmanufacturersareatthecoreofthevaluechain,alsobackwardlinkages
havebeencreatedbackinthedays(Tewari,1999).Indeed,inthe1940’sand1950’s,someoftheknitwear
manufacturers,whichhadaccumulatedcapitals,setupspinningmillsinordertoproducewoollenyarnlocally
(Ibid).Later,theyspecializedthemselvesondifferentfabricslikecottonandacrylics(Uchikawa,2012).One
respondent,forinstance,declared“Ipurchasegreymaterialsfromlocalsuppliers”(28.04ThirdInterview,
2016; 1), another one said “We are normally buying all the rawmaterials from our local suppliers, but
sometimestheyarnsarenotavailablefromthelocalsuppliersandsowebuythemfrombigenterprisesin
otherstatesorinothercities,butthisisnotthepraxis”(28.04FirstInterview,2016;2).
Theclusterisalsolinkedbackwardintheregion’smachineryproductionsector(Tewari,1999)andnowadays
thisbrought to thepresenceofmachinerymanufacturersandsuppliers (ACDS,2014). In fact,before the
economicliberalizationin1991,allthemachineryandtoolsusedintheIndianknitwearindustrycamefrom
thisregion(Tewari,1999).AsstatedbytheDiagnosticReportdonebyFMC(2016),stillaround90%ofthe
machineryemployedbytheunitsisprocuredbyLudhianaonly.Finally,alsoanancillarydyeingsectorhas
beensetupandnowadays itcounts foraround250unitsalloverLudhiana (Ibid).Not to forget thesub-
contracting knitting firms, which contribute majorly to the cluster value chain and that are part of the
backwardprocesssupport.Theyhelpthoseknittingunitsthataremainlyengagedinbulkordersorinexports
andareinshortageoftimetofulfiltheorders.Aunit’sownerthatdetainsalltheproductionstepsin-house
andwhichrepresentsoneoftheonlyexceptionsinLudhiana,stated,“Normally[MSMEs]buytheyarnfrom
spinningunits,thentheysenditforthedyeingoutside,aftertheysenditforfinishinginotherfactoriesand
47
thisisalldoneinLudhianaonly.”(28.04FirstInterview,2016;2).Hisstatementdemonstratesquitewellthe
existenceofgoodverticalcooperationbetweentheunits,particularlyonthebackwardside.
3.1.2.2Forwardties
Theend-product,ismarketedinvariouspartsofthecountryandexportedoutsideIndia.Onthedomestic
front,intermediateagents,wholesalersandretailersprovideforwardlinkages.Moreover,severalclothing
brandsarealsoflourishedintheclusterwiththepurposetoprovideforwardtiestothemanufacturingunits
(ACDS,2014).For instance,betweenthe11units interviewed2areproducingalsotheirownlabel(28.04
FirstInterview,2016;28.04SecondInterview,2016).Instead,exportsarebeingaffecteddirectlyorthrough
merchantexportersandbuyingagent/houses(ACDS,2014).Figure2depictsthecompositionoftheLudhiana
cluster,showingindetailthebackwardsandforwardstiespresent.
48
Index:
:Coreclusteractors(directlyinvolvedintheknitwearmanufacturingprocess)
:One-waylinkage
:Two-waylinkage
Backward linkages Forward linkages
KNITTING units
Embroidery units
Printing units Dyeing units
Spinning units
Sub contracting garment units
Machinery Suppliers
Machinery Manufacturers
Input providers
Buying agents or houses
Merchant exporters
Domestic market
Export market
Figure2:Majoractorsandbackwards/forwardtiesofLudhiana’sKnitwearcluster.Source:theauthor
49
4.Analysis In this chapter the empirical findings obtained through the interviews will be presented and analysed.
Moreover, all thismaterialwill be supplementedwith secondarydatawhen consideredappropriate and
necessary.Thechapter isdivided intofourmainsections, followingthestructureof the literaturereview
previously examined. Firstly, I will classify the Ludhiana’s cluster and list the CSR activities undertaken
collectivelyattheclusterlevel.Inthesecondsection,theMSMEsinterviewedwillbedescribed,underlying
the main characteristics shared and the differences encountered. The section will conclude with the
presentationof the individualCSRactivities implemented.Following, the informalisationof labour in the
Ludhiana’scontextwillbedescribedandtherepercussionsthisphenomenonhasontheimplementationof
CSRpractices. In the lastsection, theconceptofCSRasexplainedby therespondents, the impactof the
activitiesimplemented(bothattheindividualandthecollectivelevel),thedrivers,thebarriersfacedandthe
benefitsobtainedwillbedescribed.
BecauseIhaveexplicitlyadoptedanabductivereasoning,theempiricalfindingswillnotjustbe“showed”
butjuxtaposedwiththetheoreticalliteraturepreviouslyreviewedinordertooutlinethemainfindingsof
theresearch.
4.1Ludhiana’sknitwearcluster
4.1.1Classificationofthecluster
The literature provides different classifications of cluster, for instance, based on the development stage
reached(Schmitz&Nadvi,1999;Sandee,1995),onthedynamismorcapacityoftheclustertogrowover
time(Giuliani,2005)orontheclusteredfirms’humanrightsengagementandexplicitCSRadoption(Giuliani,
2016).I,throughthecollectionofprimarydata,theanalysisofthemandofsupplementarysecondarydata,
willclassifytheLudhiana’sclusteronthebasisofsometaxonomiesgavefromtheliteratureandformerly
elucidated.
In respect to thedistinction givenby Sandee (1995)of ‘dormant’ vs. ‘dominant’ clusters in adeveloping
countrycontext,theLudhiana’sknitwearcanbementionedasadominantcluster.Indeed,theunits,asstated
intheprevioussection,arecloselylinkedespeciallyattheverticallevel:bothbackwardandforwardlinkages
aregrowncloserandhavebecomemorecalibratedafterthedualcrisisof1991(Tewari,1999).Asstatedby
themajorityoftheinterviewees,theyallsupplytherawmaterialsfromlocalspinningmillsandonlyincase
50
ofshortage,theyfurnishfrombigenterprisesinotherstates(28.04FirstInterview,2016;2).Stronglinkages
existalsowiththeancillarydyeingfirmsandthesub-contractingknittingunits.Theoverallresultisthatthe
entireproductionprocesstypicallyremainsinLudhianaonly(Ibid).Moreover,theclustercompetesatthe
internationallevel,exportingespeciallyinUS,EuropeandAsiancountries(FMC,2016).Eveniftheportionof
exportisconsiderablyfewerthanthedomesticshare(indeed,aspreviouslydeclared,itcountsonlythe25%
ofthetotalturnover),itisestimatedthatduring2006/2007thevalueofexportsofhosieryandreadymade
garmentswereoftheorderof1306crorerupees,whichmakesLudhianaanimportantgarmentspotatthe
globallevel(NCAER,2009).
AnothersimilarclassificationistheoneprovidedbySchimtzandNadvi(1999),whichdistinguishbetween
‘incipient’ and ‘mature clusters’. Ludhiana’s knitwear district is characterized by the use of advanced
machineries,asdeclaredbythegeneralmanagerofDICLudhiana(25.04FirstInterview,2016;1),whichare
suppliednotonlylocallybutallovertheworld(e.g.JapanorGermany)(28.04SecondInterview,2016;1;
28.04ThirdInterview,2016;1).Thiswasalsoperceivedbymewhenvisitingtheunits,withtheonlyexception
ofthemicro-firms,whichinsteadarecharacterizedbynouseoftechnologies,onlyhand-work(29.04First,
Second&ThirdInterview,2016).However,thisisduetothetypologyofjobdonethatrequiresonlyhigh
labour skills. Finally, Ludhiana’s knitwear cluster is characterized by a good level of joint action and
cooperativeattitudes,alsodemonstratedbyanintensivespreadofbusinessassociations.Thesereasonsand
thepresenceofLudhiana’sknitwearclusterintheglobalmarketsclassifyLudhianaasamaturecluster.
Finally,basedonthetaxonomygivenbyGiuliani(2005),Ludhianacanbestylizedasadynamiccluster.Indeed,
itcanbearguedthatLudhianaischaracterizedbyanintermediateabsorptivecapacity.Thisisdemonstrated
byfirm’sgeneralupgradingrespectthetechnologicalfrontier(25.04FirstInterview,2016;1),butwithoutan
active participation to its enhancement. Indeed, research and development is not practiced within the
industry(ACDS,2014)andthusLudhianaresultsaknowledge-usingenvironmentratherthanaknowledge-
producingone.
4.1.2CollectiveCSRinLudhiana
Afterprovidingthereaderwithadescriptionoftheclustercompositionandaclassificationofit,regarding
boththedevelopmentstagereachedandthedynamismoftheclustertodevelopovertime,itisnowcrucial,
inorder toanswer theresearchquestion, to list theCSRactivities implementedonacollective leveland
explorewhetherjointaction,regardingCSRimplementation,isspreadbetweenLudhiana’sMSMEs.
51
CollectiveCSRactionsareconsideredthoseactivitiesconductedjointlywitheitherotherclusteredfirmsor
supportorganizations (Sachdeva&Panfil,2008).The literaturemainlydividedthediscussiononCSRand
industrialclustersinthreemaintopics,respectivelyregardingenvironmentalmanagement,workconditions
more generally and poverty reduction (Lund-Thomsen et al, 2016b). The interviewees have givenmany
differentexamplesofcollectiveCSRbutIhavenoticedapredominanceofthefirstthemeintheLudhiana’s
industrialdistrict.Forthisreason,Ihavecategorizedthemintwomaingroups:collectiveenvironmentalCSR
andothercollectiveCSRactivities.Themaindifferencebetweenthetwoisthat,whiletheenvironmentalCSR
actionsaremandatoryfortheunitsinvolved,thesecondgroupischaracterizedbyvoluntaryactivities.Inthe
nextsection,theywillbedescribedindetails.
4.1.2.1CollectiveEnvironmentalCSR
From the data gathered through the interviews, it appeared that themajority and themost important
collectiveCSRactionsundertaken inLudhianaregardenvironmental issues, inparticular theconstruction
andimplementationofCETPs(CommonEffluentTreatmentPlants).Indeed,thedyeingunitsresultthemost
pollutedfirmsbetweenthecoreclusteractorsdirectly involved inthegarment (knitwear)manufacturing
process.However,asdeclaredbytheinterviewees,theconstructionofend-pipetreatmentsintheformof
CETPsisso‘popular’duetotherecentspreadofnationalstrongenvironmentalrulesandregulations(26.04
SecondInterview,2016;3)andsobecauseofitsmandatoryaspect.
Dyeingisacombinedprocessofbleachingandcolouring,whichproducehugeamountofwastewaterand
consequently cause environmental degradation (FMC, 2016). After the dyeing process, the effluents are
characterizedbyhighconcentrationof“dyestuff,biochemicaloxygendemand,totaldissolvedsolids,sodium,
chloride, sulphate, hardness, heavy metals and carcinogenic dye ingredients” (Tchobanoglous & Burton,
1995). This characterizes thewater that becomeunusable for anyother purpose andposes also serious
environmentalproblems.However,asstatedbyoneemployeeofthePPCB,evenifpollutionisabigproblem
inLudhiana,thegarmentindustryisnotthemaincause.Theothersectorthatcharacterizestheindustrial
districtistheironandsteelindustry,whichisthemosttoxic(25.04SecondInterview,2016;1).Untilnowthe
onlyCETPcompletedandinfunctioninLudhianaistheonebuiltbythemetalfinishingunits,withthesupport
oftheAssociationLudhianaEffluentTreatmentSociety,and,sofar,thedyeingunitswithoutanindividual
ETPhave reused its treatedwater (25.04 Second Interview, 2016; 2).However, this is not the definitive
solutionalsobecauseonlyaminorityofthedyeingunitsareeffectivelyadjoiningthisCETP.Therefore,the
garmentindustryisinchargetoprovideinthenearfuturenumber3ofCETPswherealltheeffluentswillbe
treated(25.04SecondInterview,2016;3).Indeed,itismandatoryforallthedyeingunitsinLudhianatobe
52
providedofaneffluenttreatmentplant,commonor individual (26.04SecondInterview,2016;3). It then
cameout from the findings that the thickeningofnational environmental regulations isone reason that
increasedtheadoptionofsocialresponsiblepracticesinLudhiana(Ibid).Thissupportsthepreviousliterature
on the debate industrial clusters and CSR, which arguments that one main driver influencing the
enhancementofCSRpracticesisthethicknessofthenationalpolicyframeworkregardingenvironmentaland
socialaspects(Lund-Thomsenetal,2016b;Lund-Thomsen&Pillay,2012).
These3CETPs,whichareintheprocessofconstruction,asdeclaredbythegeneralmanagerofLudhiana’s
DIC,havebeenorganizedinsuchawaythateachCETPisscatteringtoaspecificarea(25.04FirstInterview,
2016;2). Lookingat thegeographicaldislocationof themajorareasof concentrationof thedyeingunits
(Figure3)itappearsclearthatsincethedistanceismorethan10km,establishingasingleCETPwillnotbe
feasible or too costly and thus building satellite CETPs, one respectively in Focal Point, Tajpur Road and
BahadurKeRoad,maybeabetterproposition(FMC,2016).
Majorareasofconcentrationdyeingunits
BahadurKeRoad
Figure3:MajorpointsofdislocationdyeingunitsinLudhiana.Source:theauthor
53
Thechoiceofcommonplantshasbeenpreferredbythemajorityoftheunitsmainlyduetotheireconomic
impossibility to establish individual end-pipe treatments (Ibid; 26.04 Second Interview, 2016; 3). This
supportstheliteraturethatusuallydescribeMSMEsasdisadvantagedincomparisonwithlargerenterprises,
mainly due to their lack of financial resources (Lund-Thomsen & Pillay, 2012). However, through the
agglomeration in industrial clusters, MSMEs can face the above-mentioned issues and benefit of the
competitiveadvantagederivingfromjointactionpractices(Schmitz&Nadvi,1999).TheCETPsareaperfect
example of competitive advantage deriving from collective actions. Another reason, listed by the
respondents,thatbroughttothepreferenceofcollectiveCSRpracticesrespectindividualeffortstosolvethe
issue of pollutedwater has been perceived in the “government’s barriers”. Concerning this aspect, one
intervieweehighlightedthepositiveoutcomeofbeinginjointactions:
“Nowweareinagroup[Hindispeaking]...whenwewerealoneatthebeginningtherewerelotsof
barriers…financial,administrativeandbureaucratic…andgovernmentwasaproblem.Now,throughthe
PunjabDyeingAssociation(PDA)wehavealotmorepowerandlessbarriersandgovernmentiswithus”.
(27.04SecondInterview,2016;4)
The owner of this dyeing and knitting unit, which is part of the Tajpur Road block, lately explained the
situationoftheLudhiana’scluster.BeforethestartoftheconstructionoftheCETPfortheTajpurRoadblock,
onlyasewagetreatmentplant(STP)waspresent(27.04SecondInterview,2016,5).Thissystemiscleaning
thedirtywatercomingfromallthedyeingunitslackingofindividualtreatmentplantswhichareinthisarea,
even though the STP is meant to clean only the domestic waters (Ibid). With the enforcement of the
environmentalregulations,thePDAtookthecontroltobuildaseparateCETPforallthewaterusedbythe
dyeingfirmsinTajpurRoad(Ibid).However,theplanexplainedseemsquiteambitiousfortwomainreasons.
First,forthenewintroductionoftheZeroLiquidDischarge(ZLD)technology,whichimpliesthatthewater
usedbythedyeingunits,afterbeingprocessedbytheCETP,willnotbedischargedintheriverbutreusedby
the firms, at least for its 90% (27.04 Second Interview, 2016; 7). Second, because it is supposed to be
completed in a short amount of time, between one year or two because already half completed (27.04
SecondInterview,2016;4;26.04FirstInterview,2016;4).However,regardingthisaspect,secondarydata
foretellssomethingdifferent.JournalarticlesfromtheHindustantimesandtheTimesofindiatracebackthe
discussion of CETP in Tajpur Road in 2009 and the start of theworks already in 2013, which had been
predictedtofinishtheyearafter(hindustantimes.com,2016;timesofindia.indiatimes.com,2016).However,
stillin2016theCETPisnotcompleted.AsexplainedbyoneemployeeofthePPCB,CETPsarenotwithout
54
challengesandoneofthemainreasonsofthedelayconsistsinthenotpaymentofmembers’share(25.04
SecondInterview,2016;3).Thisaspectisalsopointedoutbytheliteratureasamainissueincompleting
CETPsanddefinedasfree-riderproblems(Lund-Thomsen,2009inLund-Thomsenetal,2016b).Finally,other
tworespondents, instead, foundthemaincauseof thedelay in theCETP’scompletion in theabsenceof
stronginstitutionalsupport.Oneparticularly,declared:
“[…]Butgovernmentisalwaysaproblem!Andwefaceotherissues…forinstance,wedon’thavealotof
financialsupport[fortheconstructionoftheCETP]andwelackhelpfromlocalinstitutionsregardingthe
technicalaspectnecessary”.(27.04Interview,2016;4)
ThissupportsNadvi’sargumenthighlightingthenecessityofastronginstitutionalsupportenvironmentfor
theimplementationofsuccessfulcollectiveactions(Nadvi,2005).
4.1.2.2OthercollectiveCSRactivities
Many other collective CSR activities are undertaken by MSMEs in Ludhiana apart from environmental
collectiveCSR.Theirscopevariesalot,frommedicalcampslikeblooddonationoreye-checkcampsforthe
community,tocharitycontributionsforreligiousinstitutions,untilactivitiesfortheworkforce,liketraining
workshopsortheconstructionofhousingfacilitiesforthemandtheirfamilies.Theseareonlyfewexamples.
Idecidedtocategorizetheseactivitiesinregardoftherecipientstowardswhichtheseactionsaredirected:
the workforce, the community and religious institutions.While the first ones are themost spread, few
examplesdirectedtothebettermentofthecommunityortoreligiousorganizationsexist.Finally,aseparate
discussionwillbedoneregardingthechoiceofthepartnersforthesecollectiveCSRactivities.
Regardingtheemployees,quitealotofexamplesofcollectiveCSRengagementarepresentintheLudhiana’s
knitwear cluster.Majority of these actions are directed to improve their skills andupgrade them. These
activities consist in training camps done at the association level: for instance, for the knitting units this
happenswiththesupportoftheKnitwearClub(28.04ThirdInterview,2016;1),anassociationofhosiery
manufacturers in Ludhiana. Other units speak about health camps (27.04 Second Interview, 2016; 1) or
recreationalactivitieslikecricketmatches(25.04FirstInterview,2016;1&2).Finally,oneMSMEisplanning
to build two fully furnished hostels for theworkingwomenwith the support of Bahadur-Ke Textile and
KnitwearAssociation(BKTK)andwiththefundingofagovernmentscheme(28.04ThirdInterview,2016;4&
5).Instead,regardingthejointeffortdonebytheLudhiana’sunitsforthecommunity,thisconcernsmainly
healthcare.Theonlyexamplegivencomesfromtheownerofaknittingfirm,whichdeclaredtheprovision
55
offreeofcostseye-testingcampsandblooddonationcampsdonequarterlytoallthelocalpublic(28.04
SecondInterview,2016;1).ThisisdonewiththecooperationofaNGOcalled“RaghunathSewaDa”(Ibid).
Finally, also donations to religious institutions has appeared. These are related with aMuslim religious
festival,theRamzanEid(29.04FirstInterview,2016;1),andconsistinmonetarydonationsordistributionof
freestufftothelocalmosque(Ibid).Particularly,theseactivitiesareimplementedbysomemicro-embroidery
unitswithoutthesupportofanyexternallocalinstitutions.
Ithastobehighlightedthatthemajorityoftheseactivitiesundertakencollectivelyaredonewiththesupport
of local institutions;mostly business associations of various kind and in fewer cases NGOs. Only in one
example the collective social responsible activity is conducted between cluster firms and without the
cooperationofexternalinstitutions.Thisappearsincontradictiontowhatansweredbythemajorityofthe
respondentswhendirectlyaskedhowistheleveloftrustwiththeotherunitsinthecluster.Butassustained
bytheliterature,theleveloftrustbetweenenterprisesisjustafacilitatorintheimplementationofcollective
CSRactivities,notthe‘warranty’ofaneffectiveexecution(Sachdeva&Panfil,2008).Thisisthecaseofthe
Ludhiana’scluster.Particularly,IperceivetwomainreasonswhycollectiveCSRengagement(excludingthe
mandatoryactivities)issolowrespecttheindividualactions.Firstly,itisthelackofinterestinjointactions
regarding the implementation of responsible business practices. For instance, one interviewee explicitly
declared:
“No,wehaveneverbeenapproachedbyotherunitsfordoingcollectiveCSRandnotintheotherway
around[…]wedon’tfeelthenecessity”(29.04SecondInterview,2016;3).
Alsopreviousempirical studiesondeveloping country’s clusters, like theonedonebySachdeva&Panfil
(2008)orVives(2006),showthistendencyandthisismainlyduetoentrepreneurs’inwardlookingattitude.
Secondly,anotherreasondiscoveredisthescarcityofinstitutionsororganizationsinsupportingsocialand
environmentalresponsibilities.Insupportofthis,onerespondentstated:
“No,wedon'tdo[referringtotheimplementationofcollectiveCSRactivities].Thishappensmainlybecause
therearenoassociationsinvolvedinthatrightnow”(27.04FirstInterview,2016;1&2).
Fromthissentenceemergedthelackofastronginstitutionalsupport,whichisseenbytheliteratureasa
necessaryelementinensuringthesuccessofcollectiveCSRactions(Nadvi,2015).Interestingly,fromnone
of the answers the pressure from GVCs and global buyers appeared to be a factor enhancing the
56
institutionalizationofCSRnormsattheclusterlevel,whileseenasadominantaspectintheliterature(Lund-
Thomsen et al, 2016b; Lund-Thomsen & Pillay, 2012). This may be due to the mainly presence of the
Ludhiana’s MSMEs in local or national value chains and to the few existence of export-oriented units
(Uchikawa,2012),ormaybetotheparticipationinlessvisibleGVCs(Lund-Thomsenetal,2016b).
4.1.2.3SummarycollectiveCSRinLudhiana
Inconclusion,IobservethatregardingallthecollectiveCSRactivitiesundertaken,thefocusispredominantly
on the environmental aspect and specifically on the implementation of CETPs for the dyeing units. This
happens because of its mandatory aspect, which in turn is due to the recent thickening of national
environmental laws. Moreover, while the implementation of CETPs has been preferred by the units to
individualplants,thechoice isnotwithoutchallenges. Indeed,thecompletionhasdelayofyearsandthe
mainobstacleperceivedbytherespondentsistheabsenceofastronginstitutionalsupportenvironment.
Thesecondmost implementedcollectiveCSRactionregardthe labourwelfare inthewayoftrainingand
developmentofworker’sskills.Finally,fewexamplesdirectedtothecommunityarepresent.Apartfrom
these initiatives collective CSR is rare and negligible compared to the individual actions, which will be
described in detail in the next section. Concerning the selection of the partners,MSMEs predominantly
chooseindustryassociationsorinfewcasesNGOsrespectpartnershipswithlocalunits.Themainreasons
observedfornotgettinginvolvedwithsupportagenciesorotherunitsincollectiveCSRengagementseems
tobemainlytheabsenceofastronginstitutionalsupportenvironment.Alsothelackofinterestincollective
CSR actions is anothermotive, while the level of trust is perceived good and it does not seem directly
influencingtheenhancementofcollectiveresponsibleactivitiesfortheLudhiana’sMSMEsinterviewed.
4.2Ludhiana’sMSMEs
4.2.1CharacteristicsanddifferencesoftheMSMEsinterviewed
InthissectionIwilldescribeindetailstheMSMEsinterviewedintheLudhiana’sknitwearcluster,underlying
themaincharacteristicssharedandthedifferencesencountered.
Aspreviouslyunderlined inthe literaturereview,nouniversaldefinitionofMSMEsbasedonquantitative
criteria exists (Inyang, 2013). I have preferred to use qualitative characteristics, which have been seen
recurrent inallMSMEs,todefineanddistinguishmicro,smallandmediumenterprisesfrombiggerunits.
Firstly, personal management by the owner and a little distinction between the role of ownership and
57
direction/administrationusuallycharacterizeMSMEs(Spence&Lozano,2000).Thisisperfectlyexplainedby
thegeneralmanageroftheLudhiana’sDICwhichstated:
“SMEs[…]Basicallytheyareimmature.Sameisthemanager,sameheislookingaftersales,sameheisalso
lookingafterthetechnicalaspects,heisalsolookingatthefinancialpart...Basicallyheislookingafterall
theaspectsofitsunit!”(25.04FirstInterview,2016;1).
ThisquotationalsounderlinesthemultitaskingfeaturethatdistinguishesMSME’sownersfromtheonesof
largeenterprises.Anotherrespondentstressedthesamepoint,onlyaddingtheaspectofbeinghelpedby
hisson(27.04FirstInterview,2016;2).ThisspringstoanotherqualitativecriterioncharacterizingMSMEs:
thefamily-managementandfamily-ownership.Inoted,indeed,thatbetweenthe11unitsinterviewed,8are
family-owned, which then appeared another common feature describing the MSMEs in the Ludhiana’s
cluster. An additional peculiarity of small andmedium firms is the informal style of leadership and the
dominationofinformalrelationsandcommunicationstyle(Spence&Lozano,2000).Theownerofaknitting
unitstressedthispointwhileexplaininghisrelationshipwiththeworkforce:
“EverySaturdaysItakemymealwithmyworkers...andthemealissponsoredbythefactory[…]Weare
usedtosittogether...wetalkandtheysharetheirproblemsandviews.Whenwemeet,theyareveryfreeto
talk...ifthereareanyproblemstheytellmewithconfidence...wehaveafriendrelationandIdon’twantto
feelthemdistantfromme.”(28.04ThirdInterview,2016;1).
Thispassage, in turn,highlights thehighdegreeof interrelationofMSMEswith theirworkforce,which is
anotherqualitativecharacteristicof smallenterprises,asarguedbyEnderle (2004).Additionally, “feeling
closetotheemployees”(28.04FirstInterview,2016;1)andthecomparisonoftheunitasabigfamily(26.04
FirstInterview,2016;3)seemfrequentandnotablefeaturesbetweentherespondents.Finally,anothertrait
ofMSMEsisthefinancialconstraint(Lund-Thomsen&Pillay,2012),whichhasbeenenlistedbysomeofthe
enterprisesinterviewedastheirmainissue(29.04SecondInterview,2016;10;29.04FirstInterview;6).A
part from limited financial resources,MSMEs are also typified by awidespreadmanagerial inexperience
(İPLİK&KILIÇ, 2009) or limitation ofmanagerial resources (Lund-Thomsen&Pillay, 2012). This aspect is
underlined by the DIC’s manager which labels MSMEs as “businesses without professional style of
management”(25.04FirstInterview,2016;14).
58
BecausethecategorizationofMSMEsisquitevast,Ihaveencounterednotonlysharedcharacteristicsbut
alsosomedifferencesbetweentheunitsexamined.Apartfromthefinancialaspect,whichwashighlighted
severaltimesbydifferentrespondents,onespeakerunderlinedthewidenessoftherangebetweenmicro,
smallandmediumenterprisesinregardtotheimplementationofCSRactivities.Specifically,hesaid:
“No,they[referringtothemicroandsmallunits]arenotinterestediftheyhaveturnover.Onlyinthe
mediumandlargesectortheyactuallyimplementCSRactions.Inthemicrosector,youhavetomotivatea
lotbecausetheyarenotreallyinterested.Forinstance,thebuyersgiveinternationalstandards.”(25.04
ThirdInterview,2016;3)
To conclude, this passage also emphasizes a factor that the literature see as an enhancer of the
institutionalizationofCSRactivitiesindevelopingcountry’sunits:theglobalbuyersandglobalvaluechains
inwhichdevelopingcountriesclusteredMSMEsareembedded(Lund-Thomsenetal,2016b).However,as
previously explained, it does not seem a relevant driver for the majority of the Ludhiana’s MSMEs
interviewed.
4.2.2IndividualCSRinLudhiana
InthefollowingsectionIwillintroducetheindividualCSRactionsimplementedbytheMSMEsinterviewed.
Adistinctionbetween‘individualinternalCSR’and‘individualexternalCSR’hasbeenprovidedbasedonthe
destinationof theactivitiesundertaken (Sachdeva&Panfil,2008).While the formeronesareconducted
internallywithintheunit,thelatterhaveafunctiontobenefittheoutsideenvironment(Ibid).
4.2.2.1IndividualinternalCSR
ThisareaofCorporateSocialResponsibilityhasbeenseenasthemostbroadly implementedbytheunits
interviewedintheLudhiana’sknitwearcluster.Iexpectedthishigherlevelofinvolvementmainlybecause
unitsarenaturallyconcernedaboutmattersinternaltothefirm(Sachdeva&Panfil,2008;Vives,2006).The
respondentshaveprovideddifferentexamples falling inthiscategory: fromtheprovisionofcanteenand
housing facilities to their workforce, to provident fund (PF) and employees’ state insurance (ESI), until
trainingandsafetyworkshops.Apartmoreformalkindofpractices,liketheonesjustenlisted,alsoinformal
internalresponsibleactionshasbeenencountered.Inspecific,informalCSRpracticescoveramorebroaden
areaandarecharacterizedbythemoredisparateactions(Tran&Jeppesen,2016).Someexamplesfacedin
theLudhiana’sknitwearclusterare:thepaymentofimportantworker’sfamilyevents,theorganizationsof
59
religioustrips fortheworkforceorsimplytheprovisionof freeteaandsnacks.All theseactivitieswillbe
describedindetailinthenextparagraphs.
Betweenthe individual internalCSRactivitiesundertakenbytheunits, theonesthathavebeenseenthe
most spread are the payment of PF and ESI for the workforce and this is most probably due to their
mandatoryaspect.NormallyalltheunitsprovidePFandESIbutthisisdoneonlyforthefixed/regularworkers
(28.04Third Interview,2016;1).Themicro-unitsaretheonlyexceptionregardingthe implementationof
theseformsofinsurance.Indeed,itappearsthattheydonotcovertheiremployeeswithPFandESI(29.04
FirstInterview,2016;29.04SecondInterview,2016)andwhenaskedwhythishappensoneaffirmedthat
thisisduetotheworker’schoicenottogettheirsalarycutoff(29.04SecondInterview,2016;2).Thissupport
theliteraturewhichsustainthatamajorconditionshapingtheimplementationandfunctionofCSRnorms
in the Indian context is the labour agency, considered at the individual worker’s level (De Neve, 2014;
Carswell&DeNeve,2013).Particularly,workerstendtoavoidemploymentincompanieswhereCSRpolicies
areimplementedduetoadeliberatechoicetoworkinmoreflexible,casualandinformalsettings(DeNeve,
2014).TheownerofamediumfirmexplainedindetailshowdoPFandESIratesofcontributionworkand
whicharethemainissuestheyfaceinforcingtheworkforcetoreceivesocialsecurityandhealthinsurance:
“ESIisforthemedicalfacilities,PFisfortheretirement.InIndia,peopledon'tunderstandtheimportanceof
theseactivities...ortheydon'twantto.WhenwestartedprovidingESI,10yearsago...around15daysafter,
everydayworkerswerecominginourfloorasking"CutthePF"....Theydon'tunderstandthattheyarenot
theonlyoneswhopaid...Ialsodeposit20%.Wecutlet'ssay12rupeesfromtheirsalaryandIalsoputthe
sameamountforthemintheirfunds,buttheydon'twanttheirsalariestobecutdownandtheydon'twant
tounderstand.”(28.04FirstInterview,2016;1).
Thisproblemhasbeen listedbymostoftheunit’sowners.Though, foranemployeeofthe INTUC,trade
unionwingoftheNationalCongressparty,therealreasonwhysomeemployeesdonotwanttocuttheir
salariesforgettinghealthinsuranceandsocialsecurityisthattheydonotreceivetheminimumwageallowed
bylaw(03.05SecondInterview,2016;1).Regardingthisaspect,morethanoneMSME’sownerdeniedthis
accusationandexplicitlydeclaredtheirrespectofthelawregardingboththepaymentoftheminimumwages
andtheprovisionofthesalariesontime(27.04ThirdInterview,2016;25.04FirstInterview,2016).Finally,
regardinganotherformal internalCSRaction,morethanonerespondentsdeclaredtheirbanningofchild
labourintheirunits(28.04ThirdInterview,2016;1;27.04ThirdInterview,2016;1). Ifwhatsaidfromthe
employeeof the tradeunion is true,MSMEswill bebehaving responsiblyand irresponsibly concurrently
60
actuatingadecouplingattitude(Lund-Thomsen&Khara,2015).Indeed,whilestayinglegitimatedattheeyes
oftheexternalstakeholdersthroughthefocusonhigh-visibleissues(e.g.banningchildlabour),theywillstill
keepnotcomplyingotherhumanandlabourrightissueslikethenon-paymentofPFandESI(Ibid).Finally,
workshopsandtrainingcampsarenotonlycollectiveCSRactivitiesbuttheyareimplementedalsoatthe
individuallevel.Differentkindsofworkshopsarearranged,fromsafetytraining(28.04FirstInterview,2016;
26.04 Second Interview, 2016; 27.04 First & Third Interview, 2016) and First Aidworkshops (28.04 First
Interview,2016;27.04First Interview,2016) toproper skill trainingones (26.04Second Interview,2016;
27.04ThirdInterview,2016),evenifinalessamount.Technicaltrainingoftheworkforce,ifgiven,isusually
doneonlyatthebeginningwhenanewemployeeisrecruitedanditlastsbetweenacoupleofweekstoa
maximumof 6months (27.04 Third Interview, 2016; 2). Finally, trainings toworkers on how to use the
PersonalProtectiveEquipment’s(PPE)arealsomade(28.04FirstInterview,2016;2).
Other activities which fall in the category of individual internal responsibility, but are informal kind of
practices,aretheprovisionofteatoworkers,drinkingfacilitiesintheunitandcanteenfacilities.Usually,the
majorityofthefirmsprovidewatercoolerstotheworkers(28.04FirstInterview,2016;1),teatwiceaday
(28.04FirstInterview,2016;1)andsometimesalsofood.Onthe11unitsexamined,4unitsfurnishfoodto
theworkforceandwhileonefirmoutsourcesit(27.04FirstInterview,2016;1),theother3detainacanteen,
whichcanbefreeofcost(Ibid)orpayableataverylowprice(26.04SecondInterview,2016;4).Onespecial
caseregardsahosieryandembroideryunit,where:
“Onceaweek...everySaturdaysI[referringtothefirm’sowner]takemymealwithmyworkers...andthe
mealissponsoredbythefactory[…]Weareusedtosittogether...wetalkandtheysharetheirproblemsand
views.”(28.04ThirdInterview,2016;1).
Thisquotationperfectlysupporttheliteratureargumentregardingthepresenceofacloserrelationbetween
MSMEsandtheirworkforcerespectbiggerfirms(Jamalietal,2015).ThisinturnisthereasonwhyMSMEs
primarilytendtoimplementinformalCSRpractices,especiallydirectedtowardtheirworkforceandthelocal
community(Ibid;Vives,2006;Tran&Jeppesen,2016).Someunitsalsoofferhousingfacilities.Betweenthe
firmsinterrogated,onlyoneactuallydetainsadormitoryfreeofchargefortheworkersandtheirfamilies,
buttheseaccommodationsarereservedonlytotheregularworkforcenottheseasonalones(26.04First
Interview,2016;1,2).Anotherfirmprovidesresidencetoitsworkforce,alwaysonlytothefixedemployees,
butinthiscasethedormitoryquarteristheunititself(28.04SecondInterview,2016;1).Thereasongiven
forlettingtheemployeessleepingintheunitwiththeirfamilyismainlysafetypurpose:“Livinghere,they
61
willlookafterattheunit[…]andwewillhaveworkersontime”(28.04SecondInterview,2016;2).Finally,
othertwoMSMEsareintheprocesstobuildhostels(26.04SecondInterview,2016;1;28.04ThirdInterview,
2016;1).
Additionalinformalkindsofindividualinternalresponsibilityhavebeenencountered,andthreeexamples
are: the provision of loans to workers, the celebration of festival inside the industrial unit and the
arrangementofreligioustripsfortheworkforce.Regardingthemonetaryassistance,thisisusuallydoneto
helpthemwhentheyneedsomeassistanceforemergencysituations(e.g.familyproblems,healthissues)
(27.04First Interview,2016;1;27.04Third Interview,2016;1)or for thepaymentof importantworkers’
familyevent(e.g.paymentofweddings)(27.04SecondInterview,2016;2).However,thesekindsofbenefit
aregivenonlytoregularworkersandeachcase isscrutinizedindetail.SomeMSMEsimprovethelabour
welfarealsothroughtheprovisionofrecreationalactivitiestotheiremployees.Forinstance,afirmallows
theworkerstocelebrateinsidetheunitsomeofthebiggestfestivals,religiousornot,likeNewYear,Baisakhi,
Lohri(26.04SecondInterview,2016;1),whileanotherunit’sownerarrangesyearlyreligioustrips(28.04First
Interview,2016;1).Tothemostpart,alltheseactivitiesridemoreontheinformalrelationshipsbetweenthe
ownerandthelabourforcethananypoliciesorsystems(Sachdeva&Panfil,2008)andaredrivenbyinternal
factors, like theprinciplesof themanagersand theirethical and religiousvalues (VonWeltzienHøivik&
Shankar,2011).Asstressedbefore,thisunderlinestheinformalaspectdistinguishingMSMEs,whichinturn
is reflectedon their tendency tomajorly implement informalkindofCSR (Vives,2006;Tran& Jeppesen,
2016).Finally,Iwanttohighlightthatalsoforthesecases,micro-unitsaretheoneswhodonotprovidetheir
unitswithanyofthesefacilitiesandactivitiesandthis ismainlydue,asstatedfromthem,tothe limited
financialresourcesdetained(29.04FirstInterview2016;29.04SecondInterview2016).
4.2.2.2IndividualexternalCSR
ExternalCSRactivitiesarerealisedalsoattheunitlevelandthesearedominatedbycharitydonationsand
by the improvement of the cluster environment. Specifically, environment welfare is achieved through
private ETPs, the implementation of rainwater harvesting systems, plantation and traffic management
activities.
Thecharitydonationsincludecontributionstoreligiousorganizations(29.04ThirdInterview,2016;1)and
informalkindofassistanceforthecommunity,liketheprovisionoffreefoodorclothestopoorpeople(27.04
SecondInterview,2016;1;29.04SecondInterview,2016;1).Particularly,ithasbeennotedthatthemicro-
units,whileuntilnowdidnotshowalmostanykindofCSRexecution,aretheoneswhomostlyimplement
62
individual external CSR practices, on the form of charity actions. Particularly, they usually opt for non-
monetarycontributionslikefoodorclothing.Ifmonetarydonationsaregiven,thenareusuallyaddressedto
religiousinstitutions,likemosques(29.04SecondInterview,2016;1).Thisisinlinewithpreviousempirical
researchesindevelopingcountry’sclusters(Sachdeva&Panfil,2008)whichwereshowingapredominance,
forthemicrounits,ofresponsiblepracticesdirectedtothe‘communitywelfare’.Thisisduetotheircloseness
tothelocalcommunitymorethantothelabourforce,becauseofthesmallpooltomaintain(Ibid).
Regardingtheenvironmentwelfare,themostdiffusedindividualactionsundertakenareplantationactivities
(26.04First&SecondInterview,2016;27.04SecondInterview,2016;28.04ThirdInterview2016)andthe
developmentofparks(27.04SecondInterview,2016;1).Fourenterprisesdothatandasdeclaredbyoneof
them “This has been done forcibly by us” (26.04 Second Interview, 2016; 2) sowithout the government
permission.Whendirectlyaskedthereasonbehindtheirchoiceofvoluntaryplantationactivities,anowner
states:
“Beforethelandwasusedforpark,itwasusedtobefilledwithgarbage.Andwearedoingthisnotforour
self![…]Wefellthatthegovernmentwasnottakingcareofourneighbourhood,thatiswhywedidthisand
paidforeverythingfromourpockets.”(26.04SecondInterview,2016;1&2)
This quotation supports Visser’s (2008 in Demuijnck & Ngnodjom, 2013) argument regarding MSMEs
orientationtowardsbasicresponsiblefunctionsasawaytofill“governmentgaps”.Indeed,MSMEstakeover
thisresponsibilityinordertocontributeforthedevelopmentoftheircommunitywhentheyperceiveaction
asneeded.Furthermore,betweenthefourdyeingunitsinterviewed,onlyonedetainsitsownETPbasedon
aZLDtechnology(28.04FirstInterview,2016;1)anditalsoholdsarainwaterharvestingsystem(Ibid).Ithas
tobehighlightedthatthisSMEregularlyexports itsproductanditsmainmarket istheexport.Asusually
seeninthepreviousliterature,exportersarecharacterizedbyhigherlevelofcommitmenttoCSRpractices
due to the pressure given by the global buyers (Vives, 2006). As expected, this unit shows a major
involvementinresponsiblepractices,particularlyformalones,beinginlinewiththispath.Finally,another
activitywhichcanbecategorizedasexternalresponsibilityistrafficmanagement(26.04FirstInterview,2016;
2). This activity has been seen only once and when directly asked the reason behind this choice, the
respondentanswered:“I lostmymotherandshecouldn'treachthehospitalduetotraffic.So, that ismy
reason.”(26.04FirstInterview,2016;5).Ontheoverall,itcanbenotedthatfirstlythelevelofcommitment
toindividualexternalactivitiesisratherlowrespecttheinternalones,indicatingtheirnon-essentialnature
asperceivedbysmallerfirms(Vives,2006).Secondlyitappearsclearthatentrepreneurs’motivationsand
63
valuesarethemaindriversinthechoiceoftheCSRagenda(Vives,2006;Sachdeva&Panfil,2008),whichin
turnisreflectedinanetpredominanceofinformalCSRpractices.
4.2.2.3SummaryindividualCSRinLudhiana
Overall,Iobservedthatregardingallthe‘individualCSRactivities’undertaken,thefocusispredominantlyon
the internal aspect, so actions conducted within the unit only, and especially directed towards the
improvementof the labourwelfare. This ismainlydue to entrepreneurs’ natural concern aboutmatters
internaltothefirm(Sachdeva&Panfil,2008;Vives,2006)andalsoduetotheclosenessofMSMEstotheir
labourforce(Jamalietal,2015).Furthermore,aprevalenceofinformalindividualresponsiblepracticeshas
beenseen,supportingthegeneraltheoreticalargumentthatMSMEsprimarilytendtoimplementinformal
CSRpractices(Ibid;Vives,2006;Tran&Jeppesen,2016),withoutreflectingthemintothefirms’corporate
strategies(Vives,2006).Thismakesclearthatentrepreneurs’motivationsandvaluesarethemaindrivers
fortheCSRagenda,whilepressurefromglobalbuyersisseenrelevantonlyfortheexportingunits,whichin
turnisreflectedinahighercommitmenttoCSRformalactivities.However,acrossalltheMSMEsinterviewed
ithastobenotedthatthisengagementvariesonthebasisofthefirm’ssize;forinstance,whilesmalland
mediumenterprisesaremoreinclinedtoinvestintakingcareoflabour(frommandatoryCSRactivitieslike
thepaymentofPFandESItillmoreinformalones,liketheprovisionofloanstotheworkersforimportant
family’sevent),themicrounitsaremoreconcernedaboutcommunitywelfareandcharity.Thesefindings
reflect previous empirical researches done in small and medium enterprises in developing countries
(Sachdeva&Panfil,2008;Vives,2006).Apossiblereasonofthiscouldbethat,whilesmallandmediumunits
havealargerpoolofworkerstomaintain,makingobligatoryforthemtospendonbenefits,forthemicro
firms this doesnotwork (Sachdeva&Panfil, 2008). Instead,when it comes to the aspect of community
welfareandcharity, the inclination shifts to themicroenterprisesmainlybecause theyare closer to the
beneficiarycommunities(Ibid).Furthermore,theinformalCSRpracticesusuallyimplementedbythemicro
unitsarelessmonetaryconsuming,reflectingtheliteratureargumentdefiningMSMEsascashlimited.
4.3InformalityinLudhiana
4.3.1WorkforcecompositionandcharacteristicsinLudhiana
Beforeexplaininghowtheprocessoflabour’sinformalisationworksintheLudhiana’scontext,Iwanttogive
tothereaderabriefdescriptionoftheworkforceintheMSMEsinterviewed.Thekeyfindingsregardingthe
labourforcewillbepresentedinthenextparagraphs.
64
• Mostoftheworkersintheunits,independentlyfromthetaskcarriedout,aremales.Particularly,in
themicro-embroideryunits,theworkforceischaracterizedonlybymales(29.04First,Second&Third
Interview,2016),whilefortheotherMSMEsthepercentageofmenswingsbetween70and95%.
• Theaverageageoftheemployeesisbetween20to45/50yearsoldandithasbeenunderlinedby
morethanoneintervieweethatnooneunder18yearsoldishired(28.04FirstInterview;27.04Third
Interview,2016).Onlyinthemicro-embroideryunitsthereischildlabourandpeopleusuallystart
workingattheageof10/11years,becauseofpoverty(29.04SecondInterview,2016;2).Particularly,
thetrainingprogrammelastsforaperiodofaround3/4years(29.04FirstInterview,2016;4).
• Regardingthegeographicalprovenience,mosttheworkerscomefromoutofPunjab(28.04Second
Interview,2016;2)andmainly fromUttarPradesh (UP),Biharand insomepart,alsoOdishaand
HimachalPradesh.
• Theskillslevelvariesfromseasonalandregularworkers.Indeed,whiletheformeronesareusually
unskilled and confined to the simplest jobs, the regular ones are defined as “themaster of the
machines […] the professional in the field” (27.04 Second Interview, 2016; 6). Regarding the
educational level,mostoftheemployees(excludingthestaff)areuneducatedandasdeclaredby
onerespondent,“itisjustessentialthattheycanreadbutitisnotrequiredanyspecificeducational
qualifications”(28.04FirstInterview,2016;1).
• Aboutthemodeofrecruitment,ithasbeenseenthatmostoftheSMEsusecontractlabours(28.04
First,Second&ThirdInterview,2016;26.04First&SecondInterview,2016;27.04Second&Third
Interview,2016).Onlythemicrounitsdonotpresentthisfeatureandtheprocessofrecruitmentis
basedthroughpersonalrelationsorreference(29.04First,Second&ThirdInterview,2016).
• RegardingthecompositionoftheworkforceintheLudhiana’sMSMEs,ithasbeennotedthatallthe
unitstakeadvantageofseasonalworkersevenifnotdirectlystated.Theyareusuallyintheposition
ofhelpersorlowlevelstaff(28.04FirstInterview,2016;1)andaccountforhalfofthefirm’slabour
force.Home-basedworkers, instead, areusedonlyby themicro-embroidery firms (29.04First&
ThirdInterview,2016).
• Duetothemassiveusageofseasonalworkers,theturnoveroftheemployeesishigh.Forinstance,
oneunit’sownerdeclaredthatusuallymorethan50%oftheworkforceisshuffledeveryyear(28.04
First Interview,2016;1).Though itappeared thatnotonly seasonalworkerschangebutalso the
regular ones,which usually stay in the same industrial premise for a period of 4/5 years (27.04
Second Interview, 2016; 1). It works differently for the micro-embroidery units where, instead,
excludingtheseasonalemployees,theregularlabourforceworksinthesamefirmforatleast10to
15years(29.04First,Second&ThirdInterview,2016).
65
ThefindingsreflectsomepreviousempiricalresearchesdonebyMezzadri(2014a;2016b),aboutinformality
and the Indian garment industry. Thesewere showing the IndianMSMEs characterized by a systematic
exploitation of societal inequalities, like gender, age and geographical provenience, in order to attain
flexibilityadvantages(Mezzadri,2014b).Theconsequencestheworkforcecompositionandcharacteristics
have on informality andCSR implementation in the Ludhiana’s contextwill be described in detail in the
followingsection.
4.3.2Informalisationoflabourinfactory-realmsofproductioninLudhianaandtheconsequent
repercussiononCSRimplementation
As previously stated in the literature review, the process of informalisation involves a “systematic
exploitation of informalmechanism to control the labour force, based on deeply-rooted inequalities and
structural differences, like gender, age, geographical provenience etc.” (Mezzadri, 2012). During my
fieldwork,ithasbeenevidencedthatinthefactory-realmsofproductionintheLudhiana’sknitwearcluster,
migration’spatternsarethedominantmodalityoflabourinformalisation.Thisandtherecruitmentprocess,
mainlybasedonlabour-contractors,madetheimplementationofCSRnormscomplexandineffective.
InLudhiana,factory-basedlabourisprimarilymaleandmigratory,comingfromdifferentNorthIndianstates,
inparticularUPandBihar.Accordingtothefieldfindings,malemigrants’workerscanbecategorizedintwo
differentblocks: the skilledones that stay longer in the sameMSMEandusually gobackhomeonly for
holidaysandfestivals(27.04SecondInterview,2016;3)andtheunskilledones,whichinsteadareengaged
inmultipleprocessesof labourcirculation.Particularly,threepatternsofcirculationseemtoexistforthe
latterones.ThefirstoneisayearlyprocesscharacterizedbyworkersgoingbackandforthbetweenLudhiana
and their place of origin (25.04 First Interview 2016; 1; 26.04 Second Interview, 2016; 3; 27.04 Second
Interview,2016;28.04ThirdInterview,2016;3&4).Thesecondpattern,instead,indicatethepacethrough
whichtheyswitchbetweenunits intheLudhiana’scontext (28.04SecondInterview,2016;3;28.04Third
Interview,2016;1).Specifically,thishappensbecauseoftheminimalvariationinwagesbetweentheunits.
Finally,thethirdandlasttypeofcirculationentailsworkersmatchingoutofthesweatshopsystemoncetheir
workinglifeisfinished,aroundtheageof45/50.Theempiricalfindingsobtainedreflectpreviousresearches
doneintheIndiangarmentindustrybyMezzadri(2016b),whichexperiencedthesameprocessesoflabour
circulation in the National Capital Region (NCR). Particularly, the recruitment process of this
‘unstable’/seasonal workforce ismostly based on labour contractors (25.04 First Interview, 2016; 28.04
SecondInterview,3),asdeclaredbytheinterviewees.Boththepresenceofcontractorsshapingthelabour
66
chainandtheexistenceofalocalsweatshopsystembasedontheexploitationofmalemigrantworkersmake
CSRnormsinefficient.
Furthermore,thesecircularmigrationsprocessesimplyahighlabourturnoverinthecluster.Whiletheunits’
ownersarguedthatthishighrenewalrateisduetothemigrant’workerchoicestomove,Iperceivedthat
thisworkingarrangementbenefits tremendously the firms,as itoffersa flexiblepoolof labouratavery
cheapcostlettingthemtobeflexible.However,alsoaspointedoutbyanemployeeoftheINTUC,Indian
tradelabour,themigrationprocessesarealsoachoiceoftheworkers,whichprefertobemoreflexibleand
enjoy ‘freedom’(2.05 Second Interview, 2016; 3). This statement support De Neve’s (2014) argument
regarding individual labour agency decisions as an influencer in CSR adoption in developing countries’
MSMEs.Finally,theinformalisationoflabourseemsalsotoinvolveanindirectprocessof“informalisationof
CSRpractices”overhealthandsafetyconcerns(Mezzadri,2014a).Indeed,whilefortheskilledemployees
(whicharetheregularones)thefirmspayPFandESIcontributionsrates,theseasonalworkersarelackingof
this.
4.4 CSRperceptionsinLudhiana
4.4.1DefinitionsandperceptionsofCSRforLudhiana’sMSMEs
In the following section I will present the different definitions and perceptions of Corporate Social
Responsibilitygivenbytheinterviewees.Therespondentshavegivennouniversalexplanationoftheterm
CSRbut Ihave identifiedtwopredominantanswers:“takingcareofthe labour”(26.04SecondInterview;
27.04First&ThirdInterview;28.04FirstandThirdInterview,2016)and“improvementoftheenvironment”
(26.04SecondInterview;27.04FirstInterview,2016).Indeed,whendirectlyrequestingapersonaldefinition
ofCSR,firmsacrosstheclusteracknowledgedlabourwelfareasthemostpredominantanswer,thenfollowed
byenvironmentalwelfare. Ithas tobeunderlined that thedyeingunitsare theonlyoneswhogave this
seconddefinitionofCSRandthisisduetotheir‘pollutingtrait’.Inalessamount(actuallyonlyoneindustrial
unit)hasperceivedCSRalsoasbeinginvolvedin“communitywelfare”(28.04ThirdInterview,2016).These
findings reflect previous empirical researchers, like the one of Sachdeva and Panfil (2008). Indeed, their
projectfoundthattherewasnouniformunderstandingordefinitionofCSRamongstIndianMSMEsandthat
thepredominantanswerencounteredwas“employeewelfare”.
Clearly, as stated by the respondents, CSR actions are company driven and so perceived as “voluntary
implementedactivities”(27.04FirstInterview,2016;2),excludingthemandatoryones:likePF,ESIandETPs
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forthedyeingunits.Indeed,theyareusuallynotrecognizedas‘monitoringsystems’imposedbyoutsiders,
butinsteadtheyseeCSRactionsassupportactivitiesimplementedbythemonavoluntarybasiswhenthere
is a lack of government action (26.04 Second Interview, 2016; 1). The aspect of voluntariness is also
underlined by the absence of a dedicated budget for CSR: a characteristic, whichwas shared by all the
respondents. An exception regards the exporters, which are usually exposed to interactions with larger
sphere’sactors (e.g.globalbuyers,exportersetc.). For instance,oneexporter interviewedhaveacritical
perceptionofCSRactivities,declaring:
“Isayonethingfrankly...CSRimplementation,nobodycandobyheart!Theydoonlyiftheyarepushed,
otherwiseinnormalfactories...80-90%industries,theydon'timplementCSR.Smallscaleindustriesthey
don'twanttoimplementCSRbecauseitcosts...fortheCSRimplementationthereareverybigcosts,they
don'twanttospendmoneyinCSRbuttheywanttospendthemonproduction![…]Thisisafranklyanswer,
usuallyinthenormalindustryfactoriesitworkslikethis[...]weareexporters,weworkforbigbrands,big
companiessothat'swhywemainlyimplementthesethings.Before,Isay15yearsback,normallywewere
implementingnormaltechniques...thenbuyerswherecomingheretocheck,withinspectorsandtheywere
tellingus"ImplementCSR,implementCSR!"...andthenwedidCSR.”(28.04FirstInterview,2016;1)
Onlyinthiscase,CSRisperceivedasanimpositionfromexternalactors.ThissupporttheargumentofKhan
andLund-Thomsen(2011)whichconsiderCSRnormsimplementedbydevelopingcountry’sMSMEs,asaway
of‘WesternculturalandeconomicImperialism’imposedbytheglobalbuyers(Ibid).
4.4.1.1DriversandrecipientsforCSRinvolvement
Asjustsaid,theinterviewedMSMEs,apartforoneanswer,rarelydeclaredthattheimplementationofCSR
was imposed by remote business or institutional environments. Therefore, I continued to look for the
motivatingfactorsthatinducetheirimplementation.So,whyaretheunitscarryingouttheseactivities?It
has been seen that the implementation of CSR actions is mostly driven by the personal values of the
owner/managerandespeciallyontheclosenessorresponsibilitytheyfeelfortheirworkforceandthelocal
community.
Indeed,whendirectlyaskedwhoare the recipientsof the responsibleactivities taken,mostof theunits
mentionedtheemployees(26.04First&SecondInterview;27.04SecondInterview;28.04Second&Third
Interview,2016),thecommunity(26.04FirstandSecondInterview;27.04SecondInterview;28.04Second&
Third Interview, 2016) and the enterprise’s owner itself (27.04 Second Interview; 28.04 Third Interview,
68
2016). Only one MSME stated the buyers (28.04 First Interview, 2016; 2), while no one quoted the
government,whichisseenasamotivatingfactoronlyforbiggerfirms:
“RegardingthegovernmentIwassayingthatcompanies,whichearnmorethan200crorestheyhaveto
spend2%forCSR…ifnottheydon'tforceustotakeCSR.”(26.04FirstInterview,2016;2)
Themost consistent reason, accordingly, given for engaging in CSR actions are ethics and humanitarian
reasons.Indeed,themajorityoftheowner’sunitsperceivedCSRastheirmoralduty(26.04First&Second
Interview,27.04Second&ThirdInterview,28.04ThirdInterview;2016)“towardsboththeenvironmentand
thesocialworld”(27.04SecondInterview,2016;2).Themicro-unitsinterviewed,whichfocustheiractivity
ondonationsandcharitytobothreligiousassociationsandtothecommunity,gaveastheengagingreason
religious values/duty (29.04 First, Second & Third Interview, 2016). As declared by one of them: “Our
community[Muslim]isreallyreligiousandfollowingtheKoran,ourreligiousbook,itsaysthatwehavetodo
charityandthat'swhywedothat.”(29.04ThirdInterview,2016;1).Onlyoneexceptionisrepresentedbya
shawlexporterforwhomthemainreasoninimplementingCSRactivitiesresultinthedesiretohavebetter
relationswiththeclients(28.04FirstInterview,2016;1&2).Toconclude,itcanbestatedthatthedriving
factors for the selection and implementation of CSR activities remain in the hands of the entrepreneur
despitethepresenceandgrowthofexternalinfluences.
4.4.1.2CommunicationofCSR
RegardingthecommunicationoftheCSRactivitiesundertaken,theMSMEsinterviewedmainlyprefernotto
advertise their actions to gain any recognition (27.04 First Interview; 27.04 Third Interview; 28.04 First
Interview;28.04ThirdInterview,2016).Fewcasesstatedthatthereisanexternalcommunicationbutmainly
throughtheuseofword-of-mouth(26.04SecondInterview,2016;1)orthroughWhatsAppgroups(26.04
First Interview, 2016; 1). For this reason, most of the actions taken by the interviewedMSMEs can be
consideredas“silentCSR”,definedbySachdevaandPanfil(2008)as“thoseactionsundertakenwithoutany
publicityorexpectationoffinancialreturnuponthesocialinvestment”.Indeed,suchactionsareconsidered
common/basicbusinesspractices,for instance,somerespondentsstated:”IconsidermyCSRexpensesas
partoftheproductioncosts…whyshouldIremovethem?”(28.04FirstInterview,2016;1)or“Theseareall
activitiesneededinthefactory”(28.04SecondInterview,2016;1).
69
4.4.1.3ObstaclesandbenefitsofCSR
Themain obstacles and barriers pointed out by theMSMEs interviewed for amore participation in CSR
practices are: the lack of government permissions or government cooperation (26.04 First & Second
Interview;27.04SecondInterview,2016)andtheworkers’notwillingness,bothregardingthepaymentof
theirPFandESI’scontributionratesoruseofthePPEs(28.04First&ThirdInterview;27.04ThirdInterview,
2016).Regardingthefirstreason,governmentwasperceivedasanobstacleonlyfortheimplementationof
externalorcollectiveCSRactions,liketheconstructionoftheCETPsortheplantationactivities.Surprisingly
limitationsinmonetaryresourceswerenotdirectlymentionedasbarriersforamoreactiveinvolvementin
CSRpractices.
Instead,themajorbenefitsofengaginginCSRactivities,aslistedbytheMSMEs’interviewed,aregettinga
goodworking environment (26.04 Second Interview; 27.04 Third Interview; 28.04 First Interview, 2016),
providingbenefits/welfaresforthecommunityandtheexternalsurrounding(26.04First&SecondInterview;
27.04SecondInterview;28.04FirstInterview,2016).Inalessamountalsoaneconomicreturn(26.04First
Interview;27.04First&SecondInterview,2016).Itseemsobvioustome,thatmostlytheunitshaveseen
CSRasapotentialadvantagetoestablisha“goodandhealthyworkingenvironment”(27.04ThirdInterview,
2016;1)duetothepredominanceofindividualinternalCSRactivities.Environmentalwelfareandbenefits
forthecommunityare,instead,linkedtotheconstructionofparks,plantationactivitiesandtotheCETPs’
creation.
Economicreturnandbenefitsforthecompanyitselfareseenbysomeunits,butmainlyinthelongtermand
theyareusuallyassociatedwithaparticularCSRactivity:theCETPs’construction.Finally,acoupleofMSMEs
indirectly perceived an economic return,without frankly listing it, through the growth of trust between
ownerandemployees,whichinturnbroughtanincreaseintheproductivity:“Onebenefitcanbetheincrease
oftrustbetweenmeandtheemployeesandthereforeanincreaseintheproductivity.”(28.04ThirdInterview,
2016;1).
5.Conclusion Themain objective ofmy researchwas to investigate and exhibit how CSR practices are perceived and
implementedbyMSMEsintheLudhianaknitwearclusterinIndia.Inordertoanswertheresearchquestion
posed,“HowdotheMSMEsintheLudhiana’sknitwearcluster inIndiaperceiveandimplementCorporate
70
SocialResponsibilitiesactions?”,Iundertookseventeensemi-structuredinterviewswithmanagersofMSMEs
andexternalstakeholders(likegovernmentofficialsortradeunionsinLudhiana),inadditiontosecondary
data.Ihavealsoexploredtheliteraturepreviouslydevelopedregardingfourmaintopicsconsideredrelevant
inaspecttotheresearchquestion,whichareindustrialclusters,MSMEs,informalisationoflabourandCSR.
Regardingindustrialclusters,thediscussionconcernedmainlytheaspectofcollectiveefficiency,definedas
thecompetitiveadvantagederived from localexternaleconomiesand jointactionsbetweenbothmicro,
smallandmediumenterprisesandlocalinstitutionbodies.Concerningthesecondtopic,MSMEs,Ifocused
theattentionon thequalitative factorsdefininganddifferentiatingmicro, small andmedium firms from
larger enterprises. Some examples of these qualitative criteria are small distinction between the role of
managementandownership;primaryorientationtowardsday-to-dayproblems;highdegreeofinterrelation
with the community and the environment and limited financial and managerial resources. Informality,
instead,wasmainlydiscussedregardinginformalemploymentandhowcodesofconduct,elaboratedasa
potentialwaytofacethisissue,hadalimitedimpactinimprovingworkingconditionsduetotheirfactory
basednature.Finally,CSRwasanalysedbetweenthedifferentperspectivesemergedfromtheliterature,and
themaindrivers,benefitsandobstaclesencounteredbyfirmslocatedinadevelopingcountrycontextwere
presented.Ithereforedevelopedaninitialconceptualframeworkdescribingthelinksbetweentheprevious
mentionedtopicsandwhichdrovemeintheanalysisofhowCSRimplementationandperceptionisshaped
intheLudhianaknitwearcluster.
Thedata,insum,revealedthatMSMEsdidnothaveaproperanduniversaldefinitionofCorporateSocial
Responsibilitybuttheymainlyreferredthetermaslabourandenvironmentalwelfare.Thisisalsoinlinewith
thetypologiesofCSRactionsthat theyusually implement in theiragendasandthatwillbesubsequently
summarized.Moreover,theyperceiveCSRactionsasprimarysupportactivitiesimplementedbythemona
voluntarybasisandnotas´monitoringsystems´imposedbyoutsiders.Theonlyexceptionwascharacterized
bytheonlymediumexporterinterviewed,whichinsteadhasamorecriticalviewofCSR.Onlyinthiscase,
socialandenvironmentalactivitiesareidentifiedasawesternculturalandeconomicimperialismimposed
by the global buyers, which is also reflected in a major involvement in CSR practices. More generally,
regarding theCSRactivities implemented, it hasbeen seen that theactionsundertaken couldmainlybe
groupedintwocategories:individualandcollective.ThefocusoftheindividualCSRactionsisprimarilyon
theinternalaspectandespeciallytowardstheimprovementofworker’sconditions.Thesekindsofactivity
varyfromformalactions(likethepaymentofPFandESI)tomoreinformalones,liketheprovisionofloans
toworkersortheplanningofreligioustrips.Aprevalenceof informal individualresponsiblepracticeshas
beenseen,makingclearthat,theowner’smotivationsandvaluesarethemaindriversfortheCSRagendain
71
theseMSMEs.Ithasalsobeendiscoveredthat,thefactoryproductioninLudhianaischaracterizedbyahighly
usage of informal labour in the formofmigrantworkers. This informalisation of labour also involves an
indirectprocessof“informalisationofCSRpractices”overhealthandsafetyconcernstowardsemployees.
Forinstance,whileforregularworkerstheunitspayPFandESIcontributionsrates,theseasonal/migratory
ones are lacking of this protection. Regarding collective CSR actions, the data revealed that the focus is
predominantlyontheenvironmentalaspectandparticularlyontheconstructionofCETPs(forthedyeing
unitsonly).ThishappensbecauseitismandatoryforthedyeingfirmstohaveETPs,duetoarecentthickening
ofnationalenvironmental laws.Furthermore,thechoiceofCETPshasusuallybeenpreferredbythelocal
dyeingunitsbecauseoftheir impossibilitytoaffordindividualplants,whichinturnisduetotheir limited
financialresources.However,theconstructionofCETPsisnotwithoutchallenges,indeed,apartfree-rider
problemsalsotheabsenceofastronginstitutionalsupportenvironmentseemtodelaythecompletion.The
secondmostimplementedcollectiveCSRactivityconcernslabourwelfare,inparticular,thewayoftraining
anddevelopmentofworker’sskills.Regardingthemicro-units,thedatashowedthatbetweenthethreefirms
interviewednoneofthemimplementrelevantcollectiveCSRapartcharityactionstowardthecommunity
andreligiousinstitutions,duringholyfestivals.Thisisalsotheonlycaseshowed,whereafirmactuallyworks
jointlywithotherunitswithoutthecooperationofexternal institutions.FortherestofthecollectiveCSR
actions,theunitsusuallychooseaspartnersindustryassociationsor,infewexamples,NGOs.Apartfrom
these,collectiveCSRarerareandnegligiblecomparedtotheindividualones,andthisismainlyduetothe
absenceofastronginstitutionalsupportenvironmentandalackofinterestfromtheunitsinundertaking
socialresponsiblejointactions.Instead,theleveloftrustisperceivedgoodanditdoesnotseemtodirectly
influencethistypeoflowengagement.
In conclusion, my suggestions regarding policy implications in the Ludhiana’s knitwear cluster, mainly
concernapromotion/enhancementofthesupportinstitutionalenvironment.Whilethelevelofindividual
CSRengagementseemedsatisfactory,collectiveCSRwasalmostnegligibleandithasbeennotedthatthe
lowengagementreliesinthisissue.Regardingtheprocessof“informalisationofCSRpractices”overhealth
andsafetyconcernsduetotheexploitationfromthelocalunitsofinformalworkers,aCSRapproachcovering
also temporaryworkers couldbeapossible solution. In thisway, theworker’s choiceof generally being
employed in more casual and informalized settings, will be accomplished without let them being
‘unprotected’.Moreover,theIndianlaw,whichisnowadaysmainlydirectedtoprotectworkersenjoyinga
permanentstatus(Mezzadri,2014a),shouldandisexpectedtointervene.
72
Regardingresearchimplications,itcanbeconcludedthatfurtherresearchesarenecessarybecausethisstudy
is only a first attempt of exploring an unattended terrain of research.Moreover, complete information
regarding informalisation of labour were not reached throughmy fieldworks and thus further research
shouldfocusonthese‘empirical’gaps.Moreover,consideringwhatisknownnow,itwouldbeinterestingto
dofurtherintensivestudiesandamoreextensiveanalysis,lookingatwhetherthesefindingscanbetruealso
foralargerpopulation.
73
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7.Appendices
Appendix1:InterviewGuideforMSMEs’owners
InterviewGuideforMSMEs’owners
Durationinterview:ca.1,5/2hours BasicRespondentinformation
1. Nameoftheenterprise:2. Nameoftherespondent(s)andrespectiveposition(s)inthecompany:3. Whatisyourbackground?Education,workexperience…
EnterpriseHistory4. Canyouprovidemewithabriefdescriptionofyourenterprise?
• Whenwasitfounded?• Isthisafamilyenterprise?• What type of business form do you have? (E.g. partnership, solo
proprietorship,corporation)• How did it evolve/change during these years? (Regarding the product
portfolio,thecustomerbase,productionprocess…)CompanyProfileCustomer base
5. Whoareyourcustomers?6. Andyourmainmarkets?(Domesticmarket:Local,regional;Exportmarket)7. Which kind of request do your customers have? (E.g. pricing, delivery time, quality,
design…)Products and production process
8. Couldyoudescribemeyourproductportfolio?9. Howdoestheproductionprocesswork?Whicharethemainsteps?10. Whichkindofmachineryandtechnologydoyouemploy?11. Istheproductionseasonal?Ifyes,couldyoutellmethetimeframeofyourproduction
period?(E.g.fromwhichmonthtowhichmonth)12. Iftheproductionquantityaskedbyacustomerismorethanyouractualcapacity,how
do you handle the situation? (E.g. do you refuse the order? find partners btw thecluster?)
Management of the workforce 13. Howmanyworkersdoyouhave?14. Couldyoudescribemeyourworkforce?(Compositioninage,sex,caste,geographical
provenience)• Doyouuseseasonalworkers?Ifyes,whichisthepercentageonthetotal?• Doyouemploy“externalworkers”?Ifyes,aretheydedicatedtospecifictasks
oftheproductionprocess?Whichones?• Doyoualsoemployhome-basedworkers?Ifyes,whichisthepercentageon
thetotal?15. Howdoyourecruit/hireandfireyourworkforce?Doyouusecontractors?16. Whicharetheirskillsandeducationallevel?
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17. Howdoyoutrainandupgradetheskillsofyourworkforce?18. Doyouusealinesystemordoesaworkerproduceasingleunit/productallbyhimself?19. Howmanyproductunitsdoaworkerproduceonaverageinaday?20. Whichistheannualattritionrate(turnover)oftheworkforce?
Cluster
21. Canyoubrieflydescribethecompositionofthecluster?(E.g.numberandtypologyoftheenterprises)
22. Dothecompanyhavesomekindofrelationswiththeotherenterpriseinthecluster?Ifyes,whichones?
23. Whichkindofotherorganizationsarepresentinthecluster?(E.g.NGOs,Governmentsupportorganization,Businessassociations,Traininginstitutions…)
24. Do thecompanyhaveany links/relationswithsomeof them? Ifyes,brieflydescribethem.
25. The“FoundationforMSMEsClusters”(FMC)ispresentintheLudhianacluster.WhatsupportdoesitprovidetotheSMEs?
26. Whichkindofactivitiesdoestheypromote/do?CSRperception
27. In general, do you think that a company has a responsibility for social issues? (E.g.human rights, environment, charities, training and development, health careinitiatives…)
28. WhatdoesSocialResponsibilitymeantoyouandyourbusiness?Couldyougivemeabriefdefinition?(E.g.Takingcareoflabour,MonitoringSystemimposedbyyourclients,Guidelineforenvironmentalandsocialissues,Involvingincommunitywelfare,Followcertificationsystem…)
29. Doyouperceiveyourcompanytobesociallyresponsible?WhataspectsofCSRdoyourcompanygivethemostimportance?(btweconomic,social&environmentalaspect)
CSRactivities&communicationofthem30. WhatkindofactivitiesconcerningCSRdoyouhave?Givesomeexamples.31. Forexamples,whydoyouprovide(EXAMPLEGIVENBYTHERESPONDENT)toyour
workers?Whyisitimportantforyou(orisnot)?Whydoyouthinkisone(ornot)ofyourissues?
32. Whicharethemainreasonsyouareengagedinthesetypesofactivities?33. WhichkindsofCorporateSocialResponsibilityissuesexistinyourindustryorcluster?34. Whois(orare)themaindriver(s)ofyoursocialresponsibleactivities?E.g.
• Employees• Enterpriseowner• Community• Globalcustomers• Government
35. AreyourCSRactivitiestargetedatanyparticularstakeholders?36. Does any external agency forced/motivated you to implement social responsible
activities? Ifyes,whichwerethearguments intheirmotivation?(E.g.Supportbytheexternalagency,Preferredsupplier,Largercontractvolumeorlongerduration,Positiveattractiveimageinthemedia,Governmentfunding…)
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37. WouldyouorDoyouworkwithanyotherenterprisesorinstitutionsinacollectiveCSRinitiative? (E.g. enterprise innetwork, enterprise in cluster,NGOs, local government,religiousorganization…)
38. Ifyes,inwhichactivitieshaveyoubeenengagedin?39. Doyoupreferindividualorcollectivesocialresponsibleactivities?Why?40. WhatimpactdidyourCSRactivitieshaveonthecluster?Regarding:
• Enterprisescooperation,• Healthandenvironmentalissues,• Improvement(socialandeconomical),• Attractivenessofthecluster(investments,visibility…).
41. IsthereadedicatedbudgetforCSR?(E.g.2%ofthenetprofit?)42. Haveyoueverundertakenanyof theactivitiesgivenbeforeevenwhenthe firmwas
runningaloss?Ifyes,whichones?Ifno,whywerenotimplemented?(E.g.Nopressuretodoit,Notimportantforbusinessperformance,Lackofsocialinstitutionstoassist,Tooexpensivetoimplement,Novisiblegain…)
43. GenerallydoyoucommunicateyourCSRactivitiesundertaken?Ifyes,how?BarriersandopportunitiesofCSR
44. WhichbarriersdidyoufacewhenimplementinganyCSRactivity?Examples.45. Whatarethebenefits(bothshortandlongterm)ofengaginginCSRactivities?
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Appendix2:InterviewguideforGovernmentofficials
InterviewGuideforGovernmentOfficials
Durationinterview:ca.1hourDIC
1. Nameoftheorganization/association:2. Nameoftherespondent(s)andrespectiveposition(s): 3. Whendiditstartyourwork?4. Inwhatdoesitconsistyouractivity?5. Couldyougivemesomeexamplesoftheschemesyouimplementedespeciallyregarding
CSRactivities?6. DothesekindsofschemesalsoinvolveMSMEsoronlylargefirms?7. WhicharethemajorissuesthattheLudhiana’sSMEsarefacingupnowadays?8. Regarding MSMEs in the Ludhiana knitwear cluster, how do they perceive social
responsibleactivities?DotheyimplementanykindofCSRactions?9. Apartyourinitiatives,whichotherorganization(gov.andnot)helpSMEsinupgrading?
• Andinbecomingsustainable?(Regardingsocialresponsibleactions) MSME-DI
1. Nameoftheorganization/association:2. Nameoftherespondent(s)andrespectiveposition(s): 3. WhenandhowdidtherealityofindustrialclusterordistrictemergeinIndia?Andin
Ludhiana?4. Whendiditstartyourwork?5. Inwhatdoesitconsistyouractivity?6. Couldyougivemesomeexamplesoftheschemesyouimplementedespeciallyregarding
CSRactivities/socialresponsibleactions?7. HowisyourrelationshipwithSMEs?
• Aretheyfavorabletocollaborate?• Dotheyusuallyfollowyourschemes?
8. WhicharethemajorissuesthattheLudhiana’sSMEsarefacingupnowadays?9. Regarding SMEs in the Ludhiana knitwear cluster, how do they perceive social
responsibleactivities?DotheyimplementanykindofCSRactions?10. Apartyourinitiatives,whichotherorganization(gov.andnot)helpSMEsinupgrading?
• Andinbecomingsustainable?(Regardingsocialresponsibleactions) PPCBLudhiana
1. Nameoftheorganization/association:2. Nameoftherespondent(s)andrespectiveposition(s):
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3. Whendiditstartyourwork?4. Inwhatdoesitconsistyouractivity?5. Could you giveme some examples of the schemes/acts you implemented especially
regardingCSRactivities/socialresponsibleactions?6. HowisyourrelationshipwithMSMEs?
• Aretheyfavorabletocollaborate?• Dotheyusuallyfollowyourschemes?
7. WhicharethemajorissuesthattheLudhiana’sSMEsarefacingupnowadays?• Regarding SMEs in the Ludhiana knitwear cluster, which are their main
environmentalissuestheyface?8. Regarding SMEs in the Ludhiana knitwear cluster, how do they perceive social
responsibleactivities?DotheyimplementanykindofCSRactions?9. Apartyourinitiatives,whichotherorganization(gov.andnot)helpSMEsinupgrading?
• Andinbecomingsustainable?(Regardingsocialresponsibleactions)
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Appendix3:Interviewguideforotherstakeholders
InterviewGuideforotherstakeholders(TrainInstitutions&TradeLabors)
Durationinterview:ca.1hour BasicRespondentinformation
1. Nameoftheinstitution/association:2. Nameoftherespondent(s)andrespectiveposition(s):
3. Whendiditstartyourwork?Whenwasitfoundedtheinstitution?4. Inwhatdoesitconsistyouractivity?5. Howdoesitrunthisassociation?(e.g.Howisitfounded?Howmanyworker/peopleare
involved?Isitmandatoryforworkertobepartofthetradelabour?)6. Whichhavebeenthemajorgoalsyouachievedregardingtheimprovementofworkers’
condition?(TRADELABOUR) Workforce involved in the Trade Labour & Train Institutions
7. Howmanyworkersarepartoftheassociation/institution?(TL)• Areworkerswillingtobepartoftheassociation?
8. Couldyoudescribemethecompositionoftheworkers/peopleinvolved?(Compositioninage,caste,geographicalprovenience,industryofemployment…)(BOTH)
9. Which kind of industrial units mainly contact you for employ your trainers? (E.g.dimensionoftheunit,industry…)(TI)
10. Apart your initiatives, which other organization (gov. and not) help workers inimprovingtheircondition?(BOTH)
SMEs relations
11. Doyouhaveanykindorrelationship/linkwithMSMEsoftheLudhiana’sknitwearcluster?Ifyes,brieflydescribethem.
12. Regarding MSMEs in the Ludhiana knitwear cluster, how do they perceive socialresponsibleactivities?DotheyimplementanykindofCSRactions?
13. Apart your initiatives, which other organization (gov. and not) help MSMEs inupgrading?(Notonlyregardingworkerconditionbutalsoothersocialissues)(TL)
• Andinbecomingsustainable?14. WhicharethemajorissuesthattheLudhiana’sSMEsarefacingupnowadays?15. WhicharethemainSocialResponsibleissuesSMEsarefacingupnowadays?
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Appendix4:ParticipantInformationSheet
CorporateSocialResponsibilityintheLudhianaknitwearcluster:anexplorationthroughtheMSMEsperspective
ParticipantInformationSheet
Thepurposeofthisresearchismultiple.FirstistounderstandtheconceptofCSRandhowsocialresponsibleactivitiesareperceivedbyMSMEs.Second, itwantstoanalyzetheCSRpracticesundertakenintheIndianmanufacturingoperationsandtheirimpactandbenefitstowardsboththeenvironmentandcommunitybutprimarilyforthebusinessesitself.Third,the study will investigate the challenges faced by the enterprises in executing socialresponsibleactionsandlastwilltrytofindpossiblesolutionsorrecommendationstosolvetheissuesfaced.
Takingpartinthisstudyisentirelyvoluntaryanditisuptoyoutodecidewhetherornottotakepart.Bychoosingtoeithertakepartornottakepartinthestudywillhavenoimpacton you and your work. You do not have to answer any questions that make youuncomfortable. If youdecide to takepart, youarestill free towithdrawatany timeandwithoutgivingareason.
Theresearcherwillaskforyourpermissiontorecordtheinterview.Thisisdoneinordertoguaranteethebestpossiblequalityof thedatacomingoutof thestudy.Youcanasktheresearchernottorecordtheintervieworstoptherecordingatanytimewithoutgivinganyreason.
Ifyoutakeupoftheinterviewyouwillbeinvitedinaone-to-oneinterview.Thedurationforthis one-to-one interview will be approximately 1 hour and 30 minutes. Timing of theinterviewwillbearrangedasperyourconvenience.
TheresearcherhassignedaconfidentialityagreementwithCopenhagenBusinessSchool.Thismeansthatallinformationcollectedwillbekeptstrictlyconfidential,andyourdatawillbede-identifiedusingsimplecoding.
Thankyoufortakingpartinthisstudy.
Giuditta
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Appendix5:ClusterTree-MapfromNvivo
Cluster
Clustercomposition
Linkages &Ties
BusinessAssociations
NGOs
Government
Trade Unions
TrainingInstitutions
PDA
BKTK
CICU
LDA
FICO
LKA
The KnitwearClub
FMC
RaghunathSewa Dal
GovernmentAction
GovernmentSchemes
DIC
MSME-DI
PPCB
AEPC
MSME-DIactivity
MSME-DIdescription
LO2
INTUC
LO2 activity
LO2description
LO2 issues
INTUC activity
INTUCdescription
INTUC issues
ITI
ITI activity
ITI description
ITI issues
inter-firmlinkages
level of trust
linkages atthe
association’slevel
firm’spartnerships
subcontracting
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Appendix6:EnclosedUSB