Regulating Work In Small Firms: Perspectives On The Future Of Work In Globalised Economies 3030218198, 9783030218195, 3030218201, 9783030218201

Table of contents :
Preface......Page 5
Contents......Page 11
Notes on Contributors......Page 13
List of Figures......Page 16
List of Tables......Page 17
Part I Introduction......Page 18
1 Regulating Work in Times of Productive Fragmentation......Page 19
The Growing Importance of Small Businesses......Page 22
What We Know About Our Topic......Page 26
Beyond the Fordist Model of Employment Relations......Page 33
How to Read This Book......Page 36
Appendix......Page 39
References......Page 41
Part II An Empirical Exploration......Page 46
2 Employment Relations in Small Italian Firms: An Overview......Page 47
An Economy of Small Firms with Strong Territorial Ties......Page 48
A Dense, Flexible and Highly Informal System of Labour Regulation......Page 53
Structural Characteristics......Page 57
Productive and Market Characteristics......Page 59
In Summary: Economic and Occupational Performance......Page 62
Actors, Agency: Employers, Workers and Their Organisation......Page 63
Employers and Employers’ Associations......Page 64
Workers, Trade Union Membership, Workplace Representation......Page 66
Recruitment......Page 68
External or Numerical Flexibility......Page 69
Non-standard Contracts of Employment......Page 70
Outsourcing of Production Phases......Page 71
Working Hours......Page 72
Organisation of Work......Page 75
Training......Page 78
Owners/Managers: Decisional Processes......Page 80
Workers: Direct Contacts and Protest......Page 84
Collective Bargaining......Page 86
Bonuses and Other Forms of Compensation......Page 87
Bargaining Issues......Page 88
Company Welfare and Measures to Reconcile Life and Work......Page 89
Firms’ Internal and External Employment Relations......Page 91
Contacts with Trade Unions Outside the Firm......Page 92
Participation in Bilateral Bodies......Page 94
Relationships with Local Institutions......Page 97
To Conclude: An Overall Assessment......Page 100
References......Page 104
3 Small Firms and the Labour Market......Page 108
Recruitment......Page 111
Training......Page 118
Employment Contracts and Internal Flexibility......Page 123
Dismissals and Turnover......Page 132
Conclusions......Page 139
References......Page 141
4 The Regulation of Employment Relationships at the Enterprise......Page 144
“A Reference Point”: The Role of Sectoral Collective Bargaining......Page 147
The Management of Specific Aspects of the Employment Relation......Page 152
Wage, Bonuses, and Incentives......Page 153
Work Organisation- and Task-Related Issues......Page 156
Working Time......Page 158
Training......Page 160
Factors Influencing Patterns of Regulation......Page 161
Conclusions......Page 168
References......Page 172
5 Small Firms and the External Context: Embeddedness Versus Dependency......Page 177
Public Policy and Collective Bargaining......Page 179
Regional and Local Governments......Page 185
The Actors of Industrial Relations......Page 190
Other Actors......Page 196
The “Disputed” Arena of Labour Regulation......Page 201
Conclusions......Page 206
References......Page 211
Part III Conclusions......Page 214
Does It Still Make Sense to Talk of Small Firms?......Page 215
A Plurality of Patterns and Outcomes......Page 218
Informality and Formality......Page 224
Between Inside and Outside......Page 228
Beyond the Small Firm......Page 232
For a New Perspective on Employment Relations......Page 239
References......Page 244
Index......Page 247

Citation preview

Edited by Ida Regalia

Regulating Work in Small Firms Perspectives on the Future of Work in Globalised Economies

Regulating Work in Small Firms

Ida Regalia Editor

Regulating Work in Small Firms Perspectives on the Future of Work in Globalised Economies

Editor Ida Regalia University of Milan Milan, Italy

ISBN 978-3-030-21819-5 ISBN 978-3-030-21820-1  (eBook) https://doi.org/10.1007/978-3-030-21820-1 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface

There are two purposes behind this book. One is to tackle the quantitatively significant and qualitatively diverse, and even contradictory, reality of small firms, focusing on the crucial topic of work and the ways in which it is regulated—a topic always relevant, but of particular interest in this case—and to do so on the basis of an empirical verification of facts. The other is to take advantage of the analysis of the dynamics observed within small firms as a starting point for a preliminary reflection on the future of labour in general. It is not difficult to find good reasons to take the reality of small enterprises into serious consideration. The most obvious is their actual quantitative weight and their considerable economic and social relevance in all advanced economies. In the European Union, in the United States and in Australia, small enterprises not only constitute the overwhelming majority of all enterprises, they are frequently defined as “the backbone” or “the drivers” of the economy, because of their contribution to the economic and employment-related development of countries. Another, possibly less obvious, reason is their growing importance as an effect of the continuous reorganisation of companies induced by the internationalisation of markets, globalisation of the economy and v

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development of the services sector. Often treated as a vestige of the past that is bound to disappear, or as a peculiar characteristic of some economies (like Italy’s), today the variegated world of small business is not only a preponderant, although often neglected, part of the economy in advanced countries. It also constitutes a sort of special hinge, so to speak, between past and future: between consolidated backward-looking traditional practices and new, experimental, not yet well-defined forward-looking ways to work and to organise the production and provision of services. Its importance is quantitative, but even more qualitative. These last considerations lead us to the other aim of the book, that is, to use the analysis of the dynamics observed as a starting point for a more general reflection—although very preliminary—on the future of work and labour. The central claim, as it has been put by one of the two anonymous reviewers to whom we are greatly indebted, is that studying small firms—especially in the rich context of Italy, as we shall see in a while—can serve as a prism that allows us to look into the future of work and employment relations more generally. The reality of small firms has always been characterised, because of their small organisational size, by the greater importance of informality in dynamics and processes, by the greater and natural (so to speak) recourse to the devising of flexible solutions and by a notable dynamism and propensity for adaptation of an individualistic type. In other words, small firms have always remained at the margins of the canonical models of regulation and social protection of labour, based on the fundamental role of representative actors—especially trade unions—and industrial action. That is why today, in difficult times for those traditional models that historically emerged with the rise and consolidation of the large mass-production companies, the ways in which work is regulated in small firms may allow reflections on the effectiveness of the consolidated ways to conceive the practices and policies of labour protection more generally, posing a challenge, first of all, at the level of imagination. The book, therefore, intends to contribute to the debate on the ways in which work is being reorganised and on the ways in which it can be regulated. It proposes to do so by starting from an exploration of the

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trends that can be identified within the area of small firms, seen as a privileged point of observation: with little formal regulation, and therefore potentially more open to adaptation to circumstances and sometimes also to experimentation with practices and norms different from the traditional ones, it can reveal dynamics useful for extending our vision to the future of work more generally. The empirical reference is to Italy, a country that can be considered paradigmatic for the purposes of our analysis. Indeed, the Italian case is of particular interest: on the one hand, it is characterised by the impressive quantitative presence of a wide variety of small firms, both traditional and innovative. On the other hand, it is characterised by a system of employment relations, mediated collectively and articulated on several levels, that leaves space for adjustments and that can also affect small businesses. This makes it possible to reason on the basis of a wider range of options than can be observed if one focuses on countries where the role of collective representation in the case of small firms is extremely small or non-existent. Ultimately, the book will not only be about the regulation of work in small businesses, nor just about Italy. Rather, it is intended to be a book that, analysing the regulation of work in small firms with particular attention to the Italian case, opens spaces for reflection on the prospects for work in the current dynamics of capitalism. Certainly, there are many other issues that could be considered to reflect on the future of work and labour. A provisional, elementary list should at least include the changing role of multinational companies, the development of employment relations at supranational and global levels, the emergence of the platform and gig economies, the diffusion of social networks and new forms of protest and the increasing importance of civil society in the field of labour. By focusing on these, and other new and fashionable topics, the contours of a wide research programme aimed at understanding change in the globalised scenario may be outlined. We expect, however, that a reflection on an old problem, often neglected by classic studies of industrial relations in the golden

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age, may stimulate debate on the possibilities of positive and socially acceptable diverse ways of setting the rules of work without preconceived positions. The book is structured in three parts: an introductory and a concluding one, whose purpose is to present the research questions and key findings of the investigation and the implications that can be drawn from them, and a longer intermediate part in which the results of empirical analysis carried out in Italy are illustrated and discussed in the light of international debate on the topic. The empirical basis of the book is a study entitled “Old and new paths of labour regulation in SMEs in European countries: Trends and challenges for economic competitiveness and social sustainability”, that was conducted in Italy in 2014–2015, funded by the Ministry of University and Research. It involved research teams at the Universities of Florence, Teramo, Calabria and Milan, coordinated, respectively, by Laura Leonardi, Marcello Pedaci, Vincenzo Fortunato and the present writer, who was also the scientific coordinator of the overall project. The study took place through different instruments in four Italian regions. After a preliminary phase devoted to a literature review, a campaign of in-depth interviews to key informants and the construction of an establishment questionnaire, a survey of a large representative sample of over 2300 firms was conducted. A qualitative study of sixty-six small and micro firms in different production sectors was subsequently carried out through face-to-face interviews with their owners/managers. In a study such as this, one incurs many debts of gratitude. First, there are all those who devoted their valuable time to making this study possible: the employers and managers that responded to our initial survey, and even more those who agreed to participate in lengthy face-to-face interviews; the many representatives of employers’ associations, trade unions, local institutions and authorities, who helped us by providing information and by giving us their advice and insight in the preliminary phase of planning the field, or who took part in seminars, targeted to practitioners and the social partners, that were organised

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at Milan, Prato and Cosenza to discuss the preliminary findings of the research. I also owe a debt of gratitude to the staff of the departments involved in the project at the Universities of Florence, Teramo, Calabria and Milan. I wish to thank them for all of their administrative support and for organising the numerous seminars that allowed both fruitful and enjoyable discussion among the members of the research group. I am particularly indebted to Alessandra Caserini, who coordinated with passion and competence the survey conducted with CATI methodology in Spring–Summer 2014, under the accurate supervision of Monia Anzivino (University of Pavia), who was also responsible for the data analysis. I also extend my grateful thanks to all the colleagues and younger researchers who took part in the project in various ways—including those, such as Luigi Burroni, Mimmo Carrieri, Marco Guerci, Laura Leonardi, Annalisa Tonarelli and Eugenio Vite, who were unable to participate until the end of this part of the project and whose contributions are not included in the book—for their stimulating input and useful advice. The preliminary results of the study were presented at numerous seminars, most notably those held at the University of Glasgow and at the University of Göteborg in 2015, at the University della Calabria in 2016, at the University of Florence in 2018 and several conferences of the Society for the Advancement of Socio-Economics (SASE). On those occasions, we were able to benefit from the comments of a large number of colleagues. It is not possible to list all of them now, but I must nevertheless directly thank Paul Edwards and Sukanya Sengupta for their most helpful comments and encouragement at the beginning of the investigation programme, and the two anonymous referees for Palgrave whose precious suggestions greatly encouraged us to complete the work. I also owe a special debt of gratitude to Lisa Dorigatti, a bright young colleague of mine, one of the authors of the book, for her patient and invaluable assistance in editing the volume.

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Partial results of the study have been published as articles in journals. As a side product of the overall research, an edited volume on industrial relations at the regional level in Italy—a lateral topic, not focused on the regulation of small firms—is forthcoming. However, no part of the book in its present form has been previously published. My hope is that the work of all those that have contributed, directly or indirectly, to this volume will prompt reflection on a theme which, from the approach adopted, concerns both the quality of work and the efficiency of the economy, and which, more generally, opens a central question of fairness and justice—one that leads us to the importance of socially shared rules. Milan, Italy

Ida Regalia

Contents

Part I  Introduction 1 Regulating Work in Times of Productive Fragmentation 3 Ida Regalia Part II  An Empirical Exploration 2 Employment Relations in Small Italian Firms: An Overview 33 Monia Anzivino and Ida Regalia 3 Small Firms and the Labour Market 95 Rossella di Federico and Lisa Dorigatti 4 The Regulation of Employment Relationships at the Enterprise 131 Marcello Pedaci and Marco Betti

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5 Small Firms and the External Context: Embeddedness Versus Dependency 165 Andrea Bellini and Vincenzo Fortunato Part III  Conclusions 6 Prospects for Employment Relations: Between Informal and Formal and Inside and Outside 205 Ida Regalia Index 237

Notes on Contributors

Monia Anzivino, Ph.D. in Methodology of Social Research and Applied Sociology, is a postdoctoral research fellow at the University of Pavia. She is an expert in survey research, sampling and questionnaire design. Her research interests are related to inequalities in higher education, the role of academics in the society, youth condition, political behaviour and political communication effects. Andrea Bellini  is Assistant Professor of Sociology at the University of Florence. Andrea writes on issues of economic and social regulation. He is the author of Il puzzle dei ceti medi (2014), and co-author, with Franca Alacevich and Annalisa Tonarelli, of Una professione plurale. Il caso dell’avvocatura fiorentina (2017). Marco Betti  is research fellow in Sociology at the University of Siena, Department of Education, human sciences and intercultural communication. His research focuses on industrial relations, corporate governance and local development. Among his recent publications, there is “Fondi pensione negoziali e sviluppo locale: prospettive evolutive degli investimenti a sostegno dell’economia reale. Il caso di Solidarietà Veneto”, Autonomie locali e servizi sociali (2019). xiii

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Rossella di Federico is Assistant Professor of Human Resources Management at the master’s degree in Management and Business Communication of the University of Teramo. Her research interests are in the field of precarious work, collective bargaining and social dialogue in public and private sectors, human resources management. She worked for leading European research institutes, such as AIAS (Amsterdam Institute for Advanced Labor Studies, University of Amsterdam). Lisa Dorigatti is Assistant Professor of Economic and Labour Sociology at the University of Milan. She does research in the fields of comparative industrial relations and labour sociology, with a focus on trade union strategies, precarious work and organisational restructuring. Her work appeared in leading international journals, like the British Journal of Industrial Relations, the European Journal of Industrial Relations and Industrial and Labor Relations Review. Vincenzo Fortunato  is Associate Professor of Economic Sociology at the University of Calabria where he teaches Sociology of Work. His research activity focuses on industrial relations, human resource management, work organisation, welfare and social policies. He is the editor of Imprese, sviluppo, territori (2017). Marcello Pedaci is Assistant Professor of Economic and Labour Sociology at the University of Teramo. His research focuses on labour regulation, the quality of work and industrial relations. Among his recent publications, there is “Trade Unions Strategies Against Precarious Work: Common Trends and Sectoral Divergence in EU”, European Journal of Industrial Relations (with Maarten Keune). Ida Regalia is Professor of Economic Sociology and Comparative Industrial Relations at the University of Milan, where she has been Director of the Department of Labour and Welfare Studies. Pastpresident of SASE (Society for the Advancement of Socio-Economics), her recent publications include: “Trade Unions and Employment

Notes on Contributors     xv

Relations in Italy During the Economic Crisis”, South European Society and Politics (with Marino Regini), “Beyond Workplaces and Industries: Possibilities for Organized Action at the Territorial Level”, Comparative Labor Law and Policy Journal.

List of Figures

Fig. 2.1 Economic performance of small firms Fig. 5.1 Breakdown of small firms by type of relationship within the institutional context Fig. 5.2 The arena of labour regulation: (1) types of actors Fig. 5.3 The arena of labour regulation: (2) key actors Fig. 6.1 The (new) field of employment relations Fig. 6.2 Patterns of employment relations between formality and informality and between inside and outside

49 190 192 193 230 231

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List of Tables

Table 1.1 Table 2.1 Table 2.2 Table 2.3 Table 2.4 Table 2.5 Table 2.6 Table 2.7 Table 2.8 Table 2.9 Table 2.10 Table 2.11 Table 2.12 Table 2.13 Table 2.14 Table 6.1

Interview list 23 Firms and employees in Italy in 2014, by macro-area 38 Economic indicators in Italy, by selected regions (2012 and 2014) 39 Sample size, by sector 44 Recourse to numerical flexibility, by sector 57 Recourse to working hour flexibility, by sector 60 Recourse to training, by sector 65 How firms make decisions on organisational issues 67 Decision-making style typology 68 How firms make decisions on remuneration, by region 69 Intensity of direct contacts between employees and management, by company size 71 In-company collective negotiation over the last 2–3 years, by company size 72 Intensity of use of company welfare, by company size 76 Recourse to services provided by bilateral bodies 81 Recourse to services provided by local institutions 84 Patterns of employment relations within small firms 209

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Part I Introduction

1 Regulating Work in Times of Productive Fragmentation Ida Regalia

“Anti-globalisation is, of course, a nonsense ”. These were Ronald Dore’s (2003) opening words at a conference at Bocconi University in Milan in December 2002, during which the author discussed the governance methods of large corporations in the globalised economy. Those who are aware of the analytical work of the English sociologist, recently passed away, will quickly realise that the statement was not at all an acritical acceptance of trends that should be viewed as uniform and inevitable; he was simply emphasising real data that need to be taken seriously, regardless of whether one approves or one’s own personal preferences. Paraphrasing, one may similarly say that “Being anti-small firms is, of course, a nonsense ”. In fact, the ubiquitous presence of small firms in advanced economies is a reality that it makes no sense either to glorify or demonise, but which must be taken into serious consideration. However, as a number of authors have observed in various contexts (Birch 1981; Rainnie 1985; Brock and Evans 1989; Blackburn and I. Regalia (*)  University of Milan, Milan, Italy e-mail: [email protected] © The Author(s) 2020 I. Regalia (ed.), Regulating Work in Small Firms, https://doi.org/10.1007/978-3-030-21820-1_1

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Smallbone 2008; Acs and Mueller 2008, among others), small firms have long been treated as anachronistic to a greater or lesser extent; and rather limited, and in any event inadequate, attention has been paid to them if we consider their actual quantitative weight. Leaving aside the reality of small companies in emerging countries, which is a peculiar situation in many respects, and which would require separate consideration, we see that according to Eurostat (2018, 1), “in 2015, the overwhelming majority (92.8 per cent) of enterprises in the European Union’s non-financial business economy were enterprises with less than 10 persons employed (micro-enterprises). In contrast, just 0.2 per cent of all enterprises had 250 or more persons employed and were therefore classified as large enterprises”. In employment terms, one-half of people in employment worked in micro-enterprises or small enterprises (with fewer than 50 persons employed), and the other half worked in medium or large enterprises (with 50 or more persons employed). Moving to the other side of the Atlantic, according to the United States Department of State, “some 19.6 million Americans work for companies employing fewer than 20 workers, 18.4 million work for firms employing between 20 and 99 workers, and 14.6 million work for firms with 100 to 499 workers; by contrast, 47.7 million Americans work for firms with 500 or more employees” (Moffatt 2019). Likewise, in Australia, there were 2,051,085 actively trading businesses as of June 2009. Of these, around 96 per cent were small businesses (employing fewer than 20 workers), 4 per cent were medium-sized businesses (employing between 20 and 199 workers), and less than 1 per cent were large businesses (with 200 or more employees) (Australian Government 2011). These data are not immediately comparable because the official definition of small enterprises, and therefore their statistical accounting, varies depending on the tradition and significance of smaller companies in the various socio-economic contexts. They are very impressive, however, as is often emphasised in the official comments from governments and their statistical offices; for example, in the Eurostat report cited above, small enterprises are called the “backbone” of the European economy, providing jobs and growth opportunities (Eurostat 2018). In the United States, too, they are defined as “drivers of the (American) economy” by the Small Business Administration Office of Advocacy,

1  Regulating Work in Times of Productive Fragmentation     5

with a capacity for innovation and creativity capable of aiding the recovery from the great recession between mid-2009 and 2011 (Longley 2018). Of course, these comments and interpretations may be slightly sweetened in the wake of the optimistic views expressed by Ingham (1970) and the 1971 Bolton Report in the UK, which were to find an effective and visionary expression in Ernst Schumacher’s Small Is Beautiful (1973). On the other hand, as we shall see, there is no lack of far less positive, and even openly critical, assessments that conflict with them, especially on the part of scholars who have studied the reality of small enterprises from a work standpoint (Curran and Stanworth 1981; Rainnie 1989; Wilkinson 1999). The great significance of the “world” or “sector” of small enterprises is confirmed from both positions, however. The purpose of this book is precisely to tackle the quantitatively ­significant and qualitatively diverse—and even contradictory—reality of small enterprises. But it aims to do so on the basis of an empirical verification of the facts above and beyond preconceived positions, and focusing on the crucial topic of work and the ways in which it is regulated—a topic always relevant but of especial interest in this case. However, it will achieve its aim by adopting a perspective that goes beyond focusing on the “world” or “sector” of small enterprises as such: a perspective in which an analysis of the dynamics observed within this reality becomes the starting point for a contribution to the debate on the future of labour in general. As we shall see, the empirical reference is to Italy, a country that can be considered paradigmatic for the purposes of our analysis. The interest of the Italian case does not reside only in the quantitative importance of small firms in that country. It is also, and perhaps above all, due to the development in Italy of a system of employment relationships mediated collectively, and articulated on several levels, that can also affect small businesses. This makes it possible to reason on the topic of regulation of work on the basis of a wider range of options that could be observed in countries where the role of collective representation in small firms is extremely small or non-existent. In the remainder of this introductory chapter, we will first present the general topic area and analytical framework within which the study is

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located. The state of the art will then be reviewed and assessed. In the part that follows, the approach adopted in the book is illustrated and discussed. A general presentation of the book’s structure completes the introduction.

The Growing Importance of Small Businesses There are various ways of looking at small companies. It has frequently been done from an economic perspective at an aggregate level, to review the positive and negative contribution that they can make to the economic and/or employment-related development of a country—as we have already seen—or a local area. From this point of view, for example, one observer who takes up arguments from the US Small Business Administration offers an eloquent comment: “One of the greatest strengths of the small business is its ability to respond to economic pressures and local community needs, and because many employers and owners of small businesses interact with their employees and are active members of their local communities, company policy is able to reflect something much closer to the local ethos than a major corporation that comes into a small town” (Moffatt 2019). Or else, from an organisational standpoint at a company level, attempts have been made to shed light on the special features of management practices and to study the differences in the manner in which they organise labour compared with large companies. Another approach, from an employment relations perspective, has been to study the consequences arising out of the greater difficulties encountered in complying with laws, or applying pay and conditions that have been negotiated with trade unions, and ensuring trade union representation for the company’s workers (Curran and Stanworth 1981; Rainnie 1989; Wilkinson 1999). More generally, the implications of the extensive use of informal relations have been reviewed. In all these cases, whether one takes into account the effects of small enterprises on the economy and employment at an aggregate level or studies their relations and organisational and employment conditions at

1  Regulating Work in Times of Productive Fragmentation     7

workplaces, there is a tendency to review aspects of the realities of this productive world by taking it as a given at a particular moment. It is also possible, however, to study the dynamics (of development, continuation and decline) that affect small companies. One might cite the important contribution made by David J. Storey’s Understanding the Small Business Sector (1994), which analyses the key issues that influence the growth and development of small businesses in general, from the time they are born as start-ups to their growth and sometimes their departure from the scene. For our purposes, however, the studies—even though they may be mostly indirect—that identify historical trends in the growth and decline of small enterprises that can be traced to the dynamics of the growth of capitalism are even more important. One fundamental point of reference here is The Second Industrial Divide by Michael Piore and Charles Sabel (1984), in which the model of flexible specialisation as a possible alternative to the logic of Fordist production based on mass production technologies is theorised. According to the authors, the economies of the major industrial countries evolved along different trajectories and retained diverse legacies from their histories. What accounted for the differences was the ability of some countries—like Italy and Germany—to keep more of their traditional craft industries alongside mass production companies at the time of the first industrial divide in the nineteenth century, when mass production technologies emerged. It was in those cases in which a specialised craft type of production based on systems of small enterprises was able to survive that the bases for the development and practice of an alternative to the dominant mass production were created, at a time when mass production fell into a slump in the middle of the 1970s; this was flexible specialisation. Based on this interpretation, we might expect that in the second industrial divide, the productive logic of highly specialised small enterprises whose dynamism may compensate for the rigidities of the dominant model of Fordist production will be reaffirmed. In reality, as Suzanne Berger (2013a) recently observed, “The world of flexible specialisation as Piore and Sabel envisaged it never came into existence, but what did emerge had strikingly similar underlying drivers”. To be more precise, “Both the Second Divide ’s vision of an economy based on flexible specialisation and the fragmented global

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production system that has actually emerged since the 1980s have in common a focus on the strengths to be gained from organising production in firms producing specific components or carrying out distinct functions required for transforming an idea into a product or service delivered to an ultimate end-user, rather than organising within vertically-integrated enterprises that carry out all or most activities within their own four walls”. The MIT scholar, who has long experience with the ways in which productive methods have been transformed (Berger 2005, 2013b), defines the current situation as a fragmented global production system, or as new fragmented production networks, which are the outcome of a process of downsizing of large, vertically integrated corporations and the development of services. For our purposes here, it is not necessary to enter the debate on the factors that enabled and stimulated the processes of corporate downsizing and international production fragmentation along the value chain from the 1980s of which Suzanne Berger writes. The most frequently cited of these factors include greater market integration and the reduction or elimination of barriers to the movement of goods and services; the arrival of new commercial and productive partners following changes in the political economy of new market economies (in Eastern Europe and East Asia) and increased competition in international markets; and the development of transport, communications and information technologies that have allowed the coordination of production processes separated by vast distances (Krugman 1995; Helg and Tajoli 2005; Hillberry 2011). Our interest is rather in taking note of the fact that the growing importance of small enterprises has indirectly been confirmed by this debate, alongside that of large and very large multinational companies, in the reorganisation of advanced economies over recent decades. Nonetheless, we are certainly not trying to claim that the growing importance of small companies is a sign of homogeneous, and above all similarly dynamic, tendencies. Even though on the one hand, Suzanne Berger (2013a), quoting research results, notes that “With the downsizing of the large corporation came a downsizing and a narrowing of corporate R & D investments. Increasingly, research and development take place in small firms—without deep pockets and without the financial

1  Regulating Work in Times of Productive Fragmentation     9

capacity to pursue projects with long time horizons”, it is also true that this only holds for a relatively small number of fast-growing, innovation-driven businesses. A brief report on this topic in the United States, based on data from the Census Bureau, is significantly entitled The 4 Types of Small Businesses, and Why Each One Matters (Mills 2015). The four types identified are: (i) Non-employee Businesses, corresponding to sole proprietorships (23 million); (ii) Main Street, i.e. local businesses serving consumers and other local businesses (4 million); (iii) Suppliers, i.e. suppliers to other businesses in the traded sector (1 million); and (iv) High-Growth, i.e. fast-growing, innovation-driven businesses (200,000). The “world” of small enterprises is, therefore, a heterogeneous, complex reality that looks partly, so to speak, to the past, and partly to the future. Based on what we have observed, however, we can finally say that for some time now the considerable economic and social relevance of small firms has been a factor that does not refer to countries like Italy alone, that have always been characterised by an economy of small firms, but that involves most advanced countries. Rather than being indicative of backwardness, a vestige of the past that is bound to disappear, the emergence and spread of small businesses is at least in part one of the effects of the ongoing reorganisation of and changes to production systems, together with the development of services in the globalised economy. This means that setting out to investigate how work is organised and reorganised and the ways in which it can be regulated within the broad, diversified array of small businesses is not a marginal, or even a slightly old-fashioned, task. Rather, it is an initiative that needs to be undertaken in order to fill a cognitive gap (and a creative delay) that has its origins in the enduring centrality of the regulatory model that was consolidated during the period dominated by a production model based on large mass production companies. The significance of this venture does not merely, or even principally, rely on considerations of the quantitative relevance of small-scale production today; even more important is the idea that an expedition such as this one into the world of small businesses, which are customarily formally less regulated than large companies and therefore potentially more open to being adapted to

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different circumstances, and on occasion to experiments with practices and norms other than the traditional ones, can reveal sometimes unexpected dynamics that serve to expand our vision of the future of work more generally. Accordingly, if we keep the process of development and consolidation of small enterprises in the wider economic situation in mind, we might expect that by investigating the dynamics that characterise the organisational and employment conditions under which they operate, we will be able to go beyond the limitations of this universe, and to cast our eyes over the entire work universe.

What We Know About Our Topic The topic of this book—the organisation of work and employment relations in the small-business sector—stands at the intersection of three broad strands of research that have remained largely separate to date. The first is employment relations in small firms; the second is the development of industrial districts and of the social embeddedness of the economy more generally; and the third is the future of work and employment relations prospects in economies that are variously characterised by the internationalisation of markets, deregulation and the weakening of the traditional mechanisms of social protection for workers. The first strand of this analysis, which has a long and rich tradition, especially in the UK and other countries (including the United States and Australia) where employment relations are characterised by the pre-eminence of market regulation and in-company bargaining, has focused mainly on the dynamics of how work and its use are regulated, intentionally or de facto, in firms where trade unions are largely absent. In the absence of regulatory methods that are collectively mediated by a trade union, therefore, the debate concerns the modalities of relations between employers and workers, in particular the conditions under which these relationships are not totally determined by the choices companies make. Traditionally, the reference interpretative models have been the contrasting ones referred to previously: the “small is beautiful” model as a

1  Regulating Work in Times of Productive Fragmentation     11

place of harmonious relations among the parties (Bolton 1971; Ingham 1970; Schumacher 1973) and the small company as a “sweatshop” or a place of prevarication and managerial autocracy (Rainnie 1989; Wilkinson 1999). As has been pointed out (Edwards 2012), this is not simply a case of opposing interpretations of how things work; the policy consequences that they can entail are conflicting as well. In the former case—in which it is believed that positive face-to-face relationships based on reciprocity prevail, working conditions vary in such a way that they can be adapted to individual needs, and protection and rights in the workplace are guaranteed almost “naturally” through processes of spontaneous adjustment—the informal nature of mutual obligations can be viewed as a functional equivalent of the formal rules in effect in large enterprises. In policy terms, therefore, it is a good thing to avoid the imposition of rules and boundaries that may prevent the positive informal meetings of conveniences. Conversely, in the latter case—where it is believed that relations based on excessive one-sided power and prevarication on the part of the entrepreneur prevail due to a limited size that hinders worker organisation—it will be appropriate in policy terms to introduce rules and controls from outside to guarantee workers the minimum socially indispensable protection levels. Paul Edwards has noted, however, that business owners themselves are not completely at liberty. Owners and workers depend on each other, albeit asymmetrically. The prospect that they might be able to use work as they please tends to be conditional on a variety of circumstances, even in systems in which companies have fewer formal restrictions on their right to act, in particular as regards staff qualifications and the ease or difficulty with which they can replace workers in general (Goss 1991). This means that small companies, too, must ensure that they enjoy a certain level of consensus within the productive process. Studies in the UK on the conditions that should encourage unilateral decisions on the part of the company have actually revealed partially unexpected forms of a “negotiated order” (Ram 1994), albeit outside a representative body or collective agreements mediated by a trade union. Overall, while there is no doubt that small size will tend to structure relations among the parties in ways that are at least partly their own, what they may be in practical terms will vary greatly according to the

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specific characteristics of firms (in particular as regards the degree to which they “depend” on labour and their willingness to cooperate). In fact, the world of small firms is highly diversified and not at all compact, and it is not a firm’s size in itself that constitutes the decisive feature of its employment relations. On looking at the factors that are considered to be significant, various types of small firm have been identified. Barrett and Rainnie (2002) have suggested a typology that distinguishes between small dependent firms (which complement and serve the interests of large firms, e.g., through sub-contracting), dominated firms (which compete with larger firms through intense exploitation of machinery and labour), isolated firms (which operate in specialised niches of demand or geographically discrete markets that are unattractive to large capital due to insufficient returns) and innovative firms (which operate in frequently innovative or developing markets, creating specialised and/or new products, and which are vulnerable to takeover or acquisition by large capital). Based on a firm’s capacity for growth, Van Osnabrugge and Robinson (2000) have distinguished between lifestyle firms (which are aimed at maintaining business owners and their families, and grow little or not at all), middle-market firms (firms with good growth prospects) and entrepreneurial firms (which enjoy significant growth) (Renda and Luchetta 2010, 19). Bottazzi (2010, 137) has proposed a subdivision into four types: marginal micro-firms and small firms (which operate exclusively in local markets and have low turnover and small earnings); satellite SMEs (which operate in networks of sub-suppliers and are frequently located close to large companies, for which they work to order); interstitial SMEs (which occupy niches within high-technology markets or final market segments, and whose strength is based on their capacity to innovate, imitate and adapt rapidly to new technologies); and specialised supplier and highly competitive SMEs (which operate independently of large companies, principally on international markets). For the purpose of our argument, however, it has to be underlined that in the debate the implications of such typologies on employment relations practices remain somewhat in the shadow. Another important factor is the sector to which these small firms belong (Ram and Edwards 2010, 234). In their study of small firms in three sectors, Tsai et al. found that several key features of employment

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relations are sectorally specific more than they are related to size (Tsai et al. 2007, 1782–1783). In particular, they found that autonomy and work pressures were higher in the information and communication technology and the consulting and management sectors than in food manufacturing (Tsai et al. 2007, 1803). Even though a number of sectoral characteristics may entail elements that are linked to market conditions and skills, the influence of the sector on the employment relationship cannot be limited to this issue alone. Indeed, studies that have addressed the sector as an important influencing variable have looked not only at market conditions but also at other elements, such as industrial subcultures (Curran and Stanworth 1979). Defined by Turner as “the distinctive meanings and institutions shared by those who work in a particular industry which concern work and the social relations of work” (Turner 1971, cited in Curran and Stanworth 1979, 43), they were found to be significant in Curran and Stanworth’s analysis of workers’ orientation to work (Curran and Stanworth 1979). Differences of a structural nature (in terms of market position, relationships with other firms, skill characteristics, capacity for growth and above all sector) tend to influence the various dimensions of labour relations. This is the case with pay levels, which are generally inferior to those of large companies, but also vary considerably across sectors, occupations and job positions (Goss 1988; Forth et al. 2006; Edwards and Ram 2006; Edwards et al. 2004, 2009; Bacon and Hoque 2005; Harris et al. 2004; Gilman and Edwards 2008; Wapshott and Mallett 2013; Ram 1999). It is also the case with recruitment and training methods, which are predominantly based on informal practices, although with significant variations that depend largely on the sector, as well as on competences and skills (Doherty and Norton 2014; Kitching and Blackburn 2002; Gilman and Edwards 2008). Sectoral variations have also been observed with regard to work organisation practices and intensity, which generally give workers in small firms greater autonomy and influence (Ram 1999, 2001; Wapshott and Mallett 2013; Tsai et al. 2007). The sector is once again the foundation for a number of explanations of the high level of satisfaction found among workers in small firms (Curran and Stanworth 1981) and for certain differences regarding the low levels of trade union presence and collective

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agreements (Wapshott and Mallett 2013). It has also been noted, however, that the relationships between structural characteristics and employment relations are neither unidirectional nor automatic (Edwards et al. 2009; Gilman and Edwards 2008). For example, pressure applied by client companies in order to obtain more efficient service does not necessarily translate into an increase in the pressure on workers; on the contrary, it can strengthen workers’ capacity for applying pressure when negotiating their working conditions with management, thereby increasing their space for autonomy (Moule 1998; Ram 1991). More generally, it has been argued (Tsai et al. 2007) that the influences of external conditions may be mediated by internal dynamics, including ethnic, familial and gender dynamics (Ram 1991, 1994; Ram and Holliday 1993; Holliday 1995). If in this first strand of research attention is paid especially to the relations between the parties within the firm, the second strand of analysis, which burgeoned in the 1980s around the emergence and success of industrial districts in Italy, focuses on the external factors and conditions that have enabled small-firm systems to flourish, and often to continue their success, in the face of global competition. The precursors of this analysis were the studies that rediscovered the importance of territory and the local dimension in the organisation of production from various perspectives as a way to understand the very specific nature of economic development in Italy (Bagnasco 1977; Becattini 1979). However, the productive model of the industrial district soon became absorbed into the wider debate on the search for economic forms as alternatives to the mass production system (Sabel and Zeitlin 1985) as an example of the success of the above-mentioned paradigm of flexible specialisation (Piore and Sabel 1984; Pyke et al. 1990). The debate on the prospects of a new phase of capitalist development based on localised production systems (Whitford and Potter 2007) was further extended through research on and identification of district experiences in a variety of other countries (Storper and Harrison 1991; Ellison and Glaeser 1997; Duranton and Overman 2002) and the theorisation of the industrial or business cluster by Michael Porter (1990), of which the Italian industrial district is a special case.

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Becattini defined the industrial district as “a socio-territorial entity characterised by the active presence of both a community of people and a population of firms in one naturally and historically bounded area. In the district, community and firms tend to ‘inter-penetrate’” (Becattini 1989). More recently, the district model has been defined as “a form of production organisation of small and medium enterprises where the territory plays the role of infrastructure for economic, institutional and cognitive integration” (Corò and Micelli 2007). What interests us here is the dimension of the belonging to a local context as characterised by a culture and an institutional system that enables penetration—or interpenetration—between its productive structure and social roots. The perspective of the embeddedness of the economy in society is also significant (Granovetter 1985), as is the perspective of the effects—which can be positive under certain conditions—of the network of social relations or social capital on economic development (Trigilia 1999). The special contribution made by this strand of analysis therefore relates to expanding attention to the relations between (small) enterprises and the external environment, above and beyond the regulatory methods in effect within firms. In relations with the outside world, however, what becomes important is not so much the economic relationship—whether dependent or autonomous—between small and large enterprises as such. Rather, it is the possibility (or lack thereof ) that the firms might be included in a socially and institutionally dense environment that facilitates the development of informal relations among economic actors based on a simultaneous logic of cooperation and competition from which resources can be gathered that will assist economic and employment performance. From this perspective, therefore, what must be investigated are the networks of relations with economic, social, political and industrial subjects located outside firms that might encourage the availability of resources crucial to their success, such as access to credit, appropriate business and knowledge service infrastructures, and the provision of the flexible labour these production systems require. The third strand concerns the prospects for work and employment relations in a context of increased integration of markets and globalisation of the economy more generally. Among the numerous publications on the

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topic one may cite The Age of Dualization: The Changing Face of Inequality in Deindustrializing Societies (Emmenegger et al. 2012), which furnishes an in-depth assessment of a seemingly structural trend towards increased inequality in advanced industrial societies that has persisted since the 1970s, or The Transformation of Employment Relations in Europe. Institutions and Outcomes in the Age of Globalization, a comparative etc. (Arrowsmith and Pulignano 2013). The comparative analysis of the transformation of work and employment regulation in Europe under the pressures caused by liberalisation, deregulation and internationalisation processes (Arrowsmith and Pulignano 2013). A third useful reference is Governing Social Risks in Postcrisis Europe (Crouch 2015), in which the approaches taken by different national economies to try to “reconcile their need to combine workers on uncertain incomes and conditions with consumers confident that they can spend” are studied and discussed. More recently, we mention the comparative study in Trajectories of Neoliberal Transformation (Baccaro and Howell 2017), which aims to demonstrate that the landscape of industrial relations has changed in fundamental ways, and always in the same direction, since the end of the 1970s, and involves the expansion of the power and discretion of employers over workers and unions. These works address the problems of work and labour regulation in the age of globalisation from a number of different viewpoints—including poverty, increased inequality and social exclusion from a political science perspective; the dynamics of work transformation assessed through the policies of and the role played by various institutional and social actors; the evolution of industrial relations in Western Europe, in order to examine the extent to which liberalisation is taking hold in Europe; and the trade-off between labour flexibility and consumption, using a highly complex statistical approach. The proposed interpretations of observed dynamics are differentiated and even conflicting, at least to some degree, especially as regards whether or not there has been a convergence towards neoliberal tendencies. Still, the idea that there has been an erosion of industrial relations institutions in Europe in recent decades is a commonly held one (see also Crouch 2012; Pedersini 2014). With the exception of a couple of references in Colin Crouch’s book, however, the question of work in small and micro-enterprises does not appear anywhere in these works, at least explicitly. One might imagine

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that it is implicitly assumed that the generally observed weakening of the traditional mechanisms of social security and protection of work will also involve smaller productive organisations, which have always been less well protected than larger ones. But this is not the point that needs to be stressed for our purposes; what needs to be emphasised is the fact that these studies all show—albeit from different standpoints— the difficulty, and sometimes the profound crisis, encountered by traditional regulatory models that had been structured according to the large company model. In some ways, therefore, they justify research and reflection on other possible models, including those relating to the multifaceted reality of smaller entities, which have customarily been left on the margins of the debate.

Beyond the Fordist Model of Employment Relations The aim of this book is to move towards a study of other possible models. It does not raise the issue of the conditions under which small firms can develop and flourish and potentially overcome the limitations of their less than optimal size, nor is it our intention to investigate the contribution that may be made to the economy and employment by small firms through the support they provide to the development of a territorial area or a country. On these topics, reference should be made to the discussions and interpretations proposed by economists, which are in many respects open and conflicting. As we have said, the book has what we might term the more modest aim of starting out with an acknowledgement of the impressive reality of productive activities within small organisations in all advanced economies. This has been an ever-present factor, even during the times when the mass production model in vertically integrated large organisations enjoyed greater fortune and predominance and increased its spread following the crisis suffered by this model. From this perspective, the issue of whether or not small firms are prospering or making a contribution to the more general development of economy and society, and

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how large that contribution may be, forms a background—or the structure of the independent variables, to use the language of research—that must be viewed as a given; variations to it, it is hypothesised, can at least partly explain the different features of what we are seeking to understand and discuss: the ways in which work is regulated in small firms. What counts here is not the economic or employment success of these enterprises in and of itself, but the fact that due to their size, the Fordist model of employment relations characterised by the development and action of inclusive categories of large workers’ representative organisations and by the central role played by collective bargaining agreements—i.e. the model that enjoyed unprecedented success during the “30 Glorious Years” of the last century (Regalia 2017)—has never been able to take root, at least not completely. The strands of research to which we have briefly referred will help us somewhat with our study. The first suggests that it is not necessarily true that it is not possible to develop trends—some of which may be unexpected—towards the structuring of mostly informal relationship practices among actors in an enterprise that can act as functional substitutes for the methods of regulating work that are more consolidated and more formal elsewhere (in large enterprises). Conversely, the second strand—the literature on industrial districts and the importance of firms having roots in their territory—has shown that by means of stable or occasional relations with a multiplicity of parties outside a firm, it is also possible for smaller firms to receive positive stimuli for the development of productive strategies, and to have access to the resources and services they need in order for work to function properly and to be regulated—all strategies, services and resources that they would not be capable of producing internally. These two perspectives have remained mostly independent of each other, however, just as discussions on the future of work and its regulation are disconnected from these reflections. The principal limitations of the available studies can be seen from the standpoint of this lack of connection. In the case of the first strand, these limitations are due to an excessive degree of confinement within the four walls of the firm, or, in more developed cases, the relations between large and small firms within specific productive sectors. In the case of the second strand, they are due to a lack of adequate attention

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being paid to the problems and dynamics of relationships within individual firms. Finally, in the case of the third strand, the limitations are due to a certain undervaluation of the importance of realities other than the traditional ones on which the logic of labour relations in the Fordist era had been modelled when imagining the future of work in this regulation. It is in the interplay between the formal and the informal, and at the same time between the inside and outside world, that one might imagine that the multiple models of the employment relations that de facto characterise the conduct of social parties within small firms are located. But probably not just those. In fact, the problematic issue of how to regulate (acquire, organise, remunerate and develop) labour within firms and the multiplicity of models that can be noted is no longer peculiar to small enterprises now that the strength of the single model (the single best way for some time) in larger ones has fallen apart. In addition, in the context of the globalised economy, the competitive advantage of local economic systems seems more uncertain and problematic, and in any case less easily identifiable and predictable, starting from an analysis of the functioning of a system of local institutions that does not take account of actual production strategies and the use and regulation of work by companies. Finally, any consideration of the prospects for work and the ways it is regulated in general that does not seek to tackle without having preconceptions trends in and changes to realities that were once marginalised—if not openly neglected—such as small firms, entails the risk of offering an interpretation that is anchored in the past, and which is incapable of fully grasping the limitations, and also the potential, of what is actually taking place today. Ultimately, in the general framework of the debate on the future of work, the approach that has been adopted goes beyond the two principal strands that have characterised studies on the management of human resources in small enterprises according to a recent contribution (Harney and Nolan 2014): the strand that tends to “denature” small firms by treating them as if they were indistinct from larger firms; and conversely, the strand that acknowledges their “specificity” and seeks to investigate their dynamics (Curran 2006). One could also say that our approach overturns them, in that questions are not so much asked on

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the extent to which small companies are similar to large enterprises, but rather on how far an observation of what happens in small firms makes it possible to better understand the trends that characterise the entire universe of work, including large companies.

How to Read This Book As we have said, the empirical basis from which the arguments put forward in this book have been developed is a study on the regulation of work in small companies conducted in Italy in 2014–2015. Italy has always been a country of small firms; its economic structure has consolidated over the course of time around a clear predominance of small firms alongside a minority of medium and large ones. Since the 1980s, when the international debate looked at local systems of small firms in the form of industrial districts as a viable alternative to the Fordist production paradigm according to the logic of flexible specialisation (Piore and Sabel 1984), Italian industrial districts were the first to be taken into consideration and studied. Over and above the undoubted quantitative and qualitative significance of small firms, account must also be taken of the fact that the collectively mediated system of employment relationships in Italy operates on several levels in ways that can also involve the smallest enterprises in a more or less direct fashion. This means that looking at the Italian case, one sees a broader range of ways of regulating work compared with countries where the role of collective representation in small firms is extremely minor or non-existent. For one reason or another, Italy represents a particularly positive and exemplary case for our purposes. It is for these reasons, and for what we have already said in the earlier paragraphs, that in our intention the book should not simply be about the regulation of work in small firms, or only about Italy. Rather, by looking at the regulation of work in small firms, with special attention being directed to the Italian case, it offers space for reflection on the future of work under the current dynamics of capitalism. The book should therefore be read from this perspective.

1  Regulating Work in Times of Productive Fragmentation     21

However, we must provide certain essential methodological information and a few notes on how to read the chapters that follow. In the first place, what do we mean by small firm? The international literature currently uses a variety of definitions that correspond to the classification methods adopted by statistical institutions, and which also reflect the various weight or roles that smaller firms have historically had in different economic systems. Our study has used the European Union definition, which distinguishes between micro-enterprises (those with fewer than 10 employees and an annual turnover or balance sheet of less than 2 million euros) and small firms (those with fewer than 50 employees and a turnover or balance sheet of less than 10 million euros); while medium-sized enterprises are those with fewer than 250 employees and an annual turnover below 50 million euros (or a balance sheet below 43 million euros); and large enterprises with 250 or more employees (European Commission 2003). Accordingly, in our empirical data and in the book in general, we have focused our attention on firms with up to 49 employees, and therefore to micro-enterprises (starting from five employees, however, so as not to take account of the very many firms that are little more than sole traders, which would require very specific attention) and to small enterprises. Once the parameters of the field of observation had been established, the research was carried out using a mixed-method approach, combining quantitative and qualitative methods, in four Italian regions that were selected to represent the territorial variations in the Italian economy: Lombardy, an economically powerful region with a long tradition of industrialisation through large companies; Tuscany, a successful region with a district-based economy of small firms; Calabria, an economically backward region in the South; and Abruzzo, a region with recent but currently blocked development (see Chapter 2 for details). As a first stage, an exploratory investigation was carried out in these regions on the conduct and practices of company owners or managers with respect to the organisation, management and regulation of work, using a quantitative survey of a large representative sample of 2320 firms in the non-financial private sector. This sample was extracted from the more complete database of Italian companies (AIDA). An overview of this part of the study is provided in Chapter 2, which also offers information on the Italian case for the benefit of non-specialist readers.

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One might also say that this chapter forms a kind of second long introduction that leads to the central chapters of the book, which are mainly based on the qualitative part of the study. In the second, qualitative, phase of the research, resort was made to a campaign of face-to-face semi-structured interviews with the owners or managers of sixty-six small firms in a variety of productive sectors. The selection of cases was conducted on the same AIDA database and, for the most part, companies which took part in the survey were involved. Three criteria were used for selecting companies: territorial, dimensional and sectoral; the aim was not to reach any sort of statistical representativeness but to gain insights from a wide variety of different situations. First, two provinces within each considered region were identified: the one where the regional capital is located and a second with a prevalently district-based economy. Second, within these provinces both microfirms (fewer than 15 employees) and small firms (between 15 and 49 employees) were chosen in order to assess the relevance of size in the regulation of work and employment. Third, companies belonging to different sectors were selected in order to explore the role of the sectoral factor. Three sectors were included: made in Italy (manufacturing), low-skill services and high-skill services. The final characteristics of the interviewed firms are presented in Table 1.1 in the Appendix. The interviews, which were supplemented by in-depth discussions with key local informants, offer a rich narrative repertoire on work relations in small firms that was later examined not by using a more traditional— and perhaps predictable—territory-based (regional and/or local) analysis but by applying a transversal, per-topic interpretation in which territorial belonging as well as sector and size and other independent variables contributed towards the provision of explanations of behavioural logic and the attitudes of the firms towards work. The results of these topic-based investigations, which cover the field of employment relations from various standpoints, take up the central chapters of the book from Chapters 3 to 5. Respectively entitled Small Firms and the Labour Market, The Regulation of Employment Relationship at the Enterprise, and Small Firms and the External Context: Embeddedness Versus Dependency, they both enable the reader to gain a better understanding of the entire area of the dynamics of employment

1  Regulating Work in Times of Productive Fragmentation     23

relations in the practical situations under consideration and provide evidence for new, broader interpretive hypotheses. The ideas and stimuli they offer are then summarised in the final chapter, in which we return to the topics and issues from which we started out, and present an interpretation of the prospects for work, and work relations more generally, within a context in motion in which variety seems to be prevailing rather than homogeneity, and within which the emergence of unexpected outcomes can be seen.

Appendix Table 1.1 presents the characteristics of interviewed firms. Table 1.1  Interview list Interview number

Region

Area

Dimension

Sector

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Lombardy

Bergamo Bergamo Bergamo Bergamo Bergamo Bergamo Bergamo Milan Milan Milan Milan Milan Milan Milan Milan Milan Milan Florence Florence Florence Florence Florence Florence

Small Small Small Small Micro Small Small Micro Micro Small Small Micro Small Micro Micro Small Small Micro Small Small Micro Micro Small

High-skill services Low-skill services Low-skill services Low-skill services Made in Italy Made in Italy Made in Italy High-skill services High-skill services High-skill services High-skill services Low-skill services Low-skill services Made in Italy Made in Italy Made in Italy Made in Italy High-skill services High-skill services High-skill services Low-skill services Low-skill services Low-skill services

Tuscany

(continued)

24     I. Regalia Table 1.1  (continued) Interview number 24 25 26 27 28 29 30 31 32 33 34 35 36 37 37 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66

Region

Abruzzo

Calabria

Area

Dimension

Sector

Florence Florence Florence Florence Florence Prato Prato Prato Prato Prato Prato Pescara Pescara Pescara Pescara Pescara Pescara Pescara Pescara Pescara Teramo Teramo Teramo Teramo Teramo Teramo Teramo Teramo Teramo Cosenza Cosenza Cosenza Cosenza Cosenza Cosenza Cosenza Cosenza Cosenza Cosenza Cosenza Cosenza Cosenza Catanzaro

Small Micro Micro Small Small Micro Micro Micro Micro Small Small Small Micro Micro Small Small Micro Micro Small Small Micro Small Micro Small Small Micro Micro Small Small Micro Small Micro Micro Small Small Small Small Micro Micro Micro Micro Small Micro

Low-skill services Made in Italy Made in Italy Made in Italy Made in Italy Low-skill services Low-skill services Made in Italy Made in Italy Made in Italy Made in Italy High-skill services Low-skill services Low-skill services Low-skill services Low-skill services Made in Italy Made in Italy Made in Italy Made in Italy High-skill services High-skill services Low-skill services Low-skill services Low-skill services Made in Italy Made in Italy Made in Italy Made in Italy High-skill services High-skill services Low-skill services Low-skill services Low-skill services Low-skill services Low-skill services Low-skill services Made in Italy Made in Italy Made in Italy Made in Italy Made in Italy Low-skill services

1  Regulating Work in Times of Productive Fragmentation     25

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Bottazzi, Gianfranco. 2010. “Torn Between Breaks and Continuity: Small Enterprises and Italian Development Patterns.” In The Development of SME: Policies, Actors and Problems: A Comparison Between Japan, Italy and Argentina, 133–148. Rome: Università di Roma La Sapienza. Brock, William A., and David S. Evans. 1989. “Small Business Economics.” Small Business Economics 1: 7–20. Corò, Giancarlo, and Stefano Micelli. 2007. “The Industrial Districts as Local Innovation Systems.” Review of Economic Conditions in Italy 1: 41–67. Crouch, Colin. 2012. Il potere dei giganti. Perché la crisi non ha sconfitto il neoliberismo. Bari: Laterza. Crouch, Colin. 2015. Governing Social Risks in Post-crisis Europe. Cheltenham: Edward Elgar. Curran, James. 2006. “‘Specificity’ and ‘Denaturing’ the Small Business.” International Small Business Journal 24 (2): 205–210. Curran, James, and John Stanworth. 1979. “Worker Involvement and Social Relations in the Small Firm.” The Sociological Review 27 (2): 316–341. Curran, James, and John Stanworth. 1981. “A New Look at Job Satisfaction in the Small Firm.” Human Relations 34 (5): 343–365. Doherty, Liz, and Ann Norton. 2014. “Making and Measuring “Good” HR Practice in an SME: The Case of a Yorkshire Bakery.” Employee Relations 36 (2): 128–147. Dore, Ronald. 2003. “The Globalization of Corporate Governance: External and Internal Mechanisms of Control.” Journal of Interdisciplinary Economics 14 (2): 125–137. Duranton, Gilles, and Henry G. Overman. 2002. “Testing for Localisation Using Micro-Geographic Data.” CEPR Discussion Paper, n. 3379. Edwards, Paul. 2012. “Employment Rights in Small Firms.” In Making Employment Rights Effective: Issues of Enforcement and Compliance, edited by Linda Dickens, 139–158. Oxford: Hart Publishing. Edwards, Paul, and Monder Ram. 2006. Employment Relations in SMEs. http://www.eurofound.europa.eu/eiro/2006/02/study/tn0602101s.htm. Edwards, Paul, Monder Ram, and John Black. 2004. Why Does Employment Legislation Not Damage Small Firms? Journal of Law and Society 31 (2): 245–265. Edwards, Paul, Sukanya Sengupta, and Chin-Ju Tsai. 2009. “Managing LowSkill Workers: A Study of Small UK Food Manufacturing Firms.” Human Resource Management Journal 19 (1): 40–58.

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Ellison, Glenn, and Edward Glaeser. 1997. “Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach.” Journal of Political Economy 105 (5): 889–927. Emmenegger, Patrick, Silja Häusermann, Bruno Palier, and Martin SeeleibKaiser. 2012. The Age of Dualization: The Changing Face of Inequality in Deindustrializing Societies. Oxford: Oxford University Press. European Commission. 2003. Recommendation of 6 May 2003 Concerning the Definition of Micro, Small and Medium-sized Enterprises. https://eur-lex. europa.eu/eli/reco/2003/361/oj. Eurostat. 2018. Small and Medium-Sized Enterprises: An Overview. https:// ec.europa.eu/eurostat/web/products-eurostat-news/product/-/asset. Forth, John, Alex Bryson, and Helen Bewley. 2006. Small and Medium-Sized Enterprises: Findings from the 2004 Workplace Employment Relations Survey. Gilman, Mark W., and Paul Edwards. 2008. “Testing a Framework of the Organization of Small Firms: Fast-Growth, High-Tech SMEs.” International Small Business Journal 26 (5): 531–558. Goss, David. 1988. “Social Harmony and the Small Firm: A Reappraisal.” The Sociological Review 36 (1): 114–132. Goss, David. 1991. Small Business and Society. London: Routledge. Granovetter, Mark. 1985. “Economic Action and Social Structure: The Problem of Embeddedness.” American Journal of Sociology 91: 481–510. Harney, Brian, and Ciara Nolan. 2014. “HRM in Small and Medium-Sized Firms (SMEs).” In Strategic HRM: Research and Practice in Ireland, edited by Brian Harney and Kathy Monks. Dublin: Blackhall/Orpen. Harris, Richard I. D., Renee S. Reid, and Rodney McAdam. 2004. “Consultation and Communication in Family Businesses in Great Britain.” The International Journal of Human Resource Management 15 (8): 1424–1444. Helg, Rodolfo, and Lucia Tajoli. 2005. “Patterns of International Fragmentation of Production and the Relative Demand for Labor.” The North American Journal of Economics and Finance 16 (2): 233–254. Hillberry, Russell H. 2011. “Causes of International Production Fragmentation: Some Evidence.” In Trade Policy Research, 77–101. Ottawa: Minister of Public Works and Government Services. Holliday, Ruth. 1995. Investigating Small Firms: Nice Work? London: Routledge. Ingham, Geoffrey K. 1970. Size of Industrial Organisation and Worker Behaviour. Cambridge: Cambridge University Press. Kitching, John, and Robert Blackburn. 2002. The Nature of Training and Motivation to Train in Small Firms. Small Business Research Centre, Kingston University, Research Report RR330.

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Krugman, Paul. 1995. “Growing World Trade: Causes and Consequences.” Brookings Papers on Economic Activity 1: 327–377. Longley, Robert. 2018. “How Small Business Drives U.S. Economy.” ThoughtCo, March 2. https://www.thoughtco.com/how-small-businessdrives-economy-3321945. Accessed 11 Mar 2019. Mills, Karen. 2015. “The 4 Types of Small Businesses, and Why Each One Matters.” Harvard Business Review. Moffatt, Mike. 2019. “Small Business in the United States.” ThoughtCo, February 15. https://www.thoughtco.com/intro-to-small-business-in-theunited-states-1147915. Accessed 11 Mar 2019. Moule, Chris. 1998. “Regulation of Work in Small Firms: A View from the Inside.” Work, Employment and Society 12 (4): 635–653. Pedersini, Roberto. 2014. “European Industrial Relations Between Old and New Trends.” Stato e Mercato 3: 341–368. Piore, Michael J., and Charles F. Sabel. 1984. The Second Industrial Divide. New York: Basic Books. Porter, Michael E. 1990. The Competitive Advantage of Nations. New York: Free Press. Pyke, Frank, Giacomo Becattini, and Werner Sengerberger, eds. 1990. Industrial Districts and Inter-firm Cooperation in Italy. Geneva: International Institute for Labour Studies. Rainnie, Alistair. 1985. “Is Small Beautiful? Industrial Relations in Small Clothing Firms.” Sociology 19 (2): 213–224. Rainnie, Alistair. 1989. Industrial Relations in Small Firms. London: Routledge. Ram, Monder. 1991. “Control and Autonomy in Small Firms: The Case of the West Midlands Clothing Industry.” Work, Employment and Society 5 (4): 601–619. Ram, Monder. 1994. Managing to Survive: Working Lives in Small Firms. Oxford: Blackwell. Ram, Monder. 1999. “Managing Autonomy: Employment Relations in Small Professional Service Firms.” International Small Business Journal 17: 1–13. Ram, Monder. 2001[2016]. Family Dynamics in a Small Consultancy Firm: A Case Study. Human Relations 54 (4): 395–418. Ram, Monder, and Paul Edwards. 2010. “Industrial Relations in Small Firms.” In Industrial Relations: Theory and Practice, edited by Trevor Colling and Michael Terry, 231–252. Chichester: Wiley. Ram, Monder, and Ruth Holliday. 1993. “Relative Merits: Family Culture and Kinship in Small Firms.” Sociology 27 (4): 629–648.

1  Regulating Work in Times of Productive Fragmentation     29

Regalia, Ida. 2017. “Labour Regulation in Small Firms: In Search of a More Comprehensive Employment/Industrial Relations Paradigm.” Employee Relations 39 (3): 335–350. Renda, Andrea, and Giacomo Luchetta. 2010. “L’Europa e le Piccole e Medie Imprese: rilanciare la sfida della competitività.” Dipartimento Politiche Europee, Presidenza del Consiglio dei Ministri, Roma. Sabel, Charles, and Johnatan Zeitlin. 1985. “Historical Alternatives to Mass Production: Politics, Markets and Technology in Nineteenth Century Industrialization.” Past & Present 108 (1): 133–176. Schumacher, Ernst F. 1973. Small Is Beautiful: Economics as If People Mattered. London: Blond and Briggs. Storey, David J. 1994. Understanding the Small Business Sector. London and New York: Routledge. Storper, Michael, and Bennett Harrison. 1991. “Flexibility, Hierarchy and Regional Development: The Changing Structure of Industrial Production Systems and Their Forms of Governance in the 1990s.” Research Policy 20 (5): 407–422. Trigilia, Carlo. 1999. “Capitale sociale e sviluppo locale.” Stato e Mercato 3: 419–440. Tsai, Chin-Ju, Sukanya Sengupta, and Paul Edwards. 2007. “When and Why Is Small Beautiful? The Experience of Work in the Small Firm.” Human Relations 60 (12): 1779–1807. Turner, Barry A. 1971. Exploring the Industrial Subculture: New Perspectives in Sociology. London: Palgrave. Van Osnabrugge, Mark, and Robert J. Robinson. 2000. Angel Investing: Matching Startup Funds with Startup Companies—The Guide for Entrepreneurs and Individual Investors. San Francisco, CA: Jossey-Bass. Wapshott, Robert, and Oliver Mallett. 2013. “The Unspoken Side of Mutual Adjustment: Understanding Intersubjective Negotiation in Small Professional Service Firms.” International Small Business Journal 31 (8): 978–996. Whitford, Josh, and Cuz Potter. 2007. “Regional Economies, Open Networks and the Spatial Fragmentation of Production.” Socio-Economic Review 5 (3): 497–526. Wilkinson, Adrian. 1999. “Employment Relations in SMEs.” Employee Relations 21 (3): 206–217.

Part II An Empirical Exploration

2 Employment Relations in Small Italian Firms: An Overview Monia Anzivino and Ida Regalia

As we have said, the purpose of our study of how work is regulated in small Italian firms, which is the focus of the central chapters of this book, is to provide a broad empirical basis for a more general consideration of the future prospects of employment relations in the more developed countries. This is not simply a question of the fact that in Western countries, as we saw in the previous chapter, small firms make up the vast majority of the firms in which a significant share (and, in some cases, most) of the workers is employed. In other words, this is not simply a matter of numbers, important though they may be. The more important issue here is that because of the way they are structured, these firms inevitably pose a challenge to the ways in which the M. Anzivino  Department of Political and Social Sciences, University of Pavia, Pavia, Italy e-mail: [email protected] I. Regalia (*)  University of Milan, Milan, Italy e-mail: [email protected] © The Author(s) 2020 I. Regalia (ed.), Regulating Work in Small Firms, https://doi.org/10.1007/978-3-030-21820-1_2

33

34     M. Anzivino and I. Regalia

reference models for employment relations have historically evolved over the past hundred years, especially with regard to the role of trade unions and collective bargaining. Consequently, considering, with no a priori conditioning as far as is possible, the actual ways in which work is regulated in this area of the economy yield helpful insights regarding possible developments in work—either positive or negative, depending on what we discover—and how it is regulated. In the context of a more general reflection such as this, it is especially appropriate to make use of the results of a study on small firms in Italy1: this is both because the Italian economy is characterised by the crucial importance of small and very small enterprises, which constitute an extremely varied and anything but marginal sector, and because, as we shall see shortly, the Italian employment relations system comprises components that make it possible to identify a variety of solutions that can make provision for both the absence and the presence of representation and collective action, also in the case of small firms. Before beginning discussion of the results of the study, however, we should furnish some preliminary observations on these aspects of the Italian economic and institutional context. In the next two preliminary sections, therefore, we will describe the features of an economy made up of small firms with strong local ties and a highly informal and adaptive system of labour regulation. In the subsequent sections, we will provide an overview of the economic and productive structural characteristics of these firms and the ways in which their work is organised, managed, compensated and valued within the firms and in relation to the area surrounding them. The final section will include a brief summary of our interpretation.

An Economy of Small Firms with Strong Territorial Ties The Italian political economy has distinctive features that have always made it difficult, and a matter of controversy, to locate its position within the debate on the various models of capitalism in the 1990s

2  Employment Relations in Small Italian Firms: An Overview     35

and the Varieties of Capitalism in the 2000s (Regini 2014), as well as within the analysis of the consequences of the financial crisis of 2008 and the recession that followed (Colombo and Regalia 2016; Regalia and Regini 2018). It has sometimes been classified as a “mixed-market economy” (Hancké et al. 2007) due to its intermediate position, so to speak, between the model of liberal market economies (LMEs, AngloSaxon capitalism) and the coordinated market economy model (CMEs, Germany, Japan and the Nordic countries) envisaged by the typology of the varieties of capitalism (Hall and Soskice 2001) and in particular, among mixed-market economies, as an example of “Mediterranean capitalism” (Rhodes and Apeldoorn 1997). As has been noted, however (Trigilia and Burroni 2009, 632), this attempt is not satisfactory due to the significant differences between the cases included in this ideal type. To provide an example helpful for our purposes, according to Molina and Rhodes (2007), the development of an industrial specialisation based on small firms that mainly compete on low-priced, low-quality goods is typical of Mediterranean capitalism. In the case of Italy, one feature of the production system is undoubtedly the central importance of small firms or, to be more precise, the coexistence of a few large firms and a very large number of small ones. Indeed, in 2014, firms with up to 49 employees represented 99.4 per cent of the total (95.4 per cent were micro-firms with up to nine employees), and two-thirds of wage earners worked for them (46.3 per cent in micro-firms). The average size of a firm is currently 3.9 employees (it is 6.8 Europe-wide). It is not true, however, that these small firms compete mainly on low-priced, low-quality goods. At least until the major crisis of 2008, unlike other economies in Southern Europe, “the Italian economy was a large manufacturing economy based on small and medium enterprises, many of which are highly innovative and capable of competing on international markets”, according to the model that Piore and Sabel defined as “flexible specialisation” in 1984 (Regini 2015). Even thereafter, however, the recovery and emergence from the long recession initiated in Italy in 2009, while slow, was driven by exports in the competitive sectors of Made in Italy, which were largely dominated by the initiative of dynamic small firms. According to Eurostat data, Italian small and medium enterprises produced 54.4 per cent of Italian goods sold within

36     M. Anzivino and I. Regalia

the European Union in 2015 (24.3 per cent were small firms). This share is 10 points higher than the average for SMEs in the EU, which is 44.6 per cent (Eurostat 2018). The problems with classifying Italian capitalism within the distinctions in the international debate on models of capitalism are not only a result of the peculiar configuration of a productive economic system that appears to be neither prevalently regulated by the market (LMEs) nor coordinated by robust institutions that can channel its operations efficiently (CMEs), and which is also different from the other examples of mixed-market economies with which it is often associated. They also depend on the fact that the Italian model is characterised by a plurality of models within it (Colombo and Regini 2016). The clearest distinction is a territorial one, and this is what we will examine in this section. While within the international debate the differences among models of capitalism are above all attributed to the operation of national institutions, which influence the conduct of firms at a micro level, it has been pointed out that the Italian political economy model “is not simply characterised by a peculiar set of national institutions. The political economy is more influenced by local formal and informal institutions. The Italian model can be defined as ‘regionalised capitalism’” (Trigilia and Burroni 2009, 633). In the Italian case, in fact, it is not possible to consider solely the dynamics of the economy and the ways in which they are regulated nationally as a whole. Effective dynamics and norms include dynamics and features that differ greatly from each other according to geographical factors. On the other hand, it is also not simply a question of the traditional distinction between the developed North and the underdeveloped South. For over 40 years, since the publication of Arnaldo Bagnasco’s fundamental study on the territorial dimension in Italian development in 1977 (Tre Italie. La problematica territoriale dello sviluppo italiano ), which gave rise to a considerable body of studies and research, it has been an undisputed fact that there are three underlying models of reference. First, there is the model that was originally based on the central importance of the manufacturing production of large Fordist firms, which was most extensively developed in the so-called Industrial

2  Employment Relations in Small Italian Firms: An Overview     37

Triangle around Turin, Milan and Genoa and in the regions of the North-West in general: Piedmont, Lombardy and Liguria. Then, there is the model of the underdeveloped regions of the Mezzogiorno, where industrialisation arrived later and was driven from above, especially through investments by the large state-owned firms. These investments were not enough to stimulate the development of a private, locally developed industrialisation, however, and so what had been a mainly agricultural economy was transformed rather quickly into one based on services, above all public services. Finally, there is the model of widespread industrialisation from below, which focused on small and medium-sized firms locally interconnected in clusters and industrial districts with a high degree of manufacturing specialisation. This model emerged, and became consolidated, in the regions of the Centre-NorthEast that make up the so-called Terza Italia (Third Italy). We will not go into the reasons behind the considerable territory-based diversification of Italy’s economy and the institutions that regulated it or its features; the origins of this diversification lie in the country’s history, and it has tended to be replicated over the course of time. We will simply take a brief look at the manufacturing structure. In 2014, according to ISTAT data, the composition of firms in the Tre Italie by size (see Table 2.1) reveals a relatively more limited incidence of micro and small firms in the regions of the North-West, where the average size of firms is considerably larger than the national average: this was the area of the large Fordist firms. We see a slightly larger number of small firms, especially small rather than micro-enterprises, in the regions of the Terza Italia, where the average company size is slightly above the national average: this is the area in which a successful economy based on the dynamism of the small firms located in industrial districts especially developed. The considerable importance of smaller firms in particular in the regions of the Mezzogiorno, where the average size of firms is below the national average, demonstrates the demise of the industrialisation experience based on investments by large public-sector firms in this case. It is because of these territory-based internal differentiations that the qualitative–quantitative empirical survey to which we refer was designed by selecting regional and territorial areas that would exemplify the

38     M. Anzivino and I. Regalia Table 2.1  Firms and employees in Italy in 2014, by macro-area Regional area

Firms

Employees

0–9 10–49 Total 0–9 10–49 Total Average employee employees employees employees employees number North West 4.3 94.8 4.4 100 39.7 18.6 100 Centre-North 95.0 3.9 4.4 100 43.2 20.0 100 East South and 3.0 96.7 3.0 100 62.2 19.3 100 Islands Italy 3.7 95.4 4.0 100 46.3 19.4 100 Source Our elaboration on ISTAT (2016, 498)

internal structure of the country: Lombardy and Tuscany representing the North-West and the Terza Italia, respectively; Calabria and Abruzzo, respectively, representing the less developed areas of Mezzogiorno and those that in some way occupy an intermediate position between them and the regions of the Centre, with its tradition of industrial districts. A brief look at some data that characterise the four regions will enable us to specify matters better (see Table 2.2). Clearly, the regions that we have selected effectively make up four separate contexts across a range with Lombardy at its most positive extreme (this is the region of the North-West that has been industrialised for the longest time: it is still characterised by the presence of important medium-sized and large corporations and has recently developed a highly qualified service sector), and Calabria at its most negative extreme (Calabria is a region of the Mezzogiorno with an overall weak and not especially dynamic economy that relies on interventions by the central government: its features include a significant amount of undeclared labour and an infrastructure that is well below the national average). Of the other two regions, Tuscany (the “success region” of the Terza Italia) is placed very close to Lombardy, compared with which it is equally dynamic and has a superior infrastructure endowment: these are distinctive traits of the economic-social and institutional model of the regions of the Terza Italia, which are characterised by the development of small firms from below that benefits from a high level of interventionism on the part of local institutions. Finally, as expected, the Abruzzo region takes up an

2  Employment Relations in Small Italian Firms: An Overview     39 Table 2.2  Economic indicators in Italy, by selected regions (2012 and 2014)

Lombardy Tuscany Abruzzo Calabria Italy

Employment Unemployment rate (a) rate (a)

Dynamism Undeclared % of Infrastructure (employment labour (c) foreigners endowment trend) (b) over resident index (e) population (d)

64.9 63.8 53.9 39.3 55.7

-0.8 -0.9 -1.8 -3.7 -1.7

8.2 10.1 12.6 23.4 12.7

10.2 11.1 15.7 23.0 13.3

11.3 10.3 6.3 4.4 8.1

113.1 122.2 76.1 77.1 100.0

Sources (a) ISTAT (2014a), (b) Our elaboration on ISTAT (2009) and ISTAT (2014a), (c) ISTAT (2014b), (d) Our elaboration on ISTAT (2014c), (e) Istituto Tagliacarne (2012)

intermediate position. Development in this region has partially followed in the wake of that of the Centre-North-East, albeit with a certain delay, but it lacks the socio-economic and institutional conditions that fostered those regions’ success and has ended up reproducing certain of the elements of weakness of the areas of the Mezzogiorno. This, therefore, is the diversified territory-based economic and productive context in which the small firms that are the subject of this study operate. As we will see, territorial affiliation is one of the variables that needs to be taken into account in order to explain the diverse ways in which labour is regulated.

A Dense, Flexible and Highly Informal System of Labour Regulation Even if we take account of the normative context, in particular the institutions that govern employment relations and labour regulation, the picture that emerges is a highly diversified one that is difficult to locate among the most consolidated alternative models, especially the Mediterranean-type model with which it is frequently associated (Ebbinghaus 2003). In this case, the architecture of the system, rather than on a territorial basis, is diversified into levels through a combination of voluntarism and informality in the conduct of its actors and the (mostly indirect) role played by the law.

40     M. Anzivino and I. Regalia

If we consider this latter aspect first, we see that, as in the past, a main characteristic of the Italian system of labour relations continues to be its low level of institutionalisation (Cella 1989), in the sense that it lacks formalised, stable rules not only for governing relations between the actors, but also for clearly identifying which actors can legitimately take industrial action and enter into collective bargaining. Unions and employers’ associations have remained free, voluntary organisations governed by private law, and the relationship between them is largely determined by power relations. It is certainly true that the number of initiatives to increase the level of formalisation of the system and the predictability of the actors’ conduct has been increasing for some time, starting from the definition of criteria for measuring their representativeness: this is an extremely important aspect in a system that is typified by a competitive pluralism of representation of both workers and firms. However, this has led to numerous agreements being reached between the parties, but not to a legislative intervention that establishes clear reference criteria and prevents opportunistic exit conduct. The issue of the representativeness of the representative organisations has not been resolved, in fact, as clearly emerges from the agreement—yet another agreement!—between the largest organisations on both sides (Confindustria for the employers and CGIL, CISL and UIL for labour), which was concluded in March 2018. Indeed, the system is characterised by a very low level of legislative intervention in labour relations. The two principal legislative measures in this area remain the law establishing limits on the right to strike in essential public services, which dates from 1990, and the Workers’ Statute (Law 300/1970), which contains “rules on the protection of the freedom and dignity of workers and of trade union freedom and union activity in the workplace”, and which only partially applies to the large number of firms with up to 15 employees, under which business owners therefore enjoy greater freedom of action. Unlike in other countries, such as the UK, which does not have differentiated employment regulations for firms of different sizes (Edwards et al. 2004), there is a slightly different, lighter, normative system for smaller firms, above all with regard to dismissal.2 However, the low level of direct legislative intervention in employment relations is counterbalanced to some extent by a second feature of

2  Employment Relations in Small Italian Firms: An Overview     41

the system: the relatively formalised and stable involvement of the social partners—trade unions and employers’ associations—in the implementation of public policies and labour market legislation (Regalia and Regini 1998). The social partners have always been active in the administration of social security and welfare programmes, as well as in the tripartite committees that intervene in labour market management. Various laws regulating the labour market require the intervention of social partners for implementation, or provide that a collective bargaining agreement may more adequately define this implementation. Moreover, both trade unions and employers’ associations are often officially consulted by the public authorities on labour-related matters. This dualism between voluntarism and informality on the one hand and involvement in public institutions on the other is the result of the economic and political weakness of the trade unions immediately after the Second World War, which allowed other industrial relations actors simply to ignore them for many years. It was possible for informality to ensure flexibility at a low cost and without excessive risks, while institutional involvement might counter the lack of a well-developed, formalised industrial relations system to some extent, thereby fostering social cohesion. More generally, as has been noted on more than one occasion (most recently by Regalia and Regini 2018), the informality and voluntarism of the industrial relations system has increased its ability to adapt to changing circumstances, albeit subject to increasing costs associated with the low level of predictability and reliability of the parties’ conduct and the low level of trust that results from it. The other important underlying feature of the system of employment relations and the regulation of labour is how it is structured into levels. The difference between the centre and the periphery is especially significant in the Italian case, and it is associated, albeit not exclusively, with collective bargaining. From the point of view of collective bargaining, the system is structured between a central, or first, level and a decentralised, or second, level. The first level comprises national collective agreements that establish minimum wages and the general terms and conditions of employment. These agreements apply to all firms in a certain sector; or, more accurately, they can be applied to all firms in a certain sector because, with the exception of minimum wages, which de facto

42     M. Anzivino and I. Regalia

have become compulsory, a national agreement is only obligatory for firms that are members of the business association that negotiated it. Additionally, at the central level, cross-sector agreements on subjects of general interest that traverse the boundaries of the various productive sectors are also negotiated. The second, decentralised, level comprises company contracts as well as locally based multi-employer agreements that are negotiated in the local area by representatives of the social partners and involve variously defined aggregations of firms around shared subjects of interest. Collective bargaining, by which agreements were reached for small and medium-sized businesses in industrial districts, enjoyed significant development in the past especially. In addition to national and local collective bargaining, the social partners, acting jointly or individually or with institutions and public administrations, can also generate a wide array of initiatives that directly or indirectly concur with the regulation of employment conditions. These initiatives range from the provision of support and services to members (firms or workers) to mutual and cooperative forms of intervention on the part of bilateral bodies in fields that are not covered by the welfare state, from applying pressure on administrations to intervene in cases of production crisis to creating three-way agreements for the promotion of employment and development (Burroni and Regalia, forthcoming). If we add to all of these actions direct and, above all, indirect legislative interventions to regulate the labour market and working conditions, the result is a normative context that is not well codified but is institutionally dense, where the smallest firms, within which it is hard for autonomous collective initiatives to develop, may also, where necessary, identify benchmarks that have been jointly negotiated or prepared by representative organisations. These preliminary observations that shed light on the strong territorial qualification of the socio-economic context and the high level of informality but considerable institutional density of the normative system of labour regulation must be taken into account in the following overview of the structural and economic-productive features of small firms and the ways in which labour is regulated within workplaces and in relation to the territory outside them.

2  Employment Relations in Small Italian Firms: An Overview     43

Small Enterprises: How Are They Characterised? We often refer to small enterprises as if they were a single entity, a world of their own. This holistic vision may seem to be fairly obvious. In reality, as a large body of literature has shown (for all, see Ram and Edwards 2010), the universe of the small enterprise is not compact at all. Aside from the issue of size—which is defined differently if, for example, one refers to the EU rather than the US convention—the sector matters a great deal: a manufacturing firm with 15 employees is qualitatively smaller than, for example, a firm in the information sector with 15 employees. In any event, however, size is significant from the point of view of the greater or lesser complexity of social relations in the workplace and is particularly important for our discussion. We shall return to this in the concluding chapter. If we now consider our random sample of small enterprises (between 5 and 49 employees), the diversified nature of the situations is readily apparent. As we will see immediately, this is the case if we consider their structural characteristics—size, production sector, corporate form and company structure—within the various territorial contexts. It is also evident if we look at their productive and market characteristics: that is, the level of product standardisation, the type of client/contractor, the size of the reference market, the productive strategy adopted, the level of independence and the productive variability to which the enterprises are exposed. Further differences can be attributed to the constraints arising out of the use of the workforce—the incidence of the cost of labour, and how easy or difficult it is to replace the requisite workforce. We will conclude these preliminary observations with an assessment of the economic and employment performance of the firms in the crisis years, in the light of the differences that we have noted.

Structural Characteristics Most of the enterprises in our representative sample are micro-firms with fewer than 10 employees; just over a quarter of them have between 10 and 15 employees, and just over one-fifth have more than 15

44     M. Anzivino and I. Regalia Table 2.3  Sample size, by sector Manufacturing Construction Wholesale/retail trade Accommodation/food Business/advanced services Others Total

N

%

822 274 461 139 442 171 2309

35.6 11.9 20.0 6.0 19.1 7.4 100.0

employees: this reflects the characteristics of this universe.3 Altogether, therefore, 80 per cent of the enterprises are not covered by any of the most important provisions of the main law to protect labour and trade unions, the Workers’ Statute. This means that employment conditions are left substantially to the logic of behaviour of the parties, especially the employers. If we consider distribution by sector (see Table 2.3), over one in three (36 per cent) are manufacturing firms, which confirms the important role of industrial production in Italy (especially in the textiles and clothing, light engineering, food production and furniture sectors—the so-called Made in Italy). The low-skilled service sector (wholesale/retail trade, accommodation/food) accounts for approximately a quarter (26 per cent), while the high-skills professional service sector comprises one in five (19 per cent) of the total number of firms. There are significant geographical differences, however. In Lombardy and Tuscany—the most developed regions, although with different models, as we have said—manufacturing is more widespread, while in the other two regions the construction sector carries relatively more weight, and in Calabria—the region with the greatest economic difficulties—commercial activities are more developed. Company size varies little in relation to sector of production: trade and service firms are a little more frequently micro-firms, while in the manufacturing and accommodation/food sectors, larger firms (>15 employees) tend to be relatively more common. In the case of small enterprises, the company form is especially important, since there are partly different norms that apply to them

2  Employment Relations in Small Italian Firms: An Overview     45

with regard to certain aspects of economic and personnel management. Something less than three-quarters (72 per cent) of the firms are industrial/service companies. Over a quarter, on the other hand, are craft or cooperative enterprises (20 per cent and 7 per cent, respectively), which benefit from special tax or financial relief. The cooperative is especially widely used as a company type by enterprises in the business/advanced services sector (20 per cent). This is also relatively more widespread among small enterprises in Calabria, while the craft type (over one-half of which are micro-firms)4 is more widespread in the manufacturing (30 per cent) and construction (80 per cent) sectors. The trade and accommodation/food sectors, on the other hand, are almost all industrial/service firms, half of which have over 15 employees. Finally, similarly to what has been found in other countries (Forth et al. 2006, 11), unlike large firms, a large majority of small firms (87 per cent) constitute a self-standing organisation, while in the case of firms operating in the trade and advanced services sectors, or that fall within the “Others” category, approximately one-fifth are part of a larger company. This reveals the significance of family ownership in Italy and, as we will shortly see, the involvement of owners in managing their company and in labour relations, which goes well beyond what is the case with craft firms, where direct intervention by the owners is obligatory.

Productive and Market Characteristics One-half of the firms considered produce or provide standard types of products and services, while the other half manufacture products or provide services that are personalised based on customer needs. This is not especially dependent on the size of the company, except for a slight trend towards personalisation in firms with between 10 and 15 employees. Conversely, there are numerous differences based on the production sector: a large majority (71 per cent) of firms working in the trade sector sell standardised products, while in the manufacturing and advanced services sectors, the products and services tend to be more personalised (63 per cent). The tendency to provide tailor-made products is reduced in firms from the least developed region.

46     M. Anzivino and I. Regalia

If we look at the structure of the market, most of the firms (62 per cent) do not manufacture directly for final consumers, but for intermediate clients—other firms or public administrations, a trend that tends to increase with the size of the firm. Those that work directly with final consumers are predictably mostly in the accommodation/food and sales sectors. The level of dependence of firms on their customers does not generally seem to be very high: in two-thirds of cases, the most important client has a less than 30 per cent impact on turnover. As for the dimensions of the reference market, a little less than twofifths work with an exclusively local market, while almost 60 per cent operate in wider domestic or international (30 per cent) markets. As expected, it is in the construction sector, and in the Calabria region, that the firms that work exclusively for the local market are concentrated, whereas a propensity to operate in larger markets tends to show a growing trend among manufacturing firms. It should be noted that the type of production—customised or standardised—does not seem to correlate significantly with the type of company client—final or intermediate—or with the type of market in which the company operates, with the exception of a slightly greater tendency towards customisation in the case of firms manufacturing for international markets. Instead, variations in the type of production tend to be correlated with the various levels of significance associated with the price factor: a production strategy that focuses on price competition above all is usually a feature more of those firms that produce standardised products, whereas a strategy that pays the greatest attention to quality is especially followed by firms that sell customised products. There are also many differences among our firms based on the level of stability and foreseeability of their business activities. Only a relative minority (38 per cent) have a business activity that remains stable throughout the year. The others are divided between those whose business varies on a seasonal basis (37 per cent, especially in the accommodation/food sector, where this figure reaches 67 per cent), and those that are subject to completely unforeseeable variations (26 per cent, a figure that rises to two-fifths in the case of firms in the construction sector). As we shall shortly see, these latter firms are also those that proved most exposed to the economic crisis.

2  Employment Relations in Small Italian Firms: An Overview     47

Among the structural characteristics of small firms, we should also consider the constraints arising out of the impact of labour costs on total costs, as well as the ease or difficulty with which they can find replacement workers on the market in case of need. The cost of labour represents a significant item for small firms. For over three-quarters of the firms interviewed, it represents up to half of their overall costs, while, for one company in five, it accounts for over half of the total. It is especially the Calabrian firms in the construction sector, and above all in advanced services, that declare a far higher incidence of labour costs compared with other firms, especially trading firms, where labour costs have a much lower impact. The incidence of labour costs is also associated with production strategy, and even more with the type of product or service that the firms provide. Labour costs are especially high in firms that supply personalised products to intermediate clients. What we might term the level of dependence of the firms on their employees—that is, how difficult it is to replace them when necessary (Goss 1991)—is also high. In a little more than one-third of the firms, there appear to be no problems with finding personnel to replace existing employees. In two-thirds of cases, on the other hand, a problem exists: in half of the firms, this is in relation to certain groups of particularly crucial workers, while in the remaining 15 per cent, it relates to all personnel. This is an indirect indicator of the qualification level of the employees and, in any case, of the importance of the personnel to the functioning of the organisation. A low level of substitutability (and therefore of relative greater workforce’s strength) tends to be a more important feature in micro-firms, especially manufacturing firms operating in extra-local markets, in particular in the more developed regions, which have a productive strategy that is oriented towards the personalisation of products and quality. As we will specify later, workforces with a lower level of substitutability are above those that perform less standardised and less exchangeable tasks, and that have wider margins of autonomy within their firms. Conversely, there is a higher degree of substitutability of workers in firms with standardised production aimed directly at consumers, which adopt a productive strategy that is especially focused on low cost.

48     M. Anzivino and I. Regalia

In Summary: Economic and Occupational Performance Finally, we may consider whether and how the differences that we have observed have affected the firms’ economic and occupational performance. In general, with reference to the two or three years prior to the survey, turnover had fallen in 45 per cent of cases, remained stable in 30 per cent and increased in 25 per cent. As regards employment, it fell in 31 per cent of cases, remained stable in 41 per cent of cases and increased in 28 per cent of cases. It is immediately apparent that the overall employment data are less negative than the economic data (turnover). It is conceivable that this depends on both institutional factors (the laws on dismissal, the possibility of recourse to social shock absorbers, which were extended to the smallest firms during the crisis) and considerations of prudence on the part of the firms, especially in cases where they rely more on personnel who are difficult to replace. Which firms worked the best? Very briefly, we can say that the best performance is exhibited by the Tuscan firms, followed by those based in Lombardy, manufacturing and service firms, cooperatives, firms producing for intermediate clients, firms that are part of larger organisations, firms operating in national or international (and not only local) markets, firms with a larger impact of their most important client on turnover, firms with less productive variability and firms that are less impacted by labour costs (this is not the same as having a lower number of employees, however). The situation is reversed in respect of the worst-performing firms. By applying a multinomial logistic regression model, we have been able to check which elements net of the others are associated with reductions in turnover in our firms. In addition to productive variability, the territorial context, the type of market, the impact of labour costs on total costs, the impact of the largest client on turnover and the autonomy degree of the company are associated with economic trend. Firms operating in a region with significant economic difficulties, such as Calabria; those producing for an exclusively local market; those that are not part of a larger company; those that have an elevated incidence of labour costs; and those that depend less on their most important clients had the worst economic results.

2  Employment Relations in Small Italian Firms: An Overview     49

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Fig. 2.1  Economic performance of small firms

Finally, as regards occupational performance, the burden of labour costs is one of the elements associated with a reduction in employee numbers in the firms, even net of other structural factors.5 In addition, employment trends are closely associated with the firms’ economic trend: 54 per cent of those experiencing a reduction in turnover reduced their workforce, compared with 17 per cent that kept their revenue stable, and 6 per cent that experienced increases. Overall, if we look at economic and employment trends together, we can obtain a concise measurement of the overall state of health of small firms over the course of these difficult years. Our sample is more or less equally divided into four groups, in which half the firms seem to be in good health and demonstrate a relatively stable trend, or are even expanding, while the other half appear to be suffering. This is especially true of a quarter of the firms, which seem to be experiencing a full-blown crisis after seeing their turnover and employment rates contract in previous years (Fig. 2.1).

Actors, Agency: Employers, Workers and Their Organisation In the previous section, we focused on the structural and economic-productive characteristics of small firms and illustrated the considerable differences that make them an extremely mixed and not at all homogeneous

50     M. Anzivino and I. Regalia

group. These differences are reflected to varying extents in the ways in which work is regulated, but their explanatory capacity is conditioned by the logics of action of the actors involved in the institutional framework within which they operate—employers, managers (sometimes), and workers—and their own representative organisations. Before exploring employment relations more explicitly, we will dwell briefly on the characteristics of these actors, starting on the employers’ side.

Employers and Employers’ Associations Earlier, we saw that the large majority of small firms constitute a self-standing organisation. They are mostly family concerned in which the owner’s role is decisive, because the responsibility for corporate governance and HR management is usually his/her prerogative (Goss 1988, 118; Matlay 2002, 307). According to 2004 WERS data, employees in the UK were managed by owner-managers in 71 per cent of workplaces belonging to small firms, compared to 45 per cent of workplaces belonging to medium-sized firms, and 9 per cent of workplaces belonging to large firms (Forth et al. 2006). In our sample of small firms, corporate governance is the sole prerogative of the owners in two-thirds of workplaces, and of the owners and managers together in a further 16 per cent: in only 18 per cent of cases do owners not intervene directly. Conversely, we can also say that in one-third of cases—those in which an explicit managerial function is recognised—management of the company is more modern in style. Management by owners alone tends to be more common the smaller the firm (it can be found in 72 per cent of micro-firms, compared with 52.5 per cent of firms with more than 15 employees), in craft firms (80 per cent), and in firms in the construction sector (three-quarters of cases). A managerial style is more widespread in cooperatives and in the professional services sector (in 56 per cent and 46 per cent of cases, respectively). At an economic and productive level, firms that adopt a managerial style are more likely to operate in wider markets, to record superior economic performance and to perform even better in terms of employment. The presence of professional managers usually has an impact on the positive progress of the firm: by controlling the structural variables of firms,

2  Employment Relations in Small Italian Firms: An Overview     51

corporate management in which professional managers are involved increases the likelihood of growth instead of a reduction in jobs. On the other hand, firms managed directly by their owners (including smaller and craft firms) tend to be associated with greater and more unpredictable variability in their business activity. No significant differences are recorded on the basis of other production characteristics, however. Taking into consideration more closely the human resources management, however, the exclusive role played by owners is reduced to little more than half (53 per cent). In the other half, we see the presence of managers and internal—and, more rarely, external—specialists with administrative functions (personnel management) and control/consultancy responsibilities concerning regulation (of legal or contractual origin) of the labour market and employment relations. This must be related to a certain degree of complexity in the relevant Italian normative framework, which also affects smaller firms. Taken together, however, this is an indication of a logic of action in the area of labour regulation that in many cases is not simply based on unilateral corporate decisions, as we will shortly see. The size of a firm and its corporate form are relevant in this case, too: specialised HR management tends to become more widespread as firms grow in size, as well as in industrial and service firms. Additionally, the presence of HR specialists tends to be associated with improved employment (but not economic) performance; conversely, this is less frequent in cases where the productive and service activity is more variable or unpredictable. It is noteworthy that the two dimensions of management strategy— that relating to company management and that relating to HR management—are closely correlated but do not coincide. In two-thirds of cases in which firms are managed by the owner, HR is, too, while in one-third of cases, HR is assigned to specialists. Conversely, while in three-quarters of the cases in which firms are managed with the support of managers, the same is true of HR management, HR remains the prerogative of the owner in approximately one-quarter of cases. Another important aspect is whether or not the business owners are members of an employers’ association. This is an issue that does not appear very often in studies on small firms, which tend to focus more on what happens within the corporate sphere, and which have also been carried out especially in countries where employers’ associations have

52     M. Anzivino and I. Regalia

traditionally played a fairly limited role.6 In Italy, conversely, employers’ associations, which differ greatly according to the size of the firms at which they are aimed, generally play a significant role and have important support functions, above all for the benefit of smaller firms, including outside the company itself—for example, by facilitating access to local resources and to the benefits offered by bilateral bodies or other institutions, or by facilitating local-level collective bargaining (Regalia 2017). As we shall see, membership of a representative organisation is in fact significantly positively associated with enjoyment of the services provided by external institutions at territorial level. The rate of membership among the firms surveyed is a little less than 60 per cent: 18.5 per cent belong to the organisations representative of industrial firms (Confindustria and Confapi), 11 per cent to organisations for firms in the area of trade, 15 per cent to organisations for craft firms or cooperatives and a further 15 per cent to smaller organisations. This propensity to join an association increases significantly as the company grows in size: one-half of micro-firms and two-thirds of firms with more than 15 employees are members. Significant differences cannot be observed based on territorial or economic-productive characteristics, however. There may be some differentiation depending on the production sector. Advanced service firms tend to be more reluctant to join associations, while construction and accommodation/food firms are more likely to do so. These are very small differences; however, they appear to be in line with the long tradition of membership of employers’ associations that provide services and support to their members in the latter two sectors, and with the far more recent tradition of association membership in the case of the advanced service sector. The characteristics of the tradition of membership therefore seem to be of particular significance.

Workers, Trade Union Membership, Workplace Representation Turning to the other side, that of workers, it should first be noted that almost 40 per cent of small firms employ foreign workers, and in 14 per cent of cases they make up more than 20 per cent of the workforce. The

2  Employment Relations in Small Italian Firms: An Overview     53

differences are considerable on a territorial basis: the highest incidence is in the most developed regions and the lowest in the economically weaker ones, in line with the findings of studies on the matter. Very marked, as expected, are the differences according to sector: the one most characterised by the presence of foreign workers is that of accommodation/ food, wherein foreign workers are present—and in significant numbers—in almost 60 per cent of firms; the firms with the lowest incidence of foreign workers are those in the advanced tertiary sector and in trade, wherein there are no foreign workers in 73 per cent and 78 per cent of cases, respectively. The presence of foreign workers also tends to be greater as the size of the firm increases, and in craft firms. Such a presence is positively associated with firms’ good economic and employment performance, and the incidence is slightly higher in managerially run ones. More generally, the presence of foreign workers is a factor of workforce differentiation and heterogeneity that needs to be considered. As to the collective organisation of workers, the presence of trade union members is reported7 in one-third of firms, with a clear significant increase based on size: there is trade union membership in approximately one-quarter of micro-firms, in a good one-third of firms with between 10 and 15 employees, and in over half (54 per cent) of larger firms. As in the case of the organisation of the employers, the tradition counts for a great deal: there are more trade union members in the manufacturing and construction sectors, which have been the strongholds of traditional trade unionism, while there are fewer in both the low- and high-skilled services sectors, in which trade unions have always had more organisation problems. Membership also tends to be more widespread among firms in the two most developed regions, again with a more deeply rooted trade union tradition—Tuscany above all, and Lombardy—and more generally among firms that belong to an employers’ association. Significant, and probably unexpected, is the positive relationship with the incidence of foreign workers. As is the case with union membership among employers, no significant differences are apparent based on the firms’ economic-productive characteristics. Keeping the other variables under control—that is to say, all other conditions being equal—we do, however, see a small negative relationship between trade union membership and the performance index of

54     M. Anzivino and I. Regalia

firms: in other words, the presence of trade union members tends on average to be more widespread in cases of crisis and less so in cases of economic and employment expansion. There is workplace trade union representation in 16 per cent of firms. In this case, there are no significant differences among the various regions, while some differentiation, albeit limited, can be seen based on the type of company: workplace representation is less frequent among craft firms (11 per cent), while it is more widespread in industrial/service firms (17 per cent), and above all in cooperatives (20 per cent). However, the most significant differences depend on the size of the firm: there is workplace representation in 36 per cent of firms with over 15 employees—those to which the facilitating provisions of the Workers’ Statute apply—compared with 10 per cent of micro-firms and 12 per cent of those with between 10 and 15 employees, to which these provisions do not apply. These data, which are in line with official estimates (see ISTAT 2015, 170), confirm the importance of the national legislation, while also indicating a level of trade union organised presence that is probably higher than might have been expected, given the limited size of the firms. As regards the sector, workplace representatives are most frequent in manufacturing (21 per cent) and much less common so in services, particularly among accommodation/food firms, where they are present in only 6 per cent of cases. No significant differences are observed on the basis of the economic-productive characteristics of firms.

Work and Working Conditions: How Do People Work in Small Firms? Recruitment A first aspect to consider concerns how workers are recruited. From this point of view, it is indubitable that the most traditional informal modes based on direct contact prevail, as observed in the literature (Carroll et al. 1999; Forth et al. 2006). In our case, by far the most widespread mode is that based on acquaintance, family networks and informal

2  Employment Relations in Small Italian Firms: An Overview     55

channels, which is employed in two-thirds of cases, and even more frequently in less developed geographical areas and smaller firms. On the other hand, informal practices are a little less used in firms operating in the highly skilled service sector and in those that are embedded in the systems of larger companies. The second most important mode is that of self-candidature, reported in just over 40 per cent of firms; here, there is greater frequency among firms in those areas with labour markets most favourable to the firm (Abruzzo, Calabria), and in those characterised by strong solidarity ties at the local level (Tuscany), in the sectors of accommodation and catering. Self-candidature is a little less widespread among firms belonging to larger companies and among those operating in non-local markets with a lower incidence of labour costs. Conversely, formal channels are rarely used. Private agencies and job centres are used by only 13 per cent of firms, and public agencies by 9 per cent, but the characteristics of firms vary significantly in the two cases: private services are mainly used by manufacturing firms in Lombardy of a larger size operating in international markets; public agencies are mostly used by Tuscan companies embedded in institutionally dense local systems and especially cooperatives. Universities, schools and research centres are contacted by only 5 per cent, with a predominance of small businesses in the advanced tertiary sector. Advertisements, both in the press and on the internet, are used by 8 per cent of companies: these are more frequently small Lombardy firms in the advanced tertiary sector which are part of larger company systems. Only 2 per cent use social networks: these are predominantly firms in the high-skilled service or accommodation and catering sectors which, as we shall see, make particular recourse to temporary and non-standard forms of work.

External or Numerical Flexibility Another fundamental aspect of working conditions concerns the modes by which firms adapt to market trends, using forms of flexibility in the use of labour or in the organisation of production that make it possible

56     M. Anzivino and I. Regalia

for them to adjust to the outside according to needs. One mode concerns the degree of stability or volatility of employment contracts. Another is recourse to the outsourcing of production phases.

Non-standard Contracts of Employment If we consider the contracts of employment, in just under 40 per cent of cases all workers are hired on permanent contracts. The propensity to offer the traditional form of employment stability tends to be greater in micro-firms managed directly by the owner in less developed regions and especially in the sectors of trade, manufacturing and construction. It is generally associated with situations of difficulty in terms of economic and employment trends. In a similar percentage of cases (38 per cent), use is instead made of fixed-term contracts, the most widespread form of non-standard employment. In a quarter of cases, forms of self-employment (collaboration contracts, freelancing) are also used, confirming the broad use of more or less genuine contracts for service that characterises the Italian labour market. In almost a quarter of cases, recourse is also made to apprentices; in 14 per cent, interns are used; finally, only 8 per cent of cases make use of agency workers. Note that the use of these last three forms has diminished in recent years, in a time of crisis. In short, these are the forms of employment generally least appreciated by companies and the first to be reduced or eliminated in the event of economic-­ employment difficulties. On combining the different kinds of employment distinguishing permanent workers, fixed-term contracts and other non-standard forms of employment, we obtain the distribution (disaggregated according to production sectors) set out in Table 2.4, which gives a measure of the recourse to forms of numerical, or external, flexibility of the use of labour. As already noted, 37 per cent of small firms do not use flexible or non-standard forms of employment; 14 per cent use fixed-term contracts in addition to standard contracts; 25 per cent use other non-standard forms of employment in addition to standard contracts; and 24 per cent make use of all contractual arrangements.

2  Employment Relations in Small Italian Firms: An Overview     57 Table 2.4  Recourse to numerical flexibility, by sector Sectors

Manufacturing Construction Wholesale/ retail trade Accommodation/ food Business/ advanced services Total

Contractual arrangements

Total N

No numerical flexibility

Open-ended +  Open-ended +  fixed-terms other contracts non-standard forms of employment

All forms of contractual arrangements

41.8 41.1 44.4

11.9 14.8 11.8

22.5 23.0 28.0

23.8 21.1 15.8

100 100 100

822 274 461

28.1

28.1

18.0

25.9

100

139

22.7

13.1

31.0

33.3

100

442

37.4

14.3

24.7

23.6

100

2309

It has already been said that the most traditional mode, which does not envisage flexible or non-standard forms of employment, generally characterises small, less dynamic firms. The use of fixed-term contracts appears to be somewhat more typical of accommodation/food companies and cooperatives, and more generally of firms with good economic and employment performance. The use of other non-standard forms, and in particular the combination of all the flexible or non-standard kinds, characterises service firms operating in the advanced tertiary sector and tends to be more widespread in the more developed regions and in the largest and most dynamic companies with better economic-employment performances. Overall, it is indubitable that the use of these forms of employment requires attention to human resources management, which tends to be less widespread in smaller and more traditional firms. In fact, it is positively associated with the presence of managers or the use of specialists in the company management and HR.

Outsourcing of Production Phases In regard to the other form of external flexibility, about one-third of small firms outsource part of the production process. The sectors where

58     M. Anzivino and I. Regalia

parts of the production process are most frequently outsourced are manufacturing (47 per cent) and, to a lesser extent, construction (39 per cent). It is therefore not surprising that outsourcing is more frequent in those regions most characterised by manufacturing production—Tuscany (40 per cent) and Lombardy (36 per cent)—and much less so in those with a low incidence of industrial production, like Calabria (24 per cent). Firms operating in larger, non-local markets (41 per cent) more often resort to outsourcing, as do industrial/service firms (37 per cent), in particular cooperatives, which resort less to this form of flexibility (20 per cent). Besides cooperative enterprises, those that resort less to outsourcing are firms with standardised production and those whose workers are more easily substitutable. We may then say that the outsourcing of production phases tends to be largely driven by the search for specialised suppliers able to assure quality and reliability, reducing the costs of the small client company. In other words, outsourcing of production phases can be seen as a factor in a firm’s networking strategy and an indirect indicator of dynamism. The tendency to use this mode of organisation of production activity is greater among firms belonging to a representative association and among those in which there is a trade union presence, in terms of both membership and representation structures.

Internal Flexibility Finally, we focus on how production is organised within the firm: in particular, we consider working hours and crucial aspects of work organisation.

Working Hours A little over a third of firms use only a regular work schedule fixed at five days a week. In other cases, working-time arrangements are used which make the firm more flexible—that is, more variable and/or adaptable to production needs. In all cases, as we shall see, the use of a flexible or variable work schedule tends to be positively associated with

2  Employment Relations in Small Italian Firms: An Overview     59

better economic-occupational performance, albeit in contexts that differ in other respects. The most traditional form of working-time variability, overtime, is used by 43 per cent of firms. A similar proportion of firms use work on weekends and holidays. Only 18 per cent use night work or shifts. The use of overtime is generally associated with dynamism and good corporate performance, especially in the manufacturing sector. It is in fact most used in the more industrialised regions (in 49 per cent of the Lombardy firms compared to 27 per cent of the Calabrian ones), and in half of manufacturing firms compared to a third of those in commerce. Overtime is used by approximately half of the largest firms (with over 15 employees) which offer customised products for intermediate customers and on supra-local markets. It is also more frequent among firms that would have difficulty replacing their personnel and in which, above all, turnover and employment are expanding. Recourse to work at weekends and on holidays is, on the other hand, more used by service firms and aimed at end customers: it is widespread in trade and in the advanced tertiary sector (46 per cent of companies) and concerns almost all (93 per cent) catering and hotel businesses. Such work tends to be more widespread in regions with a greater incidence of service companies (Calabria). It is more frequent among companies with high activity variability and among those expanding, both economically and occupationally. Night or shift work is used in almost half of catering and accommodation businesses (48 per cent) but in very few trade firms (8 per cent). It is more widespread in areas with a greater tertiary (Calabria, 22 per cent) than industrial vocation (Lombardy, 15 per cent). Night or shift work is used in larger firms more than in micro ones (26 per cent vs. 15 per cent), by those operating in wide-ranging markets compared to those operating at the local level alone (21 per cent vs. 16 per cent), and by cooperative enterprises (31 per cent vs. 13 per cent of craft enterprises). It is a form of flexibility used more by firms with expanding workforces than by those in fullblown crisis (21 per cent vs. 12 per cent). Combining the use of the different flexible or variable working-time modes, we obtain the distribution, broken down by sector, shown in Table 2.5.

60     M. Anzivino and I. Regalia Table 2.5  Recourse to working hour flexibility, by sector Sectors

Manufacturing Construction Wholesale/retail trade Accommodation/ food Business/ advanced services Total

Forms of working hour flexibility Overtime Weekend No form work of flexible working hours

Total

N

Multiple forms of working hour flexibility

41.2 48.9 40.3

20.2 13.1 13.2

4.7 7.3 23.9

33.8 30.7 22.6

100 100 100

822 274 461

4.3

1.4

29.5

64.7

100

139

36.7

15.4

13.6

34.4

100

442

37.3

15.9

12.5

34.3

100

2309

While more than one in three small firms do not use any form of working hour flexibility or variability, 16 per cent only use overtime, 13 per cent resort only to work at weekends and on holidays, while a third use variable mixes of the different forms of working hour flexibility for their workers—mostly overtime plus holiday work, and night work or shifts in a minority of cases. In conclusion, beyond the obvious variability according to sector, the use of fixed working hour arrangements tends to be more typical of micro-firms, especially if artisanal, which do not use foreign personnel and are managed directly by the ownership, which tend not to belong to employers’ associations and in which there is no trade union presence. Generally less dynamic, they produce for the local market according to price competition strategies and in recent years have recorded negative performances in both business and employment. Conversely, recourse to a more composite variability and flexibility of working hour arrangements tends to characterise opposite situations, heterogeneous in respect of the ethnic composition of the workforce, with a more complex structure, run managerially and in which forms of trade union presence are more frequently reported, with greater economic and productive dynamism and positive business-employment performances.

2  Employment Relations in Small Italian Firms: An Overview     61

Organisation of Work The characteristics of work organisation within firms differ greatly, in particular according to the type of production and the sector. Here, we will refer to three dimensions that concern the quality of work: the degree of standardisation of job tasks; the autonomy that workers have in executing them; and the recourse to ways of organising work that provide for the possibility that workers work on multiple tasks. With regard to the standardisation of job tasks, they are defined as very standardised in just over 40 per cent of firms. The degree of standardisation does not vary according to the size of the firm. On the other hand, it varies, as expected, albeit not substantially, according to the sector: it is in fact somewhat greater in the sectors of low-skilled services more dedicated to final consumers (wholesale/retail trade, accommodation/food), where tasks are highly standardised in 45 per cent of companies, while being less so in high-tech services, manufacturing and construction, where in 60 per cent of firms tasks are not standardised. Overall, the degree of standardisation is therefore lower in companies in the more industrialised areas and with a greater presence of advanced services (Lombardy and Tuscany) and higher in those with a greater incidence of low-skilled services (Abruzzo and especially Calabria, where a good half of firms organise their activities according to highly standardised patterns). Moreover, recourse to ways of organising work based on very standardised tasks is likely to be made by firms in which workers can easily be replaced, those employing mainly staff hired on a permanent basis, those which do not use female labour, those which do not use overtime but rather organise work into shifts, those which do not outsource production phases and those which operate only in local markets, offering products or services that are in turn standardised. As we shall see, these are firms that tend not to resort to staff training. They are traditional firms which tend to be closed, rigid and inward-looking. It is noteworthy that on average small craft firms make less use of standardised work tasks: the data, perhaps unexpectedly, reveal that also among craft firms there are dynamics oriented to personalisation of the product, to production for markets different from the local one, that tend to resort to a highly specialised workforce—or, in any case,

62     M. Anzivino and I. Regalia

replaceable with great difficulty—and to more complex and flexible forms of employment. Overall, these are more open firms, organised more flexibly and directed towards the outside. Finally, the degree of standardisation of tasks does not seem to be associated with the management style of the company and HR, with the presence or absence of a trade union, or with the trends in economic and employment performance. This indicates that where this aspect of the organisation of work is concerned, it is predominantly some features of the production and the market that count. Considering now the dimension of autonomy, a little over 40 per cent of firms grant a great degree of autonomy to their workers. In this case, there is a clear negative relationship with the size of firms: in fact, a high degree of autonomy is found in just under half of micro-enterprises and only in one-third of the larger ones (more than 15 employees). The autonomy enjoyed by workers also varies according to the production sector: it is higher in services, especially in accommodation/food and in business/advanced services—and therefore in both low- and high-skilled services—where it is spread in about half of firms, and among firms that consistently rely on women’s labour. The degree of autonomy granted to or demanded by workers is clearly related to their degree of substitutability: they enjoy broader autonomy in well over 50 per cent of firms in which it would be more difficult to replace them (compared to 40 per cent of those in which there would be no difficulty in doing so); this also explains the greater use in these cases of vocational training. Variation in this aspect of work does not appear to be significantly associated with other characteristics of firms, or with management styles and HR; nor is it associated with trends in economic and employment performance. The tendency to grant/demand a significant degree of autonomy is if anything more typical of companies without a trade union presence. This is not surprising since a greater degree of autonomy tends in particular to characterise the organisation of work in micro-enterprises and services, in which the trade union presence has always been lacking. If account is taken of these features (greater diffusion in smaller firms, especially where staff are more difficult to replace, and no relation to management styles or to the economic-employment performance), it

2  Employment Relations in Small Italian Firms: An Overview     63

seems that we can say that the propensity for the owner and/or management to grant broad autonomy to workers has particular significance in the case of smaller firms. It is not so much an intentional choice by a management conscious of delegating to workers part of their legitimate power to organise work and an explicit instrument for the active involvement of staff in the operation of the company, as envisaged by the participative theories of the firm that have superseded the Fordist paradigm. Rather, it is perhaps an almost natural propensity, a matter of common sense, to let do, and probably also to expect or demand that the workers take the initiative. This is for two reasons: firstly, because they are small businesses, in which the distinction of roles and functions cannot be very developed, and this leads to use being made of the workers’ ability to self-organise, and secondly, because the autonomy that workers can enjoy and—which is generally an appreciated aspect of the employment relationship—can act, in these small contexts, as a functional substitute for other positive aspects of the employment relationship that workers can enjoy in larger companies, such as career opportunities and the possibilities of obtaining further benefits compared to basic standards, which can hardly be offered here. The fact that autonomy tends to be greater where the workers cannot be replaced easily and are therefore indispensable to the firm reinforces the hypothesis that an exchange takes place between greater autonomy and lower benefits, as proposed in some case studies (e.g. Moule 1998). Finally, recourse to forms of work organisation that provide for the possibility that workers may work in several jobs appears to be widespread in just over a third of cases. This is an organisational solution that does not appear to be significantly correlated with any of the characteristics of the firms examined, with the important exception of greater use in firms—mostly managed by the owner, as previously noted—using only stable personnel and which do not resort to atypical or non-standard forms of employment—that is, they do not adopt forms of numerical or external flexibility. The rotation among several jobs is precisely a form of that functional flexibility that has been considered in the literature (Blyton and Morris 1991) as an alternative to flexibility based on the use of more or fewer temporary staff. However, similarly to what was previously observed, it does not seem that this recourse to forms of

64     M. Anzivino and I. Regalia

functional flexibility corresponds to the adoption of more or less formalised schemes (sometimes negotiated with the union) for the intentional flexibilisation of work organisation with a view to greater involvement of workers in the management of the firm, as prescribed by the literature on direct participation (Cotton 1993). Rather, it corresponds to the more traditional use of experience and the ability to adapt of staff who have been stably present in the firm for some time.

Training We conclude this exploration of working conditions in the firm with a discussion on the use of vocational training. This does not concern training on the job, which is always a practice essential for the transmission of skills, particularly in less structured firms. We refer to the training that is carried out externally to the firm, or at least with the use of external specialists. Among the firms considered, training thus defined is used in twothirds of cases: in a quarter of them, training is given to selected and restricted groups of workers; in other cases, training is addressed to a large part of the staff. The use of training does not vary substantially according to the size of the firm, except for a slightly lower propensity among micro-enterprises. It varies more significantly according to the sector (see Table 2.6): it is in the advanced tertiary sector, and even more so in the construction sector, that recourse tends to be made to formalised and extensive vocational training (respectively in 75 per cent and 80 per cent of cases). A greater use of training also tends to characterise firms that are part of larger corporate systems, which hire on the basis of complex contractual arrangements for temporary and non-standard work; firms which largely outsource production phases and in which external flexibility is therefore high; and firms that use various forms of internal flexibility in which workers enjoy broad autonomy and where, as already said, workers are difficult to replace and are therefore crucial for the company. Note also that, above all, firms run with managerial methods, which belong to an employers’ association and in which there are workers’

2  Employment Relations in Small Italian Firms: An Overview     65 Table 2.6  Recourse to training, by sector

Manufacturing Construction Wholesale/retail trade Accommodation/food Business/advanced services Total

For all For some employees employees

Not provided Total

N

33.5 51.5 33.6 32.4 43.2

24.6 27.7 30.6 27.3 30.5

42.0 20.8 35.8 40.3 26.2

100 100 100 100 100

822 274 461 139 442

37.9

27.4

34.6

100

2309

representatives make the most use of training. Overall, according to these data, the use of formalised training mainly characterises firms that on the one hand tend to have higher internal complexity: (i) in which personnel are heterogeneous in terms of origin and contractual conditions, with a high degree of autonomy and a high degree of independence and potential to exert pressure (being difficult to replace), and (ii) in which work organisation is not standardised and provides a greater degree of variability/flexibility in work schedules. On the other hand, such use of formalised training characterises firms that tend to have externally dense relations with other firms: they are part of larger corporate systems and they resort to the outsourcing of production phases. In our case, therefore, training does not seem to be used mainly for staff permanently hired as a way to update and broaden their skills, according to the traditional logic of enhancing internal staff. The relationship with firms that mainly use personnel hired on permanent contracts is even negative. In the case of these small firms, training may instead have a twofold function: on the one hand, it is a means to adapt a heterogeneous workforce hired on a variety of temporary and non-standard contracts according to a firm’s minimum needs; on the other hand, it furnishes specific skills to groups of workers with higher, or particularly important, qualifications, even if they are not hired on a permanent basis. It is likely that the former case is more typical of a sector-like construction—for example, through the necessary use of building site safety courses—and that the latter case is more typical of highly skilled sectors such as advanced services.

66     M. Anzivino and I. Regalia

Employment Relations in the Workplace Let us now focus on the ways in which the employment relationship is regulated within firms. A distinction should be drawn between the behavioural dynamics of the actors and the substantive aspects that arise from them—that is, processes and outcomes.

Processes As regards the behavioural dynamics of the actors, the conduct of the owner or management is crucial, but that of the workforce is no less important. Here, we shall consider the ways in which owners or management take decisions regarding the organisation of work and remuneration, the direct contact practices between workers and management, conflict actions and protests by workers, and recourse to collective bargaining.

Owners/Managers: Decisional Processes With regard to the organisation of work, we investigated how decisions were usually taken within a firm in regard to three aspects: overtime; shifts and/or night work; and changes in job tasks. As Table 2.7 shows, only a quarter of firms take decisions on shifts and night work, and half on overtime. This corresponds to the limited use made of them in the majority of cases, as we saw in the previous section. The issue on which decisions are most often taken is changes in job tasks. This occurs in a little less than two-thirds of the companies. In general, however, in the cases in which decisions are taken, involvement of the workers and/ or their representatives, in the few cases in which they are present, is preeminent compared with the independent exercise of managerial authority. If we only consider the cases in which decisions are taken on various issues, three-quarters of firms taking decisions on changes in job tasks and on overtime and fully 60 per cent of those in which decisions on shifts and night work are taken adopt a participative orientation. If we combine the responses on overtime; shifts and/or night work; and changes in job tasks, we obtain an index of managerial

2  Employment Relations in Small Italian Firms: An Overview     67 Table 2.7  How firms make decisions on organisational issues

Shifts/night job Overtime Change of tasks

Firm decides unilaterally

Firm involves employees or their representatives

Issue is not applied

Total

N

9.0

14.3

76.7

100

2320

13.0 14.9

36.8 47.5

50.1 37.6

100 100

2320 2320

decision-making styles in the field of work organisation (from which we exclude the 20 per cent of companies that do not take decisions on any of the proposed topics). The index ranges from the one extreme of participative management (in which workers or their representatives are involved in decisions on all issues) to the other extreme consisting of a directive management (where decisions on all areas are taken independently). In the middle are a predominantly participative management (workers or their representatives are involved in two issues out of three), a predominantly directive management (decisions are taken independently on two issues out of three) and mixed management (decisions are in different ways on different issues). As can be seen from the data in Table 2.8, participative management and predominantly participative management were found in 70 per cent of cases, and directive management and predominantly directive management (which are presented together) in only about a quarter of cases. Even if we discount a certain amount of exaggeration on the part of the managers that we interviewed, it can be inferred that in the universe of small companies, it is considered especially important to involve workers in practice, regardless of the adoption of formalised participative management strategies. Firms’ decision-making styles on organisational issues do not vary in any significant way according to their structural features. Some exceptions to this may be found with respect to the productive sector: differences are in fact apparent between the construction and retail sectors, where there more often appears to be participative or predominantly participative management, and the other sectors, where there is a larger

68     M. Anzivino and I. Regalia Table 2.8  Decision-making style typology Participatory management Mainly participatory management Mixed management Mainly decisionist management Total

N

%

630 645 125 423 1823

34.6 35.4 6.9 23.2 100

number of companies with a directive style, although they are still in the minority rather than the majority. It is clear, on the other hand, that there is a relationship with firms’ economic-occupational performance: both turnover and employment tend to be higher in cases of both participative and mixed managements (where trends towards consultation and independent decision-making are combined), while they tend to be lower in cases of directive management. In contrast, the presence of trade unions within firms is not a significant discriminating factor with regard to the decision-making styles employed on organisational issues. Pay is a very different matter. In the first place, it should be noted that nearly all firms (97 per cent) report that they refer to a national collective agreement. This is in line with the general features of a national employment relations system in which, as said, the role of sectoral collective bargaining has always been—and remains, even though it is not a legal requirement—central compared with company-based agreements, regardless of the level of unionisation of the workers. Based on what the representatives of employers’ associations declared (Colombo and Regalia 2016; Regalia and Regini 2018), this is the result of a broadly implicit requirement on the part of firms, especially smaller ones, to have a shared normative framework in a context in which there is no minimum legal wage. We should also add that the very widespread use of the regulatory framework of the national agreement does not mean that some form of direct negotiation or agreement with the workers, eventually mediated by the presence of trade union representatives, cannot take place or that a direct agreement cannot be the principal method used when reaching an operational definition of pay levels within a firm.8 As indicated in

2  Employment Relations in Small Italian Firms: An Overview     69 Table 2.9  How firms make decisions on remuneration, by region

Lombardy Tuscany Abruzzo Calabria Total

Only national National collective agreecollective ments + agreeagreements ment with employees/ representatives

Only agreement Total with employees/ representatives

N

61.7 64.1 68.8 79.2 66.7

15.9 7.3 9.0 8.7 10.7

768 763 398 391 2320

22.4 28.6 22.1 12.1 22.6

100 100 100 100 100

Table 2.9, when determining pay levels, reference is made exclusively to the national sectoral agreement in two-thirds of cases, while the remaining third use a combination of the national collective agreement and a direct agreement (in almost a quarter of cases) or a direct agreement alone (in one case out of ten). It is clear that use of the national agreement alone tends to decrease and use of direct agreements with workers (and their representatives, if any) tends to increase as one moves from less industrialised to more industrialised—and, in general, more developed—regions. These differences are not associated so much with the size of firms as they are with the sector. Construction is the sector in which most use is made of the national agreement alone (in over three-quarters of cases). Here, therefore, workers tend to have less opportunity to have a voice. Conversely, it is in the manufacturing sector that there is more likely to be some involvement on the part of workers or their representatives, both in association with the national agreement and independently of it. Finally, the highly skilled service sector tends to use direct agreements more, although they remain in a minority. Generally speaking, the practice of involving workers and/or their representatives directly in the determination of remuneration is quite clearly associated with more dynamic situations, in companies that are likely to be a part of broader corporate systems, to operate in supra-local markets, to have a workforce that is difficult to replace and to offer personalised products; that are characterised by positive economic/

70     M. Anzivino and I. Regalia

employment performance; and that tend to employ various means of external and internal flexibility in the way they organise labour, using decision-making styles that are not predominantly directive. All in all, where the behaviour of management is concerned, it appears that highly unilateral and authoritarian logics do not prevail. The picture is by no means a uniform one, however, and reveals a large number of differences.

Workers: Direct Contacts and Protest Turning now to the workers, one form of conduct that characterises corporate relationships within small companies is undoubtedly direct contact between workers and management. In fact, it is totally normal for individual workers to speak directly with the ownership or management about both work-related and personal problems. This is not true in only very few cases (6 per cent). It seems to be no coincidence that lack of direct contacts is above all the case in larger companies (with over 15 employees) that are part of larger corporate systems, that work in the more modern sector of advanced services for companies and that operate in wider markets using personnel who are difficult to substitute: in situations, therefore, in which it might be expected that more formalised and structured relationships would prevail. In the very large majority of cases in which direct contact is frequent, it happens first of all in relation to issues associated with the job—that is, to ask for changes or improvements, as in 90 per cent of cases. It is also true for issues of a personal nature, however (80 per cent of cases). While the former is a measure of the significance of informal relationships in the governance of employment relations, the latter gives an idea of the widespread nature of conduct that is in some way associated with closeness and trust in relationships of a more general nature between the parties. As can be seen from Table 2.10 (which shows the combination of both aspects disaggregated by company size), workers tend to discuss work-related and personal problems in three-quarters of cases, while they discuss only one type of problem in fewer than 20 per cent of cases. In other words, the trend of seeking to apply pressure and find

2  Employment Relations in Small Italian Firms: An Overview     71 Table 2.10  Intensity of direct contacts between employees and management, by company size

6–9 employees 10–15 employees 16 and more employees Total

No direct contacts

Limited direct contacts

Extensive Total direct contacts

N

5.2 5.4

16.1 18.8

78.8 75.8

100 100

1196 628

10.3

15.5

74.2

100

496

6.3

16.7

77.0

100

2320

solutions to problems directly, and not only those related to work, is extremely widespread. This trend also tends to traverse differences in the structural, productive and organisational characteristics of firms, except for that small group of companies in which, as we have seen, there is no practice of making direct contact and we can presume that the relationships are more formal in nature. Conversely, the use of explicit forms of protest is extremely limited: mention is made of it in about 5 per cent of cases. Note that only some of these protests have been organised by the union; in a slightly larger number of cases, they seem to have been promoted by the workers themselves, although more frequently in companies in which the presence of trade unions membership is reported, and even more so in those where trade union representatives exist, where there are presumably the organisational resources necessary to mount a protest. Protests are slightly more frequent in firms with more than 15 employees (in particular, cooperatives) that are run according to managerial principles, and especially if they are part of larger organisations. However, forms of protest are also reported in smaller firms. They concern all sectors (especially accommodation/food), as well as all territorial areas (especially the less developed ones). Finally, recourse, though infrequent, to industrial conflict tends to be slightly more associated with the conditions of economic and employment crisis. It therefore mainly concerns protests in situations of difficulty and not so much forms of pressure to obtain benefits and improvements. Presumably, the latter are instead pursued through direct contact with the management.

72     M. Anzivino and I. Regalia

Collective Bargaining In a third of companies, the social partners have resorted to forms of collective bargaining in recent years. Almost 30 per cent have signed company agreements on various issues that will be discussed shortly. In some cases (8 per cent), unwritten informal agreements have instead been reached, which are certainly less demanding than formalised agreements, but nevertheless indicate a propensity to regulate aspects of the employment relationship jointly. Table 2.11 shows the distribution of the combination of the two modes by company size. Predictably, the propensity to reach formal agreements tends to grow as corporate size increases, but not as much as one might expect: that agreements are signed even in a quarter of the smallest firms is rather surprising. The association with the existence in the company of resources for the promotion/management of collective action is significant: the propensity to sign agreements is, on the one hand, greater in cases in which companies are members of employers’ associations; on the other hand, it is even more marked where there are registered members of trade unions, and especially where workers’ representative structures are established. In about half of the cases in which labour representation structures exist, formal agreements have been reached in recent years. It should be noted that all this does not count, however, if companies are considered in which informal agreements only have been reached; Table 2.11  In-company collective negotiation over the last 2–3 years, by company size

6–9 employees 10–15 employees 16 and more employees Total

Patterns of collective negotiation Only informal No Formal agreements agreements (+ eventually informal) agreements

Total

N

69.6 66.7

24.4 26.1

6.0 7.2

100 100

1196 628

58.5

36.1

5.4

100

496

66.4

27.4

6.2

100

2320

2  Employment Relations in Small Italian Firms: An Overview     73

in these cases, there is no relationship with the ways in which the parties are organised. The use of informal agreements at least partly corresponds to a logic different from that of formalised bargaining, for which it can constitute a sort of substitute. Lastly, relations with performance indicators are significant: in cases of a decrease in employment and/or turnover, informal agreements and understandings are more likely to be reached. Thus, bargaining seems to be above all bargaining for crisis management.

Outcomes Finally, we discuss what can be considered the outcomes of behaviours and dynamics among the actors referred to above. In particular, we dwell on the company’s use of bonuses and rewards; on the issues and problems that have been the subject of negotiation between the parties; and on the use of forms of corporate welfare and/or work-life reconciliation.

Bonuses and Other Forms of Compensation In just under half of firms, in addition to the minimum contractual levels, production bonuses or other forms of compensation are paid. They can cover all workers, or just some groups (in 20 per cent of cases). Recourse to these forms of economic incentive is clearly characteristic of the most dynamic firms, operating in more affluent contexts and in extensive relational networks. In fact, their use is on average more widespread in Lombardy and in the manufacturing and highly skilled sectors, and less frequent in Calabria and in the accommodation/food and construction sectors. They tend to be positively correlated with companies that operate for intermediate customers, in wide markets and within large company systems, using personnel that are not easily replaceable. Economic incentives are more typical of companies run according to managerial principles, members of representative organisations, and in which workers’ representation structures exist. They are also more common in companies that resort to composite forms

74     M. Anzivino and I. Regalia

of flexibility, both external and internal, and which adopt participative decision-making styles in relation to work organisation, or which combine participatory and directive styles. Finally, the use of economic incentives tends to be greater in cases of expansionary economic-employment performance.

Bargaining Issues In the company negotiation mentioned above, it is possible to distinguish between (i) agreements concerning issues such as variable wages, work schedules and the provision of services, and (ii) those aimed at managing crisis situations through agreements on the use of social shock absorbers, the redundancy fund, reduced hours and the like. The former, which aim to achieve improvements or additional benefits according to an acquisitive logic, affect 10 per cent of companies. The latter, which are aimed above all at encouraging industrial readjustment and defending employment as far as possible, involve 20 per cent—that is, twice the number. This fact confirms that collective bargaining resulting in formal agreements in recent years has been above all bargaining on the consequences of the crisis, but with no lack of acquisitive agreements. The propensity to sign acquisitive company agreements tends to grow with the size of the company (in 8 per cent of micro-enterprises vs. 17 per cent of those with over 15 employees). It is slightly higher in the professional services sectors and lower in construction and accommodation/ food, without significant variations among territorial areas. This propensity is associated with the presence of actors equipped for collective action—above all, the presence of employee representative structures. Turning now to the other major issue, the propensity to sign agreements for crisis management also tends to be greater in larger companies (over a quarter of those with over 15 employees). It tends to be more widespread in cases where production is extremely variable and therefore difficult to manage, but it does not appear to be associated with other particular structural and productive characteristics of firms. It is clearly associated, as expected, with negative performance in terms of both employment and business, and with the presence in the

2  Employment Relations in Small Italian Firms: An Overview     75

company of actors particularly equipped for collective action (as in the case of acquisitive negotiation). Before we look into the final point—the use of forms of company welfare and/or life-work reconciliation—it will be helpful to review briefly the logic of informal types of arrangement. As noted above, in a small percentage of cases (8 per cent), informal arrangements are reached between the parties in addition to—or more often in the place of—formal agreements. This happens frequently in the service sector, in particular in the low-skilled field (accommodation and food), without other significant variations based on enterprises’ structural characteristics. There is a tendency for informal agreements to be a little more common, however, where a company has a more flexible organisation. In contrast to what we have just noted about formalised agreements, we see no association with the presence of actors equipped for collective action on the side of either the company or the workforce. Informal agreements tend to be used more often in times of employment and economic crisis. It is therefore not so much a kind of informal understanding aimed at improving working conditions as a method of managing problematic situations in a shared way.

Company Welfare and Measures to Reconcile Life and Work For some time now, small firms have also been making services and benefits available to their employees, or offering easier working hours for working parents and mothers, and ways of supporting the careers of women returning after maternity leave. In recent years, the provision of services and benefits for employees that fall under the label of company welfare—which can include a broad range of measures such as nursery schools, summer centres, scholarships, other services for families or singles, discounts and bonuses—has become a significant new aspect of corporate employment relations. Such company welfare, incentivised by tax breaks for firms and workers alike, represents in many cases an alternative to cash-based bonuses and productivity rewards that both sides appreciate, especially in times of economic crisis. It is an instrument that is used primarily by large companies, however,

76     M. Anzivino and I. Regalia

due to the effort and the development costs that it entails. A little less than 10 per cent of the small firms that we surveyed make use of it. Assistance with working hours aimed at encouraging work-life reconciliation for working parents and mothers in the form of part-time work, time off and leave, flexible working hours and the like is far more widespread. Such assistance was found in half of our cases, and measures of career support for mothers returning from maternity leave also offered in 20 per cent. If we put these three methods together, we see that various measures that can lead to improvements in individual well-being and in the working climate (which we will call “welfare” here for the sake of simplicity) are widespread, perhaps more than might have been expected considering the characteristics of these firms. In a little more than 40 per cent of cases, none of these methods was used; in a little less than a quarter of them, at least two were in use; while one was being used in a third of cases. The biggest surprise, however, is that the intensity of use of the various methods is not associated with the size of the company, as illustrated in Table 2.12. The intensity of use of the various methods seems to be correlated above all with the incidence of women working in the company. No welfare measures are in place in two-thirds of the companies in which none of the employees are women, whereas they are in use in three-quarters of those in which women make up over half of the employees, and in the deepest way in 40 per cent of cases. Intensity is also positively correlated with good corporate performance levels in Table 2.12  Intensity of use of company welfare, by company size

6–9 employees 10–15 employees 16 and more employees Total

Intensity of welfare measures Many welfare Few welfare measures measures

No welfare measures

Total

N

22.0 23.4

35.4 33.9

42.6 42.7

100 100

1196 628

22.8

34.5

42.7

100

496

22.5

34.8

42.7

100

2320

2  Employment Relations in Small Italian Firms: An Overview     77

both employment and financial terms. Moreover, recourse to welfare measures tends to be more frequent in companies operating with a managerial style and in those in which the decision-making techniques in the area of productive organisation are not predominantly unilateral. Ultimately, application of the welfare measures described above tends to be a managerial strategy for work management in complex environments that are characterised by the presence of a heterogeneous set of employees who are difficult to replace and which have no trade union tradition, where worker consent needs to be obtained individually. This is totally different from a strategy based on collective negotiation and the mostly formal search for agreement discussed above.

Firms’ Internal and External Employment Relations In the international literature, the relationship between small firms and the external environment is mainly understood as being with specific ethnic-familial communities (Ram 1994, 2001) or with other firms, above all in terms of dependence on or independence from large ones (Rainnie 1989). Moreover, especially in Italy, a body of research has developed on the economies of conglomeration, and in industrial districts in particular. Our study suggests, however, that relationships between small firms and the outside world may develop through a broader variety of relations. If one adopts a criterion of closeness to/distance from the firm, it is possible to identify relationships with familial-local communities, with other firms in the locality (districts, networks, etc.), with representative associations, with local workers’ representative organisations, with local institutions and governments, with external regulatory frameworks (laws, collective bargaining agreements) and with other domestic and international firms. This complexity is even more significant in a territorialised and institutionally dense economy like Italy’s, but it can be true of all economies, at least in part. In our analysis so far, we have made reference to the importance of external regulatory frameworks, especially to the laws on particular

78     M. Anzivino and I. Regalia

forms of corporate enterprise (craft firms, cooperatives); to the Workers’ Statute, whose provisions on protection from dismissal and the constitution of within-firm representation does not apply to firms with fewer than 15 employees; and to the national collective agreements. We have repeatedly underlined how important it is for small firms to be exposed to the outside world (i.e. to operate not only in local markets), to be part of relational networks with other firms and to produce for other firms. We have seen, in fact, that these relationships tend to be associated with positive economic and employment performance. In this final part of the chapter, we will dwell on relations with actors and institutions outside the firm at a territorial level, and on the results and benefits that firms can gain from them. In particular, we will discuss contacts with local trade union organisations, participation in bilateral bodies (joint participation structures of social partners for the mutual management of a variety of programmes in support of workers and firms) and relationships with local institutions.

Contacts with Trade Unions Outside the Firm One in five of the firms has had contact and has negotiated with trade union organisations in the territory in recent years. This propensity for contacting external trade unions does not vary greatly on a regional basis and is most common in those sectors that have a lengthier trade union tradition (manufacturing and construction). It is clearly linked to the size of the firm (external unions were contacted in almost 30 per cent of firms with over 15 employees, compared with 16 per cent of micro-firms) and is a little less common among craft firms. It tends to be more frequent in cases where the cost of labour has a greater impact on total costs. It is inversely related to the firm’s successful operation: on average, where turnover is falling and the number of jobs is diminishing, trade unions are contacted twice as frequently as they are when turnover and employment are increasing. Contact with trade unions is only slightly associated with a logic of a managerial system within the firm and company membership of employers’ associations. Conversely, it is strongly associated with the presence of trade unions within the

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firm: external trade unions are contacted in little more than 10 per cent of cases where there are no members within the workforce; in a little less than 40 per cent of cases in which there are members; and in over 40 per cent of cases where worker representation structures exist. Generally speaking, therefore, it can be seen that the tendency to meet trade unions outside the firm grows in periods of economic and employment crisis and is very much incentivised by the presence of a trade union in the firm. Except in a small minority of cases, therefore, external action is not a corporate strategy for tackling critical issues deriving from the absence of a trade union presence within the firm. This is true in general. The available data also make it possible to observe that contact can be made with an external trade union on a variety of different logics: in a very small minority of cases (4 per cent of total sample) to reach local or territorial agreements; in a slightly larger number of cases (6 per cent) to discuss or negotiate firm-related issues based on a regulatory or information-related logic; and in a more significant number of cases (16 per cent) in order to manage times of crisis in the firm, in particular in relation to access to social shock absorbers. Local/territorial agreements are territorial-level agreements that potentially apply across a wide number of local firms according to a multi-employer logic. In principle, they enable the benefits obtained from collective bargaining to be extended to workers in firms that would not be in a position to negotiate independently (Regalia 2017). Based on our data, such agreements represent a quite limited, but not insignificant, experience, given its characteristics. Agreements on corporate topics based on a regulatory/acquisitive logic are more often aimed at a positive definition of regulations and benefits in favour of individual firms. Compared with the previous type of agreement, they tend to be more typical of larger firms and are significantly more frequent where there is a trade union presence. Crisis management-related agreements and contacts form a slightly larger group wherein firms negotiate employment support measures (social shock absorbers) and, more generally, organisational flexibility arrangements in order to cope with economic crises. In this case, as in the first, no differences were observed according to the region, while the firms are mainly larger and in the manufacturing and construction

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sectors. As expected, the firms are characterised by a negative economic-employment performance. They are not significantly distinguished by a particular management style, but in this case, too, the relationship with indicators of a trade union presence within the firm is very clear: management tends to contact and negotiate with external trade union organisations particularly when a trade union is present in the firm, with members and a representative structure. Overall, while confirming the significance of a trade union presence within a firm so that contacts can be made and negotiations carried out with the trade union outside, it is possible to see that firms’ features tend to vary, and therefore so do the conditions under which contacts and negotiations to acquire new rules and benefits and those under which measures to support a crisis are more likely to develop. In the latter case, the firm need not necessarily have the organisational and productive dynamism that seems necessary in the former case, because resources can be deployed that derive from the general welfare and institutional system (including employment protection policies, social shock absorbers and interventions by local governments).

Participation in Bilateral Bodies Bilateral bodies are organisations of contractual origin—national or territorial—composed and managed in a paritarian manner by representatives of workers and firms, whose purpose is to provide members with services and benefits of various kinds thanks to the contributions paid by the parties. Historically, they have developed in areas where public intervention for the protection of workers was limited or absent in the event of, for example, redundancy, unemployment or maternity, and therefore in construction, crafts, temporary agency work and tourism. More recently, bilateral bodies have assumed additional tasks in the areas of vocational training, social security and supplementary healthcare, support for technological innovation and others. The scope of action has also been extended to other sectors. Bilateral bodies operate at the local or regional level and membership is voluntary. Here, we are interested above all in the extent to which they introduce the logic of

2  Employment Relations in Small Italian Firms: An Overview     81 Table 2.13  Recourse to services provided by bilateral bodies % At least one service No service Total Social and health insurance Training services Economic support for employees (in case of dismissal) Contributions for technological innovation, work environment improvement, quality certification… Loans, bank credit support

62.7 37.3 100 26.7 26.9 13.8 8.8 7

Base: All firms affiliated to bilateral bodies N = 442

mutuality into work relations and the logic of subsidiarity with respect to public actions and policies. 20 per cent of the firms surveyed participate in a bilateral body. The variations in membership are wide and reflect the historical evolution of the institute. On the basis of geographical location, companies located in the regions with the oldest industrialisation have a greater tendency to join (there is therefore more membership in Lombardy and Tuscany, less in Abruzzo and Calabria). In terms of sector, membership is more frequent in construction and low-skilled services, especially accommodation/ food. In itself, corporate size does not matter, but craft firms managed by the owners and affiliated to employers’ associations tend to join more. Almost two in three members have used services and benefits. As illustrated in Table 2.13, these interventions cover a heterogeneous variety of themes. Most commonly used are social security and healthcare programmes supplementary to those provided by public policies, and vocational training, but they appear to be used by slightly different kinds of company. In the case of supplementary social security benefits (pensions) and health services, these concern mainly larger companies, especially in Lombardy, in sectors other than food/accommodation, with moderately positive employment performance, with no relationship with management strategies or trade union presence. They are likely to be firms that make use of new external opportunities provided through bilateral institutions by the national collective agreements.

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In the case of training, these tend to be firms operating in the construction and food/accommodation sectors, and more so if larger, especially if operating with a managerial style, with the presence of trade union members, and in the economic-employment situation of either growth or crisis. Measures to support employee income, particularly widespread in the past, mainly concern firms with up to 15 employees, especially if they operate in crafts and construction. These are mainly small traditional businesses, managed by the owner, and characterised by a predominantly unilateral type of organisational management. Often associated with their employer association, there are trade union members (but not worker representative structures), and they register a negative economicemployment performance. Contributions for technological innovation, improvement of workplace safety, quality certification, participation in trade fairs and interventions in general to support the development of the company mainly concern a small group of independent firms of a dynamic and non-traditional type. Loan and credit support services (an issue of particular interest to small businesses), in particular, involve a very small group of larger companies, especially in manufacturing and construction, located in less developed areas (and therefore presumably with greater difficulty accessing credit through ordinary routes), which tend to be included in broader environments/networks and achieve moderately positive performance. Somewhat more characterised by a predominantly unilateral organisational management style, in these cases there is also a greater tendency for firms to join associations and for workers to organise themselves into unions. Overall, one may conclude that this brief analysis of the use of forms of support provided by bilateral bodies shows that this is a diversified use which responds to the different characteristics and needs of firms. It can also be said that these forms of support from outside the firm can in part be functional substitutes for limited resources within the company. More generally, it should be noted that recourse to the services and benefits of bilateral bodies appears to be positively associated with the provision of bonuses and above all of corporate welfare measures by firms. It is also positively associated with the expression of an organised

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voice by the workers within the company: use of bilateral bodies is in fact significantly greater in cases where protest actions have occurred. On the other hand, it is negatively associated with individual expressions of voice—i.e. direct contact between workers and management. Finally, recourse to the services and benefits of the bilateral bodies is positively associated with the propensity of firms to contact and negotiate with the unions external to them. Both are indicators of an active endeavour to seek resources and solutions at the local level aimed at integrating and complementing, rather than replacing, collective dialogue and discussion strategies within the firm.

Relationships with Local Institutions Even more than from bilateral bodies, businesses can seek support services and measures from local institutions. The institutions to which they may refer are many and active in many fields. We have already mentioned, for example, the role (in fact, rather limited) of schools and universities, or of employment centres, in the hiring of personnel. Here, we make some further observations on the role of local authorities or public administrations. One in three of the firms used services provided by local public bodies. The use of such services occurs mainly in manufacturing (to a lesser extent in low-skilled services), and particularly when companies are larger, there being no significant relationship with the characteristics of the market and production. Instead, these are mainly firms that tend to use external flexibility strategies in the management of personnel and which are characterised by negative economic and employment performance. They are also companies that tend to be associated with their representative organisations and that entrust human resources management to managers and experts; an organised trade union presence is particularly frequent. Indeed, the propensity to contact institutions tends to be greater among firms that adopt mainly collective employment practices within the workplace—firms, therefore, that refer more than average to national collective agreements and not just to direct

84     M. Anzivino and I. Regalia Table 2.14  Recourse to services provided by local institutions % At least one service No service Total Economic support for employees (in case of dismissal) Training services Contributions for technological innovation, work environment improvement, quality certification… Resolution/arbitration services

34.7 65.3 100 20.7 10.2 10.0 0.7

Base: All firms reporting relevant information N = 2320

negotiations with the workers, that have signed company level agreements, and in which the workers have most often resorted to forms of protest. Conversely, the propensity to contact institutions tends to be less where there are more widespread forms of direct relations between management and workers—therefore, where the company makes more use of corporate welfare, and where there is more direct contact between workers and management on more issues. As shown in Table 2.14, however, the use of services and benefits conferred by institutions also corresponds to different patterns. Contact is more frequently made to obtain measures to support the incomes of redundant or unemployed workers. This case concerns relatively large, independent construction or manufacturing firms characterised by variable production, for intermediate customers, but managed with traditional methods and recording negative economic-employment performances. They tend to be associated with representative organisations but are managed autonomously by the owners, using low organisational flexibility. As expected, they tend to be characterised by the presence of trade union members and representatives. The recourse to training through institutions does not vary much according to the structural characteristics of firms, although it tends to be somewhat more common when they are large, and in cases where they belong to larger organisations, are not craft firms, and achieve a moderately positive performance, along with where external and internal flexibility is used. Recourse to training through institutions varies more according to the characteristics of the actors—therefore if they are

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firms associated with employers’ organisations, run in a managerial way and characterised by the organised presence of a trade union. Finally, recourse to financing/services for technological innovation, quality certification, participation in trade fairs and other ways to foster corporate development tends mostly to characterise business service firms, with no significant relationship with their size or location. These are especially firms embedded in large-scale networks of relations, which produce in a personalised manner and achieve positive performance. They tend to use external and internal flexibility, according to a style in which participatory and unilateral approaches alternate, and to make extensive use of training. Moreover, they tend more frequently to join associations of representation and manage their staff with the help of specialists. They are also characterised by the presence of trade unions. Contact with institutions to obtain arbitration and conciliation services is entirely negligible, though this is a more general characteristic of employment relations in Italy. More generally, if we again consider recourse to the services and benefits of institutions as a whole, on the one hand it appears to be positively associated with the development of collective bargaining within companies: almost 55 per cent of those that have signed in-company agreements have benefited from support measures from institutions. On the other hand, it can be observed that recourse to institutions is once again positively associated with the use of interventions by bilateral bodies, and even more with the propensity to contact and negotiate with trade unions outside the company: around 60 per cent of the small businesses that have contacted and negotiated with trade unions at the territorial level have in fact benefited from local institutions, compared to a general average of 35 per cent. Overall, the data indicate that relations with organisations, bodies and institutions external to the firm locally can be valuable for their good functioning and the management of human resources within them. From this point of view, we can say that salient is a set of firms that tend to resort largely to a multiplicity of external opportunities for corporate development, which add to negotiating activities and social dialogue, albeit limited, within them. There are also firms, though, that resort in variable mixes to these external services and benefits independently from the development of

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a human resources management collectively mediated within them. Other companies still do not access external resources. We shall return to these different strategies for work regulation in the next chapters (see especially Chapter 5) and in the overall conclusions.

To Conclude: An Overall Assessment Our survey has shown the composite nature of the world of small firms as regards their structural features and economic and employment performance, the configuration of the various actors, the logics of labour management, the level of independence enjoyed by the workers and the intensity, methods and functions of their relations with the outside world. If we focus on the various features of employment relations, apart from the undoubted significance of the structural variables (socio-economic area, productive sector and size of the company), we see that all the features that we might summarise as the firm’s level of dynamism (being part of broader corporate systems, exposure to international markets, use of personnel who are difficult to replace) and its company management logic (by a sole owner or by managers and other specialised personnel) are crucial for the purposes of explaining variations. Unsurprisingly, a less important role is played by the more traditional variables of employment relations—that is, by the parties’ representative organisations, especially trade unions—although these are not at all irrelevant to the extent that they apply in this specific system. We will return to this topic in the final chapter of this book. In the meantime, we will conclude this survey with brief reference to the opinions expressed by owner-managers on the context within which their companies operate. The importance of the local context to which smaller firms belong is a well-known issue. We asked them to score on a scale of 0–10 various aspects of this context, including opportunities for securing loans; the local supply of workers with skills adequate for the company’s needs; respect for the law; the availability of infrastructures and the support network of logistics and services; the initiatives

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and policies of local governments; and the activities and initiatives of social parties. The ratings for each of these aspects were fairly low (on average, they varied between a maximum of 6.7 and a minimum of 4.7). They were especially negative on the subject of the work of public administrations and social partners. There were a number of significant differences, however. Because this is a local context, and given the enormous variations among the regions examined, the most significant differences related to the territorial aspect. In general, opinions of the local context were more positive where the firms were located in the more highly developed regions (Lombardy and Tuscany) and more negative in the case of those regions that experience more problems (Abruzzo and Calabria). The Calabrian firms are noteworthy because, on average, they expressed more negative opinions regarding all aspects, especially the availability of infrastructures and support services offered at territorial level. As regards the productive sector, the assessments furnished by service or third-sector firms were generally more positive with regard to all aspects, and the same was the case for cooperatives, firms with lower labour costs and firms with a positive economic and employment performance. The various corporate configurations associated with the actors and employment relations were totally irrelevant to the perception of the local context. Even if we consider assessment of the local context as a whole rather than divided into its individual aspects, we see no significant differences at either a bivariate or a multivariate level. Opinions on the second series of assessments requested were different, however. These were the issues relating to the capacity of the various industrial relations actors to cooperate. In relation to cooperation among firms, it is the structural variables that count most: the evaluations were more positive in the case of firms located in Lombardy and Tuscany, manufacturing companies, larger companies and those operating on national and international markets with a stable business activity and sound economic and employment performance. With regard to cooperation between employers’ organisations and trade unions, in addition to the structural variables, the region and the sector (companies located in Calabria and those in the accommodation/

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food sector assessed relations among representatives more negatively on average), the presence of a trade union within a company, both in terms of unionised workers and the presence of a workplace representation, especially increased the positive perception of the ability of the representatives to cooperate. Membership of a company in a business association seems to have no relevance, on the other hand. In external relations, too, having contact with trade union representatives in the territory and making use of measures of support from the institutions increased the positivity of the assessment of the ability to cooperate. As for cooperation among local authorities and the social parties’ representative organisations, on the basis of the structural variables the dynamic of the opinions expressed is substantially a repeat of what we have seen previously: companies located in regions with more problems, those in the accommodation/food sector and very small firms assessed less positively the ability of local authorities and interest-representation organisations to cooperate. Those companies experiencing a profound crisis (those that had seen reductions in their turnover and workforce in the two or three years prior to the interview) expressed a far more negative opinion. On the subject of the ability of local authorities and representatives to cooperate, no different patterns emerged based either on internal employment relations or external relations at territorial level. It should also be stressed that there does not seem to be any relationship based on whether or not firms have benefited from institutional support measures. Finally, cooperation within companies was assessed positively by almost all the firms, with no significant differences due to either structural variables or variables relating to internal relations. The only slight difference was that the companies in crisis made a marginally less positive assessment, but this is a matter of only a few percentage points and, in any event, over 90 per cent viewed the capacity to cooperate as being good overall. The extremely positive identification of owner-managers of smaller companies with their internal environment was confirmed. We shall return to this topic in our final overall conclusions.

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Notes 1. Methodological note. The survey of small firms from which the data we have used have been taken is part of the research project of national interest financed by MIUR (Italian Ministry of University and Research) entitled “Old and new paths of labour regulation in SMEs in European countries. Trends and challenges for economic competitiveness and social sustainability”. The survey was conducted in the spring of 2014 using a structured questionnaire administered by telephone (CATI) to the owners of a total sample of 2320 small firms (with fewer than 50 employees) in four regions of Italy (Lombardy, Tuscany, Abruzzo and Calabria). The sample was stratified based on data from the 2011 ISTAT census in each of the four regions by class of employee and by the province where the companies had their head office; the firms were extracted randomly from the AIDA lists updated as of August 2013. The regional sample quotas were conformed to in the actual sample without significant deviations. Ten substitutions were extracted randomly for each sample share (province by class of employee in each region). Each substitution was activated after at least ten attempts had been made to contact the firm in the main sample. This process was made necessary because of the predictably high mortality rate among companies due to the economic crisis, together with the physiological quotas of errors in the contact lists and refusals to be interviewed. Overall, therefore, the substitution rate was 75.1 per cent. 2. There are other benefits for firms with particular corporate structures (such as craft enterprises and cooperatives). 3. The distribution of employees by level in our sample is not only in proportion to the regional level—given that firm size was one of the stratification variables within the regions—but is also the same as that recorded across the country as a whole. 4. Craft firms with over 15 employees make up 13 per cent, while 23 per cent are cooperatives. 5. In this case, too, we checked the relationship between the employment trend and the incidence of labour costs in total costs using a multinomial regression model in which we included the region, the production sector, size class, autonomy degree of the company, the market in which it operates, the type of production and the type of customer, reliance on the most important client and the variability of the business activity as control variables.

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6. There are not many references in the literature on small firms to membership associations on the part of entrepreneurs. If we look at studies carried out in the UK, Bacon and Hoque report a membership level of more than 60 per cent in their analysis based on 2004 WERS data (Bacon and Hoque 2005, 1983). Edwards and Ram, however, report density rates of around 5–10 per cent (Edwards and Ram 2006). Both, on the other hand, highlight the fact that employers’ associations do not have a significant impact on employment relations in small firms. Indeed, Bacon and Hoque do not find any significant effects of such membership on the type of HR management practices adopted. This finding reinforces the idea that UK “business associations have never been strong” (Crouch and Trigilia 2001, cited in Edwards et al. 2009, 43). 7. It should be noted that these data have been provided by managements and therefore depend on management perceptions. This does not represent a serious limitation for our purposes, however, because it is in part by taking account of the perceived level of organisation of their workers that managements are led to develop their human resources and employment relations management strategies, which is the object of our investigation. 8. According to the normative framework, however, which does not provide for a legal obligation to use a national collective labour agreement in the case of companies that are not members of a representative organisation, the minimum compensation may not be lower than that established by the collective agreements.

References Bacon, Nicolas, and Kim Hoque. 2005. “HRM in the SME Sector: Valuable Employees and Coercive Networks.” International Journal of Human Resource Management 16 (11): 1976–1999. Bagnasco, Arnaldo. 1977. Tre Italie. La problematica territoriale dello sviluppo italiano. Bologna: Il Mulino. Blyton, Paul, and Jonathan Morris. 1991. “A Flexible Future: Aspects of the Flexibility Debates and Some Unresolved Issues.” In A Flexible Future? Prospects for Employment and Organisation, edited by Paul Blyton and Jonathan Morris, 1–21. Berlin and New York: de Gruyter. Burroni, Luigi, and Ida Regalia, eds. Forthcoming. Regioni e relazioni industriali in Italia. Bologna: Il Mulino.

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Carroll, M., M. Marchington, J. Earnshaw, and S. Taylor. 1999. “Recruitment in Small Firms: Processes, Methods and Problems.” Employee Relations 21: 236–250. Cella, Giamprimo. 1989. “Criteria of Regulation in Italian Industrial Relations: A Case of Weak Institutions.” In State, Market and Social Regulation: New Perspectives on Italy, edited by Peter Lange and Marino Regini, 167–186. Cambridge and New York: Cambridge University Press. Colombo, Sabrina, and Ida Regalia. 2016. “Changing Joint Regulation and Labour Market Policy in Italy During the Crisis: On the Edge of a Paradigm Shift?” European Journal of Industrial Relations 22 (3): 295–309. Colombo, Sabrina, and Marino Regini. 2016. “Territorial Differences in the Italian ‘Social Model’.” Regional Studies 50 (1): 20–34. Cotton, John L. 1993. Employee Involvement: Methods for Improving Performance and Work Attitudes. Thousand Oaks, CA: Sage. Crouch, Colin, and Carlo Trigilia. 2001. “Conclusions: Still Local Economies in Global Capitalism?” In Local Production Systems in Europe: Rise or Demise? edited by Colin Crouch, Patrick Le Galés, Carlo Trigilia, and Hermann Voelzkow. Oxford: Oxford University Press. Ebbinghaus, Bernhard. 2003. “Ever Larger Unions: Organisational Restructuring and Its Impact on Union Confederations.” Industrial Relations Journal 34 (5): 446–460. Edwards, Paul, and Monder Ram. 2006. Employment Relations in SMEs. http://www.eurofound.europa.eu/eiro/2006/02/study/tn0602101s.htm. Edwards, Paul, Monder Ram, and John Black. (2004). “Why Does Employment Legislation Not Damage Small Firms?” Journal of Law and Society 31 (2): 245–265. Edwards, Paul, Sukanya Sengupta, and Chin-Ju Tsai. 2009. “Managing LowSkill Workers: A Study of Small UK Food Manufacturing Firms.” Human Resource Management Journal 19 (1): 40–58. Eurostat. 2018. Small and Medium-Sized Enterprises: An Overview. https:// ec.europa.eu/eurostat/cache/digpub/keyfigures/vis/DIR_KF2_24_1/index. html?country=EU28. Forth, John, Helen Bewley, and Alice Bryson. 2006. Small and Medium-Sized Enterprises: Findings from the 2004 Workplace Employment Relations Survey. London: Department of Trade and Industry. Goss, David. 1988. “Social Harmony and the Small Firm: A Reappraisal.” The Sociological Review 36 (1): 114–132. Goss, David. 1991. Small Business and Society. London: Routledge.

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Hall, Peter, and David Soskice, eds. 2001. Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford: Oxford University Press. Hancké, Bob, Martin Rhodes, and Mark Thatcher, eds. 2007. Beyond Varieties of Capitalism: Conflict, Contradictions and Complementarities in the European Economy. Oxford: Oxford University Press. ISTAT. 2009. Labour Force Survey 2009. dati.istat.it. ISTAT. 2014a. Labour Force Survey 2014. dati.istat.it. ISTAT. 2014b. Annual Regional Account. dati.istat.it. ISTAT. 2014c. Migration and Calculation of Foreign Resident Population and Structure by Citizenship. dati.istat.it. ISTAT. 2015. Rapporto annuale 2015. La situazione del Paese. Rome: Istituto Nazionale di Statistica. ISTAT. 2016. Annuario statistico italiano 2016. Rome: Istituto Nazionale di Statistica. Istituto Tagliacarne. 2012. Atlante della competitività delle province e delle regioni. Rome: Ist. Guglielmo Tagliacarne. Matlay, Harry. 2002. “Industrial Relations in the SME Sector of the British Economy: An Empirical Perspective.” Journal of Small Business and Enterprise Development 9 (3): 307–318. Molina, Oscar, and Martin Rhodes. 2007. “Industrial Relations and Welfare State in Italy: Assessing the Potential for Negotiated Change.” West European Politics 30 (4): 803–829. Moule, Chris. 1998. “Regulation of Work in Small Firms: A View from the Inside.” Work, Employment and Society 12 (4): 635–653. Rainnie, Alistair. 1989. Industrial Relations in Small Firms. London: Routledge. Ram, Monder. 1994. Managing to Survive: Working Lives in Small Firms. Oxford: Blackwell. Ram, Monder. 2001. “Family Dynamics in a Small Consultancy Firm: A Case Study.” Human Relations 54 (4): 395–418. Ram, Monder, and Paul Edwards. 2010. “Industrial Relations in Small Firms.” In Industrial Relations: Theory and Practice. 3rd ed., edited by Trevor Colling and Michael Terry, 231–252. Chichester: Wiley. Regalia, Ida. 2017. “Beyond Workplaces and Industries: Possibilities for Organized Action at the Territorial Level.” Comparative Labor Law & Policy Journal 38 (2, Winter): 233. Regalia, Ida, and Marino Regini. 1998. “Italy: The Dual Character of Industrial Relations.” In Changing Industrial Relations in Europe, edited by Anthony Ferner and Richard Hyman, 459–503. Malden, MA: Blackwell.

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Regalia, Ida, and Marino Regini. 2018. “Trade Unions and Employment Relations in Italy During the Economic Crisis.” South European Society and Politics 23 (1): 63–79. Regini, Marino. 2014. “Models of Capitalism and the Crisis.” Stato e mercato 1: 22–44. Regini, Marino. 2015. “La crisi e il capitalismo mediterraneo: temi e problemi.” Introduzione alla Tavola rotonda, Southern Europe: The Social Regulation of the Economy in the Mediterranean Capitalism, Convegno nazionale AIS-ELO, Cagliari, ottobre 5–7. Rhodes, Martin, and Bastiaan van Apeldoorn. 1997. “Capitalism Versus Capitalism in Western Europe.” In Developments in Western European Politics, edited by Martin Rhodes, Paul M. Heywood, and Vincent Wright, 171–189. London: Macmillan. Trigilia, Carlo, and Luigi Burroni. 2009. “Italy: Rise, Decline and Restructuring of a Regionalized Capitalism.” Economy and Society 38 (4): 630–653.

3 Small Firms and the Labour Market Rossella di Federico and Lisa Dorigatti

This chapter deals with the labour market of small firms, i.e. the way in which small firms acquire the workers they need, manage their careers and deal with turnover and terminate employment relationships when no longer needed. Therefore, we will focus on the issues of recruitment and training, internal and external flexibility, retention, conflict and dismissals. As with other features of employment relationships in small firms, the literature has generally highlighted informality as a crucial characteristic of these processes in companies of small size. Recruitment is generally considered to happen through informal channels, with a significant role of informal networks, such as contacts of friends and R. di Federico  Faculty of Communication Science, University of Teramo, Teramo, Italy e-mail: [email protected] L. Dorigatti (*)  Department of Social and Political Sciences, University of Milan, Milan, Italy e-mail: [email protected] © The Author(s) 2020 I. Regalia (ed.), Regulating Work in Small Firms, https://doi.org/10.1007/978-3-030-21820-1_3

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family (Ram et al. 2007) and co-ethnic labour (Ram 1991; Holliday 1995). This has been found to be closely connected with the problem of new workers “fitting” into existing social relations, which becomes a crucial criterion for recruitment within small firms (Holliday 1995; Marlow and Patton 2002). However, research has also showed that formalised processes of recruitment are not absent in small firms, especially in cases of labour shortage (Doherty and Norton 2014). High staff turnover is sometimes expected to derive from informality and the predominance of direct managerial control, and to be associated with poor terms and conditions and little training (Curran and Stanworth 1981; Ram et al. 2007). More formal recruitment processes have been found to be particularly common in those companies in which skills and competence levels are usually considered key for the company’s success, such as in high-tech and professional service firms. Here, recruitment is less dependent on family or ethnic ties and more focused on competences and skills (Gilman and Edwards 2008, 541). Still, even in these cases, recruitment often takes place through informal networks (Ram 1999, 17), and it is usually not characterised by systematic or integrated selection techniques (Gilman and Edwards 2008, 544). Moreover, also within these sectors, the capacity to “fit in” with a particular style and process of working is a crucial selection criterion besides technical requirements (Ram 1999, 18). Formal training is also generally considered to be scarce in small firms (Ram 1991; Edwards et al. 2009), if not actually absent. Among the factors limiting the engagement of small firms with formal training initiatives, the literature highlights two different tendencies: on the one hand, the lack of financial resources and the orientation of small firms’ owner–managers to focus on short-term survival issues, and, on the other, employers’ perception of the limited usefulness of training (Patton 2005, 88). However, other empirical studies have advanced the hypothesis that informal training can substitute for formal accreditation in small firms. Matlay’s survey among 6000 small firms highlighted how informal training is favoured by small firms’ owner–managers (Matlay 2002, 314). Also, according to data provided by Kitching and Blackburn, if one includes informal, on-the-job training, the share of small firms providing training increases considerably, even if with

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strong variation across sectors (Kitching and Blackburn 2002, 7ff.). The importance of the sector and its skills requirement was also noted by Gilman and Edwards, particularly concerning high-tech firms (Gilman and Edwards 2008, 544). Informality seems also to characterise the way in which small firms deal with the unexpected, and, in particular, market fluctuations. According to several contributions, this is often based on a “give-and-take” approach. On the one hand, workers accept working longer than normal hours at short notice when needed and adopting flexible working practices. On the other hand, managers allow high flexibility and autonomy and often show understanding of personal situations (Goss 1988; Marlow and Patton 2002; Ram 1991, 2001). Similar mechanisms are also at play concerning internal flexibility. While employees in small firms are generally reported to enjoy relatively high levels of autonomy and involvement in work organisation, this is rarely due to formal structures (such as team-working arrangements, problem-solving groups and functional flexibility), but seems to be the consequence of largely informal processes (Forth et al. 2006, 38). Scholars have advanced opposite views in the literature concerning the issue of turnover. Some contributions have shown long tenure and relatively stable employment patterns in small firms. However, other contributions have highlighted problems of staff turnover due to the low level of wages paid by small firms in some sectors (Ram et al. 2007, 335) and the scarce career possibilities. Turnover and leave have also been commonly identified as latent forms of conflict, with some commentators finding this particularly widespread in small firms. Indeed, according to several observers, exit rather than voice is the primary response to discontent for employees of small firms, since, because of the proximity and power of the owner–manager, employees are reluctant to either organise with fellow workers or personally articulate grievances (Goss 1988; Moule 1998). Similarly, Rainnie argued that managers adopt a “like it or leave it” approach, in which workers’ exit is, in one view, the price of threatening managerial authority (Rainnie 1989), and, in another perspective, a way for small firms’ owner– managers to avoid threatening a friendly labour environment inside the company with open confrontation (Marlow and Patton 2002).

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From this background, we will now explore different aspects of the management of the labour markets in the analysed small firms.

Between the In- and the Outside: The Labour Markets of Small Firms In small firms, difficulties of labour supply are amplified compared to the experiences of larger firms, because of the lack of available resources and the absence of HR specialists (Hann 2012). While there is a preference for informality, recruitment methods show variance between sectors. What is almost self-evident for small firms is that, because they have fewer employees to begin with, it is extremely difficult to develop an internal labour market based on recruitment and internal career development (Taylor 2005). For most small firms, recruitment of new staff is via closed and responsive methods that rely on informal networks (Carrol et al. 1999).

Recruitment This section aims at describing the recruitment practices of analysed small firms—the recruitment problems they face and what strategies they adopt to overcome them. As the literature has highlighted (Hann 2012), small firms are less likely than larger firms to use formal methods (such as personality tests) when recruiting new staff. This tendency is confirmed among our small firms, since informal recruitment methods constitute the dominant recruitment channel in all productive sectors. The literature highlights the existence of different informal recruitment practices, such as word of mouth (among companies), direct knowledge by the entrepreneur, family networks and self-candidatures (Atkinson and Meager 1994, 41). Inside the analysed small firms, the most popular informal practices are direct knowledge of a candidate, word of mouth among companies and self-candidacies.

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We have three or four interesting entries … here everyone knows each other: one is the son of an employee of another company, one is the husband of an employee, and then the other came, unfortunately, because in the territory several important firms have closed…. Good or bad, here we all know each other, and this isn’t a bad thing. (Florence, small firm, Made in Italy, Int. 28) They are mostly specialised workers. We selected them because we already knew their potential…. Ninety per cent of these ladies already had a working capacity. The territory of Abruzzo has an important experience at the level of skilled workers, because once there were so many tie factories, now less. But we were lucky because we were able to take advantage of skilled workers already trained and still present in the area. (Pescara, micro firm, Made in Italy, Int. 41)

A first reason explaining the centrality of informal methods in small firms’ recruitment practices is the lack of resources, especially in terms of dedicated personnel, i.e. personnel specifically responsible for this activity. However, resource scarcity is not the only (and perhaps not even the most important) reason explaining the centrality of informal practices in small firms. Indeed, given the low number of employees, which by definition characterises these companies, recruitment activity and identification of the right people to integrate within the company are particularly important for small firms. The recruitment is done mainly on a personal basis, because it’s normal that he/she must be a person of trust for us; they must be good girls and guys, having certain values…. It’s a big family for us. (Cosenza, small firm, low-skill services, Int. 59) I have no recruitment channels. I choose local people or people living very close to Amantea, and this is the first thing for me. Because with the hotel organisation, if I hire staff from far away, I have to give them food and accommodation. Or if they move to work here and their family lives in another place … they can leave you at any moment. That’s the reason why I’ve always preferred locals. (Cosenza, micro firm, low-skill services, Int. 55)

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In a small context, informal recruitment practices (and particularly personal knowledge and word of mouth) represent a way for companies to identify reliable workers who possess the required skills but also fit into a pre-existing and well-defined relational context. Sharing the owner’s cultural model, values and way of being is considered essential characteristics to foster mutual trust in small businesses. Personal knowledge and word of mouth seem to be crucial also in sustaining the reproduction of local labour markets and avoiding the dispersion of local competences, particularly in situations of crisis, because this technique enables employers to acquire skilled workers coming from other companies in crisis and at the same time favours the rebalancing of the local labour market. I hired three employees who worked in another company; they asked me to come and work here with me…. Then I hired other employees who were in mobility from other firms in recent times. When I recruit, I hire people who I know. (Prato, micro firm, Made in Italy, Int. 31)

This is particularly frequent among small firms placed in areas traditionally characterised by high levels of social and relational capital, such as the manufacturing and industrial districts (like Abruzzo and Tuscany). In these territories, the presence of widespread know-how, interpersonal trust, and networks of solidarity (Putnam 2000), very important for the functioning of the labour market, allows companies’ owner–managers to use these two methods for recruiting trained and trusted staff very easily. Personal knowledge and word of mouth can be, to some extent, functional substitutes for training, which tends to be less widespread in small businesses (Dundon and Wilkinson 2009). The practice of poaching, instead, has become less widespread. At least for some employers, this practice is considered an unethical method of recruitment: No, we avoid these things and for us it’s an unethical fact. We have people and we don’t go around to get them from our suppliers. (Florence, small firm, high-skill services, Int. 19)

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While it is common to associate informal recruitment practices with low-skill activities, our research reveals that these practices are quite widespread also in companies in the high-tech services sector, as exemplified by the following observation: We are looking for a new developer … and we have not been able to find one yet. How does it work? Word of mouth always wins. (Milan, micro firm, high-skill services, Int. 9)

In the high-skill sector, informal recruitment methods are very useful for selecting professional figures of the highest level, difficult to find in the labour market and often considered crucial for companies’ business (Gilman and Edwards 2008, 541). Still, informality is often a necessity in some of our small businesses (Ram 1999, 17), especially in those with a weak organisational and economic structure. This is particularly true for those managed directly by founding members, which work for important projects, but in a subcontracting regime, and have primarily a local market. While informality might have positive effects for small firms, it can also lead to potential problems, in particular with regard to issues of discrimination. Indeed, informality reduces the likelihood that employers monitor their recruitment methods with regard to equal opportunities (Forth et al. 2006). Moreover, owner–managers can lack knowledge about equality regulations or diversity best practices. For example, “indirect discrimination can be evident when workers are recruited from the same ethnic group or from within a particular and social milieu” (Ram 2001). In fact, the use of family and ethnic labour can be extremely gendered, with women occupying subordinate positions in smaller (ethnic and family-run) firms: “roles are rewarded accordingly, influenced by ‘male-breadwinner’ and female ‘actual or potential wife and mother’ ideology” (Ram and Holliday 1993). Carrol et al. (1999, 24) stated that “word of mouth recruitment methods are potentially discriminatory. On the other hand, given the lack of in house expertise in human resources management techniques and the nature of the labour market, it could be argued that these methods are the most appropriate. Hiring known quantities could be seen as a very effective way of reducing uncertainty decisions”.

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While constituting the dominant method of recruitment, informal practices are not the sole recruitment channel for small firms. In some of our small firms, the recourse to informal channels for personnel choices seems to be less dominant than in other cases and goes hand in hand with the use of formal tools. For the staff recruitment, we rely both on temporary work agencies, that we know and send us profiles they consider interesting, and on … word of mouth, direct knowledge. (Bergamo, small firm, high-skill services, Int. 1)

Recourse to formal recruitment practices tends to be particularly diffused especially among companies belonging to developed socioeconomic contexts (such as Lombardy), generally involved in large production circuits (working with/for other companies), and in which the management of human resources is entrusted to a specific internal figure. Findings of our research highlight that the most widespread formal recruitment methods are private agencies (above all temporary work agencies) and public employment centres (PECs). In some territorial contexts, formal labour intermediation is mostly centred around agencies and private intermediaries. We tried many ways; at the beginning we made the classic announcement in the newspaper. But many people arrived and it was very difficult to skim them. Now I substantially use a temporary agency; they do all the interviews, skim candidates, and then send me those they think could fit the company. (Bergamo, small firm, low-skill services, Int. 3)

This trend tends to be more popular among small firms which are members of an employers’ associations (such as Unione Industriali, Confapi, and Confcommercio) and located in more developed regions, such as Lombardy, where the logic of the market prevails as the main regulatory practice. For these companies, the formal dimension of recruitment is associated with the initiative of private actors. In other contexts, and particularly in the regions of the so-called Third Italy, where public institutions have historically played a significant role in sustaining economic development and are perceived as

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important actors by companies, formal labour market intermediation is also based on public services and, particularly, on public employment centres. This is an approach typically preferred by small businesses in areas traditionally characterised by a so-called red political culture, like Tuscany (Bagnasco 1984): We hired the last two through the FIL project [employment policy aimed to favour the inclusion of young people in the labour market]. They did a 6-months internship at 500 euros per month, that the region returned in part. Then we hired them as permanent apprentices. So on the one hand we use the word of mouth—an informal channel—and on the other the public employment centre—a formal channel. (Prato, micro firm, Made in Italy, Int. 32)

Finally, other firms tend to adopt a third solution that can be defined as “dual” because it includes both private and public recruitment channels. At the extremes of this dual combination, there are, on the one side, manufacturing companies that rely mainly on temporary worker agencies, and, on the other, small low-skill services firms that refer mostly to public employment centres. More generally, it should be noted that the formal recruitment channels tend to be negatively assessed by our respondents. Private agencies are considered unable to provide trained personnel and are excessively expensive: For me, temporary agencies are very expensive and exploit labour, i.e. they don’t care about workers and firms. They don’t guarantee job stability to employees and offer companies people with low professional abilities. (Teramo, micro firm, low-skill services, Int. 46)

Public employment centres are also seen as excessively slow in responding to companies’ needs: I judge them negatively….Take the case of the Youth Guarantee programme: it seemed that we had to hire young people immediately. Unfortunately, PECs have not yet organised themselves and have not yet even called candidates to

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make the first screening of their curricula. We have seen it because we were activating ourselves. Yes … their timing is very long. The first contacts are now taking place … but they are taking place mainly because the company was calling candidates directly, not through their intermediation. (Pescara, small firm, high-skill services, Int. 35)

According to our findings, a few other formal recruitment methods are sometimes used by small firms. Close relationships with universities are widespread, especially among high-tech companies, for recruiting very skilled staff. Moreover, vocational schools and technical institutes are important within the metal sector, while employers’ associations and bilateral bodies play an important role in tourism and food sectors. The search for personnel on the Web is also quite common, but only in the retail sector and for hiring high-profile positions. Online advertisements or announcements in local newspapers seem to be adopted only in small manufacturing firms placed in more developed areas. In the cases of small firms located in less developed territories and characterised by so-called familist culture (Putnam and Leonardi 1993), as in Calabria, formal recruitment activities are completely absent. It has to be noted that none of the interviewed small companies relies on social networks for recruiting staff, not even those of the high-skill services sector. Although they can be an excellent window for skilled profiles, social networks are probably not the proper tool to choose the appropriate persons for small companies’ professional and relational needs. In sum, small firms have a different approach to recruitment than larger companies. It is a mostly informal approach, based on the owner– manager’s view on what is adequate for the business at a particular time (Taylor 2005). Smaller firms may count on a reduced internal labour market movement through promotion and career development; therefore, recruitment from the outside can be one way to inject new skills into the organisation. The most popular informal methods of recruitment are direct knowledge of candidates, word of mouth among companies and self-candidacies. Yet these practices raise a number of problems about potential discrimination. However, formal methods of recruitment are also used in variable ways according to the sector.

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The most popular channels are private agencies and public employment centres. According to our data, social networks are never taken into consideration by small companies for recruiting their personnel.

Training Training is a crucial process for increasing workers’ skills and a fundamental tool for the development of tacit knowledge, especially for less structured companies such as those we consider. Training is also important to favour the socialisation of workers and increase their satisfaction as well as productivity, trying to discourage exit behaviour. In small firms, training is mostly based on informal learning practices (Ram 1991; Edwards et al. 2009). Unlike large businesses, small ones often do not have sufficient financial resources to implement structured programs of formal training. Moreover, it seems that many owner– managers are either unaware of the importance of softer skills that can be developed through training or are too busy and preoccupied with “getting the products out of the door” to have the time to consider training needs in a coherent manner (Westhead and Storey 1996). Off-the-job training is perceived as risking the temporary loss of worker productivity; given their small size and limited amount of human resources, small firms usually need to be able to mobilise the entire workforce at all times. With regard to this aspect, some owner– managers stated the following: We do mandatory training. So safety, fire, HCCP [Hazard Analysis and Critical Control Points training], first aid, and we did all of them even considering the fact that many times we are alone during the shift. If you have to send someone to take the course, often you cannot do it because she is needed at the hotel. (Florence, micro firm, low-skill services, Int. 22)

A further explanation for the lack of formal training in small firms is that managers fear the risk that investment in training might be lost if newly trained employees leave the job and decide to go to work for competitors (Hann 2012). Wynarczyk et al. (1993), for example, found

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that many small business owners expected line managers to leave the firm if they wanted to advance their career. Inside many SMEs, off-the-job training is often considered “useless” (Patton 2005, 88) or “a waste of time”, due to the low profile of trainers involved. Yes, it doesn’t help at all, they don’t teach them anything different from what they did at school, often the level of speakers is poor and workers get bored, and they say “I was there, I did four hours for ten days in a year, and I had to recover those ten days with overtime work”. Let’s say that training, as it is set today, only serves to pay for training institutions and their friends of friends. (Bergamo, small firm, high-skill services, Int. 1)

Two approaches, therefore, seem to be visible concerning how our analysed small firms deal with training. Some of them prefer to reduce their training needs by hiring already trained personnel, who do not need further training and can be immediately deployed to production. Others, instead, show a preference for hiring untrained personnel: Frankly we have almost always preferred to train the staff directly and not to take staff already trained in other contexts, because sometimes certain experiences form you in a way that is difficult to change. So I prefer a person of goodwill who wants to learn what happens here more than a skilled worker that wants to change our things, already existing…. Practical updates are done on site, with the foreman or with people who have some experience and train the younger ones. Here updates are made with me, my mother, my brother, and my father. We are experts in this field and then we train the staff that sometimes gets better than us too. (Pescara, micro firm, low-skill services, Int. 37)

In this case, on-the-job training aims not only at transmitting knowledge but also at socialising workers to the company’s environment and way of functioning, in order to align workers to the company’s practices and to avoid possible conflicts generated by points of view and methods of carrying out activities deemed inappropriate by the owner–manager. In general, however, our small companies are oriented to find the way to integrate training in everyday work and understand how to do it in

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the best way, so that everyone is useful to others, optimising time and resources. We directly train employees. We need two to three months and we teach the job … because we have our method…. The employees must have a certain approach with the customers, give a certain type of service, that’s why we directly manage the training. (Bergamo, small firm, low-skill services, Int. 3)

Small firms that use exclusively on-the-job training for their staff are those in which employees have very close contact with customers (Bacon and Hoque 2005; Kinnie et al. 1999; Ram 2001). They are often companies operating in the retail sector that, in addition to selling a product, aim to build a strong company image. In this sense, training on the job is useful to homogenise employees’ behaviour with customers with respect to a common identity. In some of our companies, in addition to on-the-job training, other informal training methods are also used, such as self-training and self-updating. We do 90 per cent internal training with experienced employees trying to transfer skills. Then a lot of self-training also. (Milan, micro firm, high-skill services, Int. 8) Training is on the workplace. Training is managed with several tools that we have, for example internal training sites or self-training, where people are paid for studying. (Florence, small firm, high-skill services, Int. 19) Training is both on the job and online, with Atlassian [a multinational software and training provider]. It is a very vast and versatile world and our human resources are very skilled thanks to what they learn in the firm and what they learn from our team leaders. (Cosenza, small firm, high-skill services, Int. 54)

These other internal training practices, that require a deep technological ability by people, are used exclusively inside high-skill services

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companies with very experienced employees (difficult to replace) characterised by a marked work autonomy. Even though informal, on-the-job training is dominant, formal, offthe-job training is far from absent in our small firms. In addition to internal training, over 60 per cent of our small companies also take into consideration off-the-job training courses for their employees. Often this takes place with the help of employers’ associations, chambers of commerce, professional orders, regional funds or the support of the parent company, confirming the importance of the external context for understanding the management of people in small firms. Here we do external training.… For standard courses we rely on trade associations…. For specific training we have two to three people who go at least twice a year to the parent company. (Florence, micro firm, high-skill services, Int. 18)

Our research outlines that the propensity of small firms to organise offthe-job training grows as the firm’s size increases and trade unions are present (Westhead and Storey 1996). Findings highlight that external training mainly means general training, aimed at all employees, while specific training courses seem to play an important role above all inside companies in which turnover is growing or particular skilled workers are needed. We organize periodic training courses regarding self-control, health systems on which we rely a lot, especially with regard to the stable personnel. To do these activities, we use internal resources, but also public and private structures. Then our employees have to attend several specialisation courses because in the fruit and vegetable sector workers are required to have a lot of certifications. (Cosenza, small firm, Made in Italy, Int. 65)

They are generally zootechnical and agricultural companies whose workers can operate only if they have specific certifications, or low-skill services firms whose employees are required to have special qualifications, such as in the case of cleaning services performed in specific sectors (such as hospitals), or teaching activities in crèches and kindergartens.

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Specific training activities are present also in small firms of the high-skill services sector and usually involve several professional figures. Still, in high-skill services companies located in less developed areas, even if larger than the others and inserted in an international market, specific training is often reserved for a very limited number of employees. Training of employees in 90 per cent of cases takes place within the company. The new recruits are always accompanied by the most experienced staff, who briefs them on the most important things. Then, in the month of March, one of our employees will do an external course on cyber security, which is 10 per cent of the training we do. (Cosenza, micro firm, high-skill services, Int. 53)

Generally, in small manufacturing companies, specific training is not very common and when present involves mostly white-collar workers and almost never production workers. Regarding blue-collar workers, training is a little more on the job. But we are members of ALI, which is the association of industrialists, where different courses are organised; if there is something of interest, we send the staff to attend them, especially those who work in administration. (Milan, small firm, Made in Italy, Int. 16)

When small businesses require specific competences which need to be frequently updated, more workers are involved in specific external training. This was the case, for example, with a company involved in international sales where several training courses were organised on topics such as internationalisation, customs duties, communication and foreign languages. In 2014 we did several courses, all those required. So: general training, firefighting, first aid, all the updates related to safety. As for the specific training we did, for example, English courses, communication courses. On the internationalisation, customs duties, we did training for the administrative office. (Bergamo, small firms, low-skill services, Int. 2)

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In sum, small firms have a different approach to training than larger firms. As in the case of recruitment, they show a less formal approach, which is primarily based on on-the-job training. Informal training methods are particularly widespread among those firms that prefer hiring untrained people, or in those in which workers have close contact with customers, such as in the retail sector. Off-the-job training, however, is also not absent, especially among firms in the high-skill services sector or in those in which particular work certifications are needed or very skilled workers are required.

Employment Contracts and Internal Flexibility Perhaps contrary to what one would expect, but in line with what was observed in the literature, around half of the interviewed companies do not use temporary contracts and employ their workers exclusively through open-ended, subordinate contracts. This is clearly visible in the words of the owner–managers of different interviewed firms. There are advantages in the use of open-ended contracts because, at least in our sector, if you hire people it means that they have characteristics that are so specific that you have to keep them safe, to make them feel an integral part [of the company], because for us any of them, in the eventuality [that they leave], it would be a loss of skills and expertise, above all because they have been hired for a long time and the big problem is to lose not so much the person in herself, but the experience one acquires, and which takes even five years to be developed. (Cosenza, small firm, low-skill services, Int. 59) In our type of activity, to hire through open-ended contracts is very important. Things change a lot from sector to sector and in our case it is different. To train a person to keep her for two months does not make sense; you need to invest time in people and this means money. (Cosenza, micro firm, low-skill services, Int. 55) If someone comes to work with us, we absolutely need one to stay with us two, three, four months. If one stays with us two, three, four months, these are the two, three, four months in which one does not know how to do anything, so it

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is more a damage than an advantage. From the fourth month onwards, one begins to understand how the work works, and it is then that one gets useful for us, and therefore it would be absurd if we then send her away. So when we hire, we always hire indefinitely. (Teramo, small firm, low-skill services, Int. 47)

Open-ended contracts enable companies to retain important competences and skills, which would be lost in case of temporary contracts. However, there is also a significant share of companies that makes use of non-standard forms of employment. In terms of the type of temporary work most widely diffused across our companies, we observed a predominance of fixed-term contracts and of internships and apprenticeships (currently present in almost a third of the companies we interviewed). Self-employment is evidently sector-specific, used in 12 out of the 14 companies providing high-skill services, while only a minority of companies in low-skill and manufacturing industries makes use of this. In contrast, agency work is rarely used: more than half of the interviewed firms never relied on agencies for employing their workforce. Temporary contracts, in all their forms, are used in two predominant ways. In the majority of the analysed companies, they are used as a probationary period to test employees and their fit within the company. As stated by three interviewees, We hire six months through an agency, so we test people, so to say, and then, if they are okay, we hire them indefinitely. (Bergamo, small firm, low-skill services, Int. 3) What we do is to use internships to test a worker, to see if he is able to learn, so as not to be forced to decide immediately and to hire him afterwards. But when the internship ends, then—it is what we have done so far—we continue with a permanent contract. (Cosenza, micro firm, low-skill services, Int. 55) With agencies … we hire for a limited period of time and we try to give workers a place with a repetitive work and in the meantime we try to train them…. Agencies propose us candidates as we need two very specific professional profiles: the turner and the miller. So if they propose us a miller, we test him. These figures are difficult to find. (Teramo, micro firm, Made in Italy, Int. 50)

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The second model is typical of companies having a highly seasonal business or in which production peaks are highly predictable (e.g. they take place in specific moments of the day or week), especially in the lowskill service sector, such as hotels, restaurants or gardening companies. In these companies, temporary contracts are used to cover staffing needs of a temporary nature. For example, the manager of a food company stated that they use on-call contracts to deal with higher work intensity during lunchtime on specific days of the week: On Thursdays and Fridays, I need people who only come during lunchtime, for two hours, because at that moment there is a lot of work…. Therefore we resort to on-call contracts, which we use according to the need. (Milan, micro firm, low-skill services, Int. 12)

Similarly, companies characterised by highly seasonal production make significant use of temporary workers. At the moment we have 15 employees, all with open-ended contracts. But in summer we reach a peak between 35 and 40 employees, and these workers are hired with seasonal contracts. (Cosenza, small firm, low-skill services, Int. 58) We have several seasonal workers, because there is a period of the year in which the olive oil mill works. Stable, employed all the year round, we are about 10 people. With seasonal contracts about 20. (Cosenza, micro firm, Made in Italy, Int. 62)

Even when contracts are temporary, the same workers are often hired year after year, so that companies can rely on the competences they have acquired during previous employment. In order to retain a relatively stable pool of workers, institutional arrangements have been developed particularly in those sectors which are characterised by regular seasonality. This is the case, for example, with gardening companies: as part of the agricultural sector, they can rely on a social absorber scheme, the so-called agricultural unemployment insurance (disoccupazione agricola ), which sustains seasonal workers’ incomes when they do not work.

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This institutional configuration makes temporary contracts in the agricultural sector less disadvantageous than in other sectors and ensures that companies in the sector can rely on a stable pool of workers even though they are able to offer them employment only for a limited part of the year. As argued by the owner–manager of a small gardening company, We use temporary contracts, but these are people who continue to work with us…. There are those who work during the winter season and those who work during the summer season, and also those who work all the year round…. But this is the temporary contract of the agricultural sector, which has nothing to do with other temporary contracts … it is a contract in which the employee is protected at 360 degrees and lacks nothing. (Milan, small firm, low-skill services, Int. 13)

More rarely, temporary contracts are used as a way to deal with production peaks by companies which do not have a seasonal business. In cases of production peaks which do not have a seasonal nature—which, as we will see below, are, however, relatively infrequent—interviewed companies tend to rely more on forms of internal flexibility (and particularly on work time flexibility such as overtime) rather than on temporary contracts to manage fluctuations in demand, especially those of an unpredictable nature. Rather than taking other people from the outside, during peaks we try to distribute overtime among our workers. (Teramo, small firm, Made in Italy, Int. 51)

According to our interviewees, this is due to the fact that it is difficult to find adequate skills and competences for limited periods of time on the external labour market, particularly for very specific jobs. Asked for the ways in which they manage workload increases, the owner–managers of three companies in different sectors answered as follows: We rely more on overtime work, because it is not easy to find outside the same skills and competences we have inside. (Florence, small firm, high-skill services, Int. 19)

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Q: Do you often rely on agencies? A: No, no. Only occasionally, because ours is not a job in which you can employ people who do not have specific competences and knowledge about this activity. (Teramo, small firm, Made in Italy, Int. 51) Q: Have you ever used agencies? A: No, because people need to have a bit of training for this type of job. There is no exterminator as a trained professional figure. It is hard to find them, unless you find someone who left a disinfestation company and was registered by the agency with this profile. (Teramo, small firm, low-skill services, Int. 47)

Similarly, in order to retain their more skilled workers, and safeguard their cooperation and good relationship with them—which is particularly crucial within small groups—companies often resort to openended contracts even if they have periods in which work is less intense. I cannot do it … how could you do something like that? You cannot tell to a qualified mechanic “stay at home during winter….” Because we have this seasonality problem: from April to September I would need 20 mechanics, and then from October to March you have no work…. You have also to be good in mixing a little. (Pescara, small firm, low-skill services, Int. 37)

In other words, flexibility within the internal labour market is preferred over flexibility on the external one in cases of production peaks. Hence, the propensity to rely on temporary employment varies most significantly across sectors and the seasonal vs. non-seasonal business dimension. If we use as an indicator of such propensity the intensity of use, i.e. the share of temporary contracts on the company’s workforce, we find that it is higher in companies in both the low- and the high-skill services sector and lower in manufacturing. In particular, it is companies providing high-skill services that show the highest intensity of use of temporary employment. The existence of such sectoral variation probably depends on the kind and level of skills required in the various sectors. In the case of companies providing low-skill services, workers can be employed through temporary contracts since they can be quite easily substituted

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and their turnover is not particularly problematic for the company. Moreover, many of the low-skill services companies we analysed have a highly seasonal business. In contrast, manufacturing companies rely on a more specialised workforce, with company-specific skills which are difficult to find on the external labour market. Hence, the use of non-standard contracts for limited periods of time is less attuned to their skill demand. High-skill services companies, finally, while having the highest share of skilled workers, are used to operating in more open labour markets, on which workers’ turnover, as we will see in the next paragraph, is relatively high. This may raise problems for small companies, which suffer competition from larger ones, but it is generally accepted by all actors. In such a context, employing workers through non-standard contracts does not seem particularly problematic, neither for companies nor for workers. Even though flexibility is mostly internal, instruments of internal temporal flexibility, such as overtime work, work on Saturdays and Sundays, and shift work, do not seem to be particularly diffused either. Overtime work is reported only in one-third of the interviewed companies, and in general it is more used in manufacturing than in service companies. Moreover, not surprisingly, overtime work is more widespread in those companies which have enjoyed a positive performance over the last two to three years. Working on Saturdays and Sundays and recourse to shifts and night work are, instead, less connected with issues of productive flexibility and more with the structural characteristics of the different economic sectors. Indeed, they appear to be a stable feature of work organisation in the vast majority of low-skill service companies, which, as in the case of hotels and restaurants, offer services requiring longer opening times. In manufacturing companies, instead, when used—and it is relatively rare—work on Saturdays and Sundays is connected with demand peaks. Another form of internal flexibility is task flexibility, i.e. the possibility for workers to work in multiple positions. This type of internal, functional flexibility seems to be particularly widespread in smaller companies, in which workers’ capacity to move across different activities is crucial to face unexpected situations. As stated by the

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owner–managers of a micro-company in the manufacturing sector in the province of Milan and of a hotel in the province of Cosenza, I have always tried to let them do a little bit of everything, each one with his own specialisation, but then with some grounding also of the rest of the work, just to avoid being displaced at certain times, because anyway the workshop is small and it can always happen that someone is missing. And so you have to adapt a little. (Milan, micro firm, Made in Italy, Int. 14) In my hotel, those who stay at the reception have also to be able to make a coffee. Obviously, receptionists do not cook. There are some tasks that cannot be done by anyone, others that everyone can do. (Cosenza, micro firm, low-skill services, Int. 55)

This is evident also in those companies experiencing significant swings in the number of workers employed over the year, such as those characterised by strong seasonality, where it is rather common to see higher task flexibility when the number of workers is lower. This emerges clearly from the words of the owner–manager of another hotel in the province of Cosenza: During summertime, everything is very sectoralised, some take care of that specific thing … and that is enough, there is a good work rhythm. During winter, I ask for more availability. To have a person only for the bar, for example, would not be economically manageable … so, I ask the girl at the reception, if it is needed, to make a coffee, to make a cappuccino; and they are always very available. (Cosenza, small firm, low-skill services, Int. 58)

As can be expected, in contrast, larger companies seem to have a more clearly defined division of labour among their workforce. This is particularly evident in those cases in which employees hold unusual skills and competences. For example, the owner–manager of a small company in the high-skill service sector in the province of Bergamo argued that it is rather difficult for the company to move employees across different tasks, since the competences required for each of these tasks are quite specific. This same pattern emerged also in other high-skill service companies, in which workers’ specialisation makes task flexibility rather complicated.

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In all cases, however, as observed also in the analysis of quantitative data, task flexibility is not the outcome of formalised systems of job rotation—typical, for example, of lean production models—but rather of informal and often largely spontaneous ways of dealing with the available staff. A last instrument of flexibility used by several of our interviewed companies is outsourcing. In general, outsourcing is more diffused in manufacturing than in service companies. Moreover, in the two sectors, outsourcing has different logics. While in low-skill services outsourcing is most often used to reduce production costs, in manufacturing cost reduction reasons usually go hand in hand with advantages connected to quality and flexibility. This is, for example, the case with a micro-company in the province of Bergamo which produces highquality machines for glass sandblasting. We are six people, and over the years we decided to outsource a large part of work that was previously done internally such as painting…. Painting machines have very high fixed management and maintenance costs.… Thus, we could not maintain a constant quality level. Having outsourced, we now have a company that is certified, which gives you a product that is always the same, with perfect colours…. Of course, another thing is that by outsourcing you are more flexible, meaning that in case of a drop in demand, we simply do not make orders. (Bergamo, micro firm, Made in Italy, Int. 5)

In the service sector, outsourcing is typical of hotels, where it is commonly used for cleaning activities, and of the logistics sector. In both cases, work is often outsourced to cooperative firms. The reason for this choice is mainly connected with cost reduction and flexibility. This is well explained by the owner–managers of two hotels and of a logistics company. Maids should not be on pay checks, because in the low season, if you have to clean only five rooms, you will still have to pay two maids. If you take a cooperative, you would only pay for the five-rooms service. If I had to decide, I would definitely turn to an external cooperative. (Florence, micro firm, low-skill services, Int. 22)

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There are many advantages [in taking an external cooperative] such as the certain cost of cleaning rooms: if the room is sold, it has a cost, if it is not sold, it costs nothing. In addition, we do not have to look for staff in cases of peaks, holidays, illness, etc. We just ask the cooperative. (Florence, small firm, lowskill services, Int.24) As for the warehouse, there is a cooperative there, in which eight people work, and then we have outsourced the entire distribution to self-employed drivers…. These transformations have taken place over the years, because … the management of all the trucks had become very onerous…, especially due to maintenance costs. It is different now, with the service agreements…. So we have the opportunity to transform a fixed cost into a variable cost. (Catanzaro, micro firm, low-skill services, Int. 66)

Even if decisions to outsource are largely explained by sectoral features, room for managerial discretion is still present. As argued by the manager of a small hotel in Florence, I do not know why these workers were hired directly from the hotel with openended contracts. It’s something that I’m noticing especially for the maids on the floors and in the breakfast room, for what concerns using cooperatives or service companies, etc. The motivation that has been given by the owner is because he trusts the girls who are currently there and he does not feel like sending them away. (Florence, micro firm, low-skill services, Int. 22)

Summing up, in the analysed small companies, internal over external flexibility seems to predominate. Owner–managers overwhelmingly tend to prefer open-ended, direct employment, for ensuring both adequate competences and good relationships with employees. Also production peaks are generally managed through internal forms of flexibility, both in the form of working time flexibility (with overtime diffused especially in manufacturing companies, although not in a large share of them) and of functional flexibility (with workers shifting across different tasks). However, external forms of flexibility are also used. They mostly take the form of temporary contracts or of outsourcing. Sectoral dynamics and the characteristics of the service/product produced

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strongly influence their use. Temporary contracts are generally used as a probationary period, to test employees and establish whether they fit the company. However, seasonal businesses and businesses with production peaks of a predictable nature, particularly typical of low-skill service activities, strongly rely on temporary contracts. Different reasoning seems to characterise the labour market of high-skill service companies, in which temporary contracts, also in the form of self-employment, constitute a permanent characteristic of how workers are employed, often on a project basis and with high mobility across companies.

Dismissals and Turnover A last issue concerns how employment relations in small firms terminate. This question, in turn, is related to three main themes: turnover (i.e. employees deciding to leave the company), dismissals (usually connected with individual conflict at the workplace) and crisis management (i.e. the problem of reducing the headcount in times of economic downturn). Turnover seems to be rather scarce in the interviewed small firms, and it was common during the interviews to get answers like this: most of the people here … started working when they were very young and retired directly from here. (Florence, small firm, Made in Italy, Int. 27)

or again: here we have people who came to my baptism…. People who have known only the [name of the company] in their working life. (Florence, small firm, Made in Italy, Int. 28)

People tend to remain rather a long time in small firms, as found also by some scholars on human resources in SMEs (Durst and Wilhelm 2012). However, in some cases, mobility has proved to be significant. For example, numerous interviewees in small firms producing highskill services highlighted significant turnover problems, particularly in the Milan area, characterised by a labour market more favourable to the supply side.

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Compared to a larger company I think that at the beginning you learn a lot here, because there is little to delegate, you are absolutely on the frontline … also in the relationship with customers. On the other hand, a large company allows a different career path. (Milan, micro firm, high-skill services, Int. 8) We are destined to lose 10 per cent of our staff per year, let’s say two and a half people. Why are they leaving? According to me for three reasons: 1) because the grass of the neighbour is always greener, and this is a good reason; 2) because our competitors have a good game on the economic and regulatory aspects to guarantee higher salaries and higher grading, a higher classification; 3) because maybe they cannot see career and advancement prospects, because we are not a company of 200 people with many intermediate positions. The organisational chart is very simplified, very flat here. (Milan, small firm, high-skill services, Int. 11)

In these cases, turnover was mostly connected with workers’ willingness to make a career and earn higher wages. The limited possibility of small companies to respond to these expectations and the presence of a significant number of employment alternatives provided by large organisations active in the same sector make it very common for people in the high-skill service sector, particularly those producing digital services in Milan, to leave small companies at some point of their career, usually after having acquired some experience. However, some of our interviewees argued that this tendency stopped in the 2010s, due to a reduction of labour market opportunities, thus highlighting the relevance of external labour market conditions in turnover decisions. Turnover has stalled for at least four or five years. Before we had a strong turnover…. After a couple of years, people were leaving…. Maybe they found work in a bigger company…. After two to three years’ training, people working in a small company tended to leave, to move to a bigger company…. There is the myth of the big company, of the more secure job … these kind of things.… Furthermore, they do not make a career here…. If they want to make a career, they have to go to a bigger company, there is no space here…. But now this process is blocked. (Milan, small firm, high-skill services, Int. 10)

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While dominant in companies belonging to the high-skill service sector, turnover connected with (limited) career prospects was present also in companies in other sectors. In the manufacturing sector, turnover was typically connected with phenomena of poaching, i.e. companies “stealing” each other’s particularly experienced and skilled workers by offering them higher wages. However, due to the difficult economic situation experienced during the economic and financial crisis beginning in 2008, the incidence of this phenomenon significantly decreased over the last ten years, as argued by an interviewee: This thing happened much more often years ago, that one company stole people from the other, and it was also the reason why the sector had higher salaries, because it was as in football, I steal the player and pay him more. Today, people move much less, because anyway there is not all this demand. (Milan, micro firm, Made in Italy, Int. 15)

In some cases, turnover was also connected with people not fitting within the company’s environment, social relationships and working conditions. Some interviewees reported instances of people leaving the company because they did not like how work was managed. For example, an interviewee reported that when people cannot sustain the long working hours requested in his company, they typically leave. A similar pattern emerges also from the words of the owner–manager of a micro-company of the manufacturing sector in Teramo. In this company, employees’ requests were frustrated, and this ultimately triggered their leave. We had a period where there was a bit of a drop in work and it coincided with some claims of some employees. And therefore we did not reduce the staff, but not satisfying the requests of these employees, they autonomously left. (Teramo, micro firm, Made in Italy, Int. 50)

What seems to emerge from some of the interviews is that, within a small environment, disagreements existing between workers and managers usually translate into an exit rather than a vocal behaviour. This is in line with several other contributions in the literature which have shown

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that, within small and informal environments, workers rarely have the possibility—due both to the lack of collective representation and the proximity between workers and managers—of explicitly discussing their grievances (Goss 1988; Moule 1998). Hence, they rather prefer to leave when the situation proves untenable. This behaviour seems close to the idea of a “like it or leave it” approach often associated with small companies (Rainnie 1989). These examples show that employees’ leave can take place both from a position of strength and from a position of weakness, i.e. both in those cases in which employees “shop with their feet” to find better working conditions and in those in which they exit an untenable situation. As shown also by the literature, however, the scarce presence of an open expression of grievances is attributable not only to the workers’ side (i.e. workers not willing to voice possibly thorny issues) but also to a managerial reluctance to openly acknowledge dissonance within the company. For example, the literature reports that owner–managers within small firms seem to prefer avoiding counterpositions and overt dissonance with their employees in order not to expose the hierarchy existing within the company, but tend rather to rely on alternative means to deal with grievances and disciplinary issues. In case of dissonance with employees, employers might directly intervene in order to exacerbate the situation and “force” people to leave, or simply take advantage of an autonomous decision by employees, without intervening to stop them (see also Marlow and Patton 2002). Two examples are reported below. Some came to work, but only to get their wage at the end of the month; every occasion was good to stay home…. During the year, I would have liked these guys, some very young, to come to fairs to see how the world is…. The answer was always negative, something like “I want to do my hours, they are even too much, and the earlier I go home, the better”. So there was a bit of a fight…. Then after a series of … not quarrels, but disagreements, they chose to leave the company. (Bergamo, micro firm, Made in Italy, Int. 5)

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Let’s say that everything happened in periods when, if one was told to find another place, it was very easy to find it. Probably, if one is told something like that, if he is not really a big head, well … either you accept everything, but, well, working in a place where you are not well accepted, it is not the best … so when you start having problems with the people who work around you, it gets a little hard. (Milan, micro firm, Made in Italy, Int. 14)

This confirms the importance of fitting into a small company’s social environment, as highlighted also by Holliday in her famous study (1995). As visible in the quotes above, such mechanisms are more likely to take place in positive economic conjunctures, when the labour market is mobile and workers find it relatively easy to secure another job. Still, the social pressure within small companies might get so strong that it becomes the functional equivalent of a dismissal. An example of that is visible in the quote below, which reports the case of a company in which the owner–manager was legally unable to dismiss an employee accused of stealing, but the worker was finally forced to leave by the social pressure exerted by the colleagues. We also had people stealing goods, unfortunately it happened…. Who pretended to be ill.… But we never found ourselves in the position of having to send someone away. Let’s say that colleagues always made it possible to marginalise people who played games. (Teramo, small firm, low-skill services, Int. 47)

The parties’ reluctance to openly address grievances seems also to be the reason why in the analysed small firms conflict tends to concentrate at the end of the employment relationship. In several cases, interviewees reported of grievances, sometimes presented by workers through the support of external trade unions, taking place after the termination of the employment relationship. A typical case is represented by workers employed through fixed-term contracts deciding to sue companies not renewing their contract, as explained by an interviewee:

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She had a temporary contract, this girl, and … we told her that we did not want to renew it…. The contract ended and after … a couple of months I received a letter from the union, because they wanted her to be reinstated, because I could not have hired her with that type of contract anyway. (Milan, micro firm, Made in Italy, Int. 15).

This, again, is a feature commonly found in other analyses of small firms’ behaviour (Marlow and Patton 2002). To avoid these situations, a company developed a system by which every year employees, through a collective agreement signed with an external trade union, agree to pre-emptively give up any future demand related to their employment relationship in exchange for a small amount of money. Every year we make an agreement … where it is said that we employees renounce, in exchange of an X sum—which is a ridiculous amount, by the way … we renounce to any dispute we might make in the future. To make this agreement, which is an imposition by the company, not one’s own will … the company wants you to sign a full release. If the employee is dismissed, he will not be able to take action because with the union he agreed not to, for a sum which is very low. (Pescara, small firm, low-skill services, Int. 39)

While these cases point to the contested nature of employment relations in small firms, others show instead the existence of a strong alignment between workers and managers. For example, individual resignation is sometimes used in cases of economic downturn and the consequent need of the company to reduce the headcount. As expressed by the quotes below, in some cases workers decide to leave their companies when they understand that the companies are in a difficult economic situation, even without the need for the company to open dismissal procedures and/or to bargain on the cost of dismissal. More than a need to dismiss personnel, in this sector the various professionals understand the situation, and seek autonomously another solution, and leave the company in a non-drastic way for the company itself. (Int. 35, Small firm, High-skill services, Pescara)

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Someone had a temporary contract, someone else understood that the situation was not going well and he pulled back. We have not made any appeal to the unions. (Int. 42, Small firms, Made in Italy, Pescara)

The quotes above suggest the possibility that workers and owner– managers develop a cognitive alignment which translates into a reduction of the risk of conflict and a more cooperative relationship even in a dire economic situation. Still another case shows the opposite situation and the emergence of conflict between workers and owner–managers as a consequence of the company’s willingness to dismiss employees. In 2010 there was a very strong crisis. We started with six employees and we again went haywire and four of these workers created great difficulties…. They placed a litigation…. We have honoured all of them, but it cost us a lot, and since that time we have decided … we feel no longer in the position to have all these people. (Teramo, micro firm, Made in Italy, Int. 49)

In most cases, however, collective dismissals related to crisis situations neither took place through individual voluntary dismissals nor were accompanied with disruptive conflict. Instead, they were predominantly managed through the help of external trade unions, sometimes with the involvement of labour consultants. In several cases, moreover, this was the channel through which trade unions entered small companies, which, as we have seen, are rarely unionised (among the analysed companies, less than a third have trade union members and even fewer have workplace representatives). The role of trade unions, however, was crucial not only for negotiating collective dismissals (and their costs), but also, and more frequently, as actors which allowed companies to overcome temporary crisis situations through the help of social shock absorber instruments. Indeed, the role of external trade unions is foreseen also in those companies without an employee representation structure by the institutional configuration of the Italian social shock absorber scheme. In some cases, informal mechanisms also played a significant role in enabling companies to avoid the loss of key competences in phases of economic downturn. For example, an owner–manager argued,

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We have also made the workshop available to employees in case someone manages to do a job on his own.… After 50 years we had to ask for the social shock absorber fund.… It never happened before.… At the beginning there was a bit of liquidity and we anticipated it to employees; then when we arrived…. Now we arrived almost at the end, and they cannot make it, they cannot make it…. Unfortunately, they do not even have to make a gate, a chore on their own, despite we are fully open to let them use the machinery. (Pescara, small firm, Made in Italy, Int. 42)

Summing up, looking at turnover, grievance management and crisis management, we have highlighted the relevance of both sectoral and dimensional dynamics. While our analysis confirms that turnover in small firms is predominantly low, different patterns emerged in highskill service companies, where employees might decide to leave in order to pursue a career, usually blocked in small contexts. The management of grievances from both sides of the employment relation, instead, is highly influenced by the peculiar social context which develops in small environments. The reluctance to openly express potentially problematic issues, the concentration of grievances at the end of the employment relationship and the predominance of exit over voice behaviours are, in fact, closely connected with the strong proximity between employers and employees. Lastly, crisis management shows the importance of external resources, and in particular of trade unions, for small firms.

Conclusions This chapter analysed small firms’ internal and external labour market dynamics, by focusing on the issues of recruitment, training, internal and external flexibility, retention, conflict management, and dismissals. As highlighted by the literature, we have shown how informality constitutes a crucial element of small firms’ labour markets, concerning all the aspects analysed in this chapter. Informal recruitment channels and training systems predominate in the analysed small firms, as do informal ways of dealing with the unexpected and the need for flexibility, as seen in the relatively limited use of formalised external flexibility

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instruments, such as non-standard contracts and flexible working time models, and the larger diffusion of ad hoc, adaptive practices such as task flexibility. Still, we have also identified crucial sources of variation in these common patterns. First, we have seen that the sector, its skills requirements and modes of organising the production process play a significant role in influencing the characteristics of small firms’ labour markets. For example, high-skill service companies show a remarkably higher propensity than other small firms to rely on more formalised recruitment channels and relationships with external institutions (such as universities) to recruit their employees. The intensity of use and the type of non-standard employment contracts used also vary across sectors, as does the way in which employees move across different tasks. Second, the territorial context in which small firms operate also makes a significant difference for the management of employees in the internal and external labour market. Rather than being due to the economic dynamism of the different areas we have analysed—which, however, surely plays a certain role—this seems to be mostly related to the sociopolitical resources different territorial areas are endowed with, which in turn provide important resources to small firms. For example, we have seen that in so-called district areas, in which social ties are strong and dense, recruitment does not take place simply through word of mouth, as is common in all other areas, but it also crucially relies on the networks of firms operating in similar markets. Moreover, recruitment models also reflect the important role played by external institutions (such as employers’ associations and local institutions) in sustaining the specific sociopolitical foundation of the competitiveness of those areas. Similarly, we have seen that external institutions might have important effects also in the management of external labour markets, such as in the case of small companies in the agricultural sector, which can rely on external institutional resources to deal with their unusual flexibility needs. This might happen also in the management of crisis situations—which in several small firms has seen the significant involvement of external actors, in particular trade unions, whose role needs, therefore, to be identified, even in contexts in which their

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importance would not emerge if we focused only on what happens within the company’s boundaries. While these findings seem to point to the significant variation existing in the universe composed of small firms, this chapter also showed that there are areas of the employment relationship in which size seems to play a very dominant role. This is the case in particular with the management of grievances and conflict, which, as we have seen in the previous paragraph, are everywhere characterised by informality, the dominance of a take-it-or-leave-it approach, and exit over voice behaviours. In this case, what is crucial are the types of social relationships emerging in small contexts, which seem to cut across different sectors, territorial areas and groups. Summing up, the analysis of small firms’ management of their labour markets shows the interplay of internal and external dynamics, in which firms’ size plays a significant role, but also sectoral dynamics and institutional resources related to the external environment.

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Putnam, Robert. 2000. Capitale sociale e individualismo. Bologna: Il Mulino, Putnam, Robert, and Robert Leonardi. 1993. Making Democracy Work: Civic Traditions in Modern Italy. Princeton, NJ: Princeton University Press. Rainnie, Alistair. 1989. Industrial Relations in Small Firms. London: Routledge. Ram, Monder. 1991. “Control and Autonomy in Small Firms: The Case of the West Midlands Clothing Industry.” Work, Employment and Society 5 (4): 601–619. Ram, Monder. 1999. “Managing Autonomy: Employment Relations in Small Professional Service Firms.” International Small Business Journal 17: 1–13. Ram, Monder. 2001. “Family Dynamics in a Small Consultancy Firm: A Case Study.” Human Relations 54 (4): 395–418. Ram, Monder, Paul Edwards, and Trevor Jones. 2007. “Informal Work, Small Firms, and Employment Regulation in the United Kingdom.” Work and Occupations 34 (3): 318–344. Ram, Monder, and Ruth Holliday. 1993. “Relative Merits: Family Culture and Kinship in Small Firms.” Sociology 27 (4): 629–648. Taylor, Stephen. 2005. “The Hunting of the Snark.” In Labour Management in Small Firms, edited by Sue Marlow, Dean Patton, and Monder Ram. London: Routledge. Westhead, Paul, and David Storey. 1996. “Management Training and Small Firms Performance: Why Is the Link So Weak?” International Small Business Journal 14 (4): 13–24. Wynarczyk, Pooran, Robert Watson, David Storey, Helen Short, and Kevin Keasey. 1993. The Managerial Labour Market in Small and Medium Size Enterprises. London: Routledge.

4 The Regulation of Employment Relationships at the Enterprise Marcello Pedaci and Marco Betti

As said above (see especially Chapter 1), an important strand of the literature on small firms has articulated a comprehensive and theoretically grounded critique of the prevailing traditional opposing views of small enterprises—that of the “small is beautiful”, i.e. of small enterprises as places for harmonious relations (Ingham 1970; Bolton 1971), and that of the “sweathouse” or “black box”, i.e. of small enterprises as places of entrepreneurial/managerial autocracy (Rainnie 1989). It has highlighted instead the heterogeneity of the employment relationships, of the dynamics between employers and their employees, and the ways in which tasks are allocated and work organisation and working conditions are shaped by the parties, even in small enterprises. M. Pedaci (*)  University of Teramo, Teramo, Italy e-mail: [email protected] M. Betti  Department of Education, Human Sciences and Intercultural Communication, University of Siena, Siena, Italy e-mail: [email protected] © The Author(s) 2020 I. Regalia (ed.), Regulating Work in Small Firms, https://doi.org/10.1007/978-3-030-21820-1_4

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This literature has challenged the presumption that the enterprise size alone is a major determinant of the patterns and features of employment relations. On the contrary, it has emphasised the variety of labour management approaches, policies, and practices based on diverse combinations and degrees of unilateralism/cooperation and formality/ informality (Wilkinson 1999; Ram et al. 2001; Barrett and Rainnie 2002; Ram and Edwards 2003; Edwards 2012). On the one hand, these studies have highlighted the influences of external factors such as labour and product market conditions, the economic position of the small enterprises, inter-firm relations (particularly relations with larger firms), and growth trajectories (Rainnie 1989; Goss 1991; Scase 1995; Kinnie et al. 1998). On the other hand, the influence of internal factors has increasingly been pointed out, including the type of ownership, the workforce skill-mix, the level of employer dependence on employees (Holliday 1995; Ram et al. 2001; Marlow et al. 2005; Holten and Crouch 2014), and the employer’s ideology and attitudes (Cardon and Stevens 2004). These aspects can mediate the impact of the external pressures. Keeping in mind this theoretical background, and on the basis of both the survey quantitative results discussed in Chapter 2 and the qualitative findings of the in-depth interviews to the owners/managers of our sample of small firms, in this chapter we will explore in greater detail the processes by which employment relationships are regulated at the enterprise level and the dynamics of the various actors involved: owners, managers, external consultants, employees, and trade unions. We will do this by focusing on several selected aspects of the employment relationship. Precisely, we will examine the processes through which wages and additional benefits are defined, tasks are allocated, work is organised and reorganised, working time is planned, and work– life balance and skills development opportunities are regulated. For each of these aspects, we will consider whether the owner/ manager decides unilaterally or makes use of employee involvement and/or negotiation. Attention will be also paid to the degree of formality or informality that characterise the regulation processes. The overall aim is to provide insights into the ways in which different fundamental dimensions of terms and conditions are defined at the enterprise level,

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in order to explore not only differences and similarities across small enterprises in general, but also the different logics of action that characterise various aspects of the employment relationship within the same organisation. Finally, we will discuss both the external and internal factors influencing the different approaches, policies, practices, and outcomes of the regulation processes from the connection with other companies and the position in the market and value chains to the “soft stuff” of the enterprise such as the employer’s ideology and attitudes. Our analysis draws on the empirical material of the above-described research (see Chapter 1), especially the interviews with owners/managers of 66 small enterprises of different sectors and territories, conducted on a common set of questions and concepts including demands on the decision-making processes. Before entering our argument, it is worth outlining a few basic characteristics of the industrial relations actors in the studied enterprises, including trade union membership and worker organisation at the workplace and the employers’ association. A presence of union members is recorded in about 1/3 of cases (24 out of 66). These are mostly larger companies, especially in manufacturing; however, union members are also said to be present in companies providing services. Instead, only eight enterprises have a workplace-based worker representation. Most of them are manufacturing companies with more than 15 employees. Only two operate in services sectors. One provides services to building and landscape maintenance (planting, care and maintenance of parks and gardens), which employs about 30 persons and is located in Lombardy. The other is specialised in freight transport by road, including heavy haulage, which employs about 45 persons and is located in Calabria. However, in about a quarter of the cases, owners/managers have (or have had) contact with trade unions, often of an informal kind, especially to address specific problems or critical situations (crisis, restructuring, layoffs). Finally, about two-thirds of the enterprises (41 out of 66) are members of an employers’ association (sometimes more than one), and in most cases, these are the largest associations. Enterprises that do not join any employers’ association are generally the smallest ones and/or those of the services sectors.

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Patterns of Regulation “A Reference Point”: The Role of Sectoral Collective Bargaining Labour management at the enterprise level is influenced by the external normative context including regulations shaped by legislation and multi-employer collective bargaining. In Italy as well as in other countries, the latter—particularly sectoral collective agreements—has a very important role, although it is increasingly under pressure. Several industrial relations studies have evidenced the “frontal assault” on collective bargaining institutions, especially on multi-employer agreements (Marginson 2015). They have highlighted the widespread pressure for de-centralisation to weaken collective bargaining at the national/sectoral level and to increase the possibilities for derogations and opting-out at the company level (Koukiadaki et al. 2016; Baccaro and Howell 2017; Guardiancich and Molina 2017; Leonardi and Pedersini 2018). Despite these general trends, the collective bargaining system has maintained its main features in Italy, although weakened (Leonardi et al. 2018). In Italy (see Chapter 2), collective bargaining is articulated (and takes place) at two levels: the centralised national/sectoral level and the decentralised company or territorial level. The former, which is the core of the system (Cella and Pedersini 2014), establishes minimum rights and standards valid for all the job profiles in the sector. Second-level collective bargaining mainly takes place within companies, but it can also take place at the territorial level.1 Second-level negotiations intervene on work-related issues and integrate, adapt, or improve terms and conditions.2 This collective bargaining system is characterised by a low level of “institutionalisation” and a high level of voluntarism, at least in the private sector (Cella 1989). According to data provided by international sources (Visser 2016), in Italy, collective bargaining coverage is estimated to be around 80 per cent. In other words, eight out of 10 employees are covered by at least a multi-employer agreement, and national estimates are even higher (CNEL-ISTAT 2015). The diffusion of the second-level

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bargaining is instead limited. The available data derive from samplebased surveys; these generally estimate decentralised bargaining coverage to be around 20–30 per cent (D’Amuri and Giorgiantonio 2014; Cardinaleschi and De Santis 2016; Banca d’Italia 2017; Fondazione Di Vittorio 2016). In contrast with a widespread view in the social-political debate, according to which the influence of collective bargaining is low among small businesses, our findings show a high collective bargaining coverage among the studied enterprises. According to interviews with owners and managers, most of the selected companies (58 out of 66) refer to a sectoral collective agreement. This is in line with the findings of our survey on a wide sample of companies (see Chapter 2), where almost all (94 per cent) appear to apply a sectoral collective agreement. The few cases where this does not take place are especially smaller enterprises operating in the low-skilled services and located in the less economically developed regions. Certainly, two caveats must be added. Firstly, evidence on the coverage by a sectoral collective agreement does not mean that such an agreement is actually and integrally applied. Our empirical data, based on interviews with owners and managers, do not allow us to understand the degree of compliance with the negotiated agreement. In other words, we do not have information about “how” and “to what extent” the agreement is applied. Among the selected enterprises, there will certainly be cases of limited compliance. Secondly, although most of the selected enterprises declare to apply a sectoral collective agreement, in several cases we lack information about “what kind” of agreement they are referring to. It is worth noting that incomplete/unclear information often stems from the lack of knowledge of the entrepreneur himself on the matter. Frequently, this aspect of labour management, as we shall see in a while, is fully delegated to external professionals, in particular to labour consultants. Two examples, a company operating in the software development sector with more than 15 employees located in Northern Italy and a small hotel located in the south, can illustrate the point.

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We have a labour consultant on whom we rely. He manages this aspect. (Milan, small firm, high-skill services, Int. 10) We use the national [sectoral] collective agreement, but I cannot say which one. Our labour consultant dealt with it. (Cosenza, micro firm, low-skill services, Int. 55)

“What kind” of sectoral collective agreement has become a relevant issue in Italy, as the collective bargaining system is becoming increasingly fragmented (Leonardi and Pedersini 2018). Especially in private services, sectoral agreements have multiplied. These include a number of agreements signed by poorly representative employers and workers’ organisations. In most cases, these agreements, sometimes defined as “pirate agreements”, set worse conditions (with regard to both economic and normative treatment) compared to those signed by the most representative social partners. They promote de facto forms of economic and social dumping. Their coverage is limited, but it is growing.3 In our respondents’ answers, the sectoral collective agreement is very often defined as a “reference point ” and qualified as “useful ”, “important ”, “necessary ”, and “essential ”. In other words, it is greatly appreciated as a framework that defines—or, as an interviewed entrepreneur says, as “a floor of ”—minimum employment terms and conditions, above all pay levels, working time, overtime issues, and holidays. Minimum standards established by the sectoral collective agreement are generally considered like a “starting point ”, a consolidated “basis ”, over which managements can shape the terms and conditions they are adopting, eventually improving them. As expected, according to our investigation, cases of significant increases in the basic terms and conditions set up by the sectoral agreements were exclusively found in the more economically developed regions (i.e. in Lombardy and Tuscany). In these cases, minimum standards were sometimes considered too low or not appropriate. For instance, in the words of a small manufacturing company’s owner in Lombardy: let’s say that it is useful to give a basis…certainly the bar is a bit low. (Bergamo, small firm, Made in Italy, Int. 6)

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While that of a software development micro-company in Lombardy says: but the minimum [established by the sectoral collective agreement] is really basic, something not to die of hunger! We are always above. (Milan, micro firm, high-skill services, Int. 9)

In short, the sectoral collective agreement constitutes the framework within which small enterprises generally establish the specific forms of work organisation, distribution of tasks, and configurations of working time or through which they define additional benefits, career trajectories, initiatives for skills development, etc. Owners and managers appear to appreciate having a sectoral collective agreement as a point of reference for two main reasons. First, it simplifies labour management. This is even more so considering the more limited knowledge, skills, and organisational resources that can be devoted by such firms to labour management issues. This is especially true for the smallest ones. A set of rules and minimum terms and conditions (established by employers and workers’ representatives) avoids/ reduces discussions, negotiations, and conflicts within the workplace. As an interviewed owner explains: it [the sectoral collective agreement] avoids having to establish and discuss the treatment for each worker; you do not have to think about doing something ad hoc, starting from scratch. (Milan, micro firm, high-skill services, Int. 9)

Similarly, the owner of a small company of the accommodation and food services sector says: it [the sectoral collective agreement] simplifies things. If one is hired as a chef, he takes a certain pay, if he is hired as a dishwasher, he takes another, if he is hired as a receptionist, he takes another one. I do not know how the calculations are made, but we use them. (Cosenza, micro firm, low-skill services, Int. 55)

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The following excerpt from an interview with the manager of a software development company in Milan summarises the key arguments of many of our respondents. The sectoral collective agreement is the basis; on this you make recruitment, establish pay levels and the normative treatment […] It sets up rights, for example on holidays. It is a point of reference. And a reference is necessary. Without a sectoral collective agreement, it would be difficult to manage the thing [labour]. It avoids having to discuss with all […] I exclude small enterprises could do everything by themselves. FIAT makes by itself, but it has its big HR department, a lot of consultants, etc. Sectoral collective agreements are the result of years or decades of reflection, analysis. I think it is very useful to have such a reference to apply. (Milan, small firm, high-skill services, Int. 10)

The second reason why the sectoral collective agreement is appreciated is that it is an important institution to reduce unfair and cutthroat competition in a context, such as the Italian one, in which there is not a statutory minimum wage. Such a motivation emerges more frequently with owners/managers of companies operating in sectors characterised by high levels of competition based essentially on price. For instance, an interviewed person from a company providing low-skilled services says: there are enterprises [not applying any collective agreements] that pay a lot less. I prefer to be correct […] But this is a problem. (Pescara, micro firm, low-skill services, Int. 36)

This is consistent with the findings of other studies that revealed that small enterprises might be supportive of binding rules set up at a higher level, such as national/sectoral collective agreements, and pressure employers’ associations to keep them or to implement some extension mechanisms. The aim is to prevent firms not applying the (main) sectoral collective agreements to exert unfair competition by paying lower wages and providing worse working conditions (Colombo and Regalia 2016; Bulfone and Afonso 2017; Regalia and Regini 2018).

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Linked to this, according to our findings, is the key role played by external professionals, such as business consultants, labour or HR consultants, in making decisions about the selection and application of multi-employer agreements. Small enterprises, above all the smallest ones that cannot afford the expense of a dedicated HR manager and/or department, tend to outsource personnel-related issues. Dealing with these activities, often considered non-core, is not only seen as time consuming, but proves to be more and more difficult for the ever-increasing complexity of norms concerning work and the labour market. Among the studied enterprises, 52 out of 66 rely on a labour consultant. Some rely on two or more professionals including a labour consultant; others, particularly the smaller ones, rely on only one professional, usually a business consultant that, together with accounting and bookkeeping services, does the payroll, handles recruitment and terminations, manages employees’ complaints and disputes, manages safety and welfare concerns, etc. In most small enterprises, a long-standing consolidated owner-consultant relation based on considerable trust emerges. “I always discuss with our labour consultant ”, “he knows very well these aspects ”, “I prefer to talk to the consultant ”, “we meet frequently ”; these kinds of statements were very common and recurrent in our interviews. In the majority of cases, the consultants suggested referring to a sectoral collective agreement to manage the employment relationship, and they indicated which one. In short, we can say that consultants play a role in promoting isomorphism among small enterprises; they exert isomorphic pressures (Powell and DiMaggio 1983). From this point of view, they induce a de facto formalisation of the regulation of many aspects of the employment relations.

The Management of Specific Aspects of the Employment Relation Having discussed the important role played by two external sources for the regulation of work and labour—the sectoral collective agreements and the intervention of consultants—we will now shift to the decision-making processes through which the most relevant aspects

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of the employment relationship are defined/shaped and take their company-specific characteristics at the enterprise level. Specifically, we will focus on the processes regarding compensation and benefits, tasks and work organisation, working time arrangements, work–life balance, and skill development opportunities; these are fundamental aspect of the employment condition. In this context, we will pay special attention to the logic of action and behaviours of the different actors involved in the regulation processes within the enterprise.

Wage, Bonuses, and Incentives With regard to compensation, in most of our enterprises, pay levels are defined by referring to a sectoral collective agreement. Against this backdrop, it is the employer that will decide—usually with the support of an external consultant—which collective agreement must be selected and whether to stick to the minimum or to increase it. However, this does not necessarily mean that there will not be any forms of negotiations with employees. These usually are individual negotiations in which especially high-skilled workers are involved. Another important aspect is that of bonuses and incentives, representing a variable part—and sometimes a significant integration—of the economic treatment. In most cases, it is the owner/manager that unilaterally decides on this aspect. Such a decision-making approach is more frequent in the smaller firms, without differences across sectors. In these cases, the dominant form is represented by discretional bonuses with one-off payments. Generally, they are occasional contributions without stability or regularity. Entrepreneurs often consider them as “gifts ” aimed at rewarding workers who (according to them) are more committed to the firm, thus strengthening mutual trust, as suggested by the following observation: there is a bonus we give to senior workers. They are the ones who have gone through all the steps, who have more responsibilities. (Teramo, micro firm, Made in Italy, Int. 50)

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It is worth noting that sometimes these kinds of incentives are non-monetary. As an example, the owner of an enterprise operating in a low-skilled service sector says: one of my workers said that his son needed a tablet, so I bought one for almost 300 euros and gave it to him. (Pescara, micro firm, low-skill services, Int. 37)

In some cases, bonuses and incentives are granted when specific production targets are achieved. They can be considered informal performance-related or productivity-related bonuses. An owner of a manufacturing company describes in this way the mechanism of the bonuses at his enterprise: then you may say: “look, if we finish the work by this date, we can divide this amount of money”. (Pescara, mirco firm, Made in Italy, Int. 40)

In short, although bonuses and incentives are generally thought as a matter typical of larger companies, even small businesses can implement their incentive schemes. But this will take place according to the peculiar characteristics of these firms. Otherwise they will appear too complicated to manage, however useful and interesting. In the words of an owner of a micro-manufacturing firm: giving bonuses means being able to measure productivity and results in a precise way; but this is not easy for small enterprises. However, we are thinking about it. (Cosenza, micro firm, Made in Italy, Int. 61)

And another entrepreneur says: my brother suggested a productivity-related incentive, I told him “look there will be chaos, we are not IBM.” Here workers do not have only a task, they make a lot of things; how can we calculate such incentives? (Milan, small firm, Made in Italy, Int. 17)

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Contrary perhaps to expectations, our findings have also revealed cases in which the employees themselves, or—better—their representatives, are involved in the definition of some form of bonuses and incentives. No surprise that this is more typical of firms characterised by the presence of union members and workplace employee representatives. As said, these are a minority of our enterprises, they are mainly manufacturing companies with more than 15 employees, as well as some large companies in the services sectors. Some of them have a deep-rooted tradition of negotiation on working conditions, including this aspect. According to an interviewee of a high-skill services firm in Florence: I am used to having relations with unions. So for me it is not a problem at all, on the contrary, it is an opportunity. (FI_HS_S2)

In these cases, bonuses and incentive schemes can be object of formal negotiations. As an example, we can mention the statement of the manager of a unionised enterprise of the low-skill services sector in Milan: some parts of the company-level collective agreements are redefined every year […] Specific goals are set up and then commitments are defined, for instance an economic bonus. (Milan, small firm, low-skill services, Int. 13)

Rather obviously, when formally negotiated with the workers’ representatives such bonuses tend to have greater stability and regularity. Moreover, for some time the propensity to sign workplace collective agreements on productivity-related incentives has increased in response to recent legislation aimed at supporting such agreements through tax and social security reliefs. Significantly, the owner of a small manufacturing firm in Florence observes: when there is tax or social security relief, then there can be a collective agreement on that [bonus and incentives]. (Florence, small firm, Made in Italy, Int. 27)

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Work Organisation- and Task-Related Issues The decisions-making processes on tasks and the organisation of work exhibit a high degree of variability within our enterprises. In many cases, the owner/manager decides unilaterally on these topics and the employees have very limited spaces for some form of involvement or negotiation. Such an approach is explained/justified with the necessity to respond quickly to changes in the demand for goods or services, particularly to face unexpected production peaks by intervening accordingly on the organisation of work. As an owner of an enterprise operating in a low-skilled service sectors argues: if we need one of the employees to take care of a particular or unexpected task, we ask who could be available…; but at the end a person must be found. (Teramo, small firm, low-skill services, Int. 47)

This means, as explained by this employer, that at the end he decides unilaterally on how to “modify ” the distribution of tasks and the organisation of work. Employees are then informed of the decisions, usually in an informal way. However, our investigation has also revealed other cases in which, even in the presence of high demand variability, frequent unexpected production peaks and needs to quickly adjust the work organisation, employers make recourse to different, i.e. more participative, modalities of decision-making. A frequent solution is to involve in the decisions those that we can call “key actors”. They are usually senior workers, i.e. department head/ foremen and/or workers with higher qualifications, which over time have earned the trust of the employer. This is a relevant point that helps understand how variable behaviours, dynamics, regulation processes maybe even across small businesses. “They are ‘key actors’ for the loyalty shown for many years ” (Teramo, small firm, low-skill services, Int. 48). In this way, an owner of a small enterprise operating in a low-skilled services sector describes his older workers that have become a reference point for decisions regarding the work organisation. Another, in a manufacturing sector, speaking

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of the senior workers he trusts, says: “they have a role of responsibility, a role of point of reference ” (Florence, small firm, Made in Italy, Int. 28). These key actors discuss and informally negotiate with the owner/ manager on tasks and work organisation, especially when they must be changed. Sometimes they act as spokespersons or intermediaries between employer and employees. The owner of a low-skilled services firm explains that he usually discusses the need for making changes with the department head, who is the person who organises the production, for instance, when orders are above average, and it is necessary to work on Saturday or to make other changes. (Teramo, small firm, low-skill services, Int. 47)

Similarly, another in a manufacturing firm decides together with the chief worker, who follows and manages the entire production chain. (Teramo, small firm. Made in Italy, Int. 52)

We found cases of discussions/negotiations with key actors in different kinds of firms, in terms of size, sector, etc. However, such a decision-making approach on work organisation is particularly frequent in the cases in which there has been a generational shift in corporate governance. Here the “new” owners (often children or grandchildren of the founder) often prefer to make decisions together with senior workers that have an in-depth knowledge of the whole organisation, the production process, the workflow, etc. From the following piece of interview with the second-generation owner of a Tuscan mechanical company emerges the importance of some workers who have been in the company for years who saw the company being born and develop, and now they are a reference point for the new owner. Now this company is managed by the second generation […] It takes luck [with regard to the generational shift in corporate governance]; I was lucky to find the right people, people who not only have technical skills, but are historical figures, with great experience; they transmit to those who arrive as we work. (Florence, small firm, Made in Italy, Int. 28)

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Working Time A relevant aspect of working time arrangements is overtime. Owners/ managers consider it a fundamental tool to cope with the variability of the demand and production needs. As already discussed (see Chapter 3), its use is preferred to other solutions such as recourse to temporary contracts, especially when high-skilled workers are involved. Against the framework established by sectoral collective agreements, the in-company decision-making process about the use of overtime (whether to use it, when, how much, with what modalities, for how many and which workers, etc.) shows substantial variations across the studied enterprises. In the few cases characterised by the presence of unions and workplace employee representation, such aspects are negotiated with the workers’ representatives, frequently through formal negotiations. In the ensuing agreements, the compensation for overtime, which often goes beyond that established by the sectoral bargaining, is generally set up. As explained by the owner of a manufacturing company: we have signed an agreement; if they [the employees] work on Saturday, we give them gasoline vouchers of 10 euros if they make more than four hours, in addition to what established by the sectoral collective agreement. (Pescara, small firm, Made in Italy, Int. 42)

In most cases not covered by unions, a frequent way in which overtime is regulated at the enterprise level is through informal negotiations with employees. For instance: let’s say that we ask the workers who is available, we discuss about it [the use of overtime], we explain that we have an urgent job to be done. (Milan, small firm, Made in Italy, Int. 16) we decide on it [overtime] with our workers, and normally they do not have problems to come, to do overtime. (Prato, micro firm, Made in Italy, Int. 32)

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More importantly, sometimes workers negotiate (more or less informally) some forms of exchange between their availability in accepting hours of overtime and an increased autonomy in the management of their working time, their leaves, and the like. However, cases in which the owner/manager decides unilaterally are also frequent: it is the owner then that establishes the recourse to overtime and subsequently informs employees. This happens in several sectors, both in manufacturing and low-skilled services, while it is less frequent in high-skilled services. As we will say in greater details later, this occurs more often in companies that are under strong pressures by competitors, clients, outsourcers, etc. For instance, the owner of a manufacturing company says: according to the jobs we have to do for the following week, on Friday we [the owner and the manager] establish if overtime will be needed. And then we notify the workers. (Bergamo, small firm, Made in Italy, Int. 7)

The manager of a cleaning company describes in the following way the decision-making process on overtime: The owner just says: “these are the working times”; yes, he often is very authoritarian on this. (Pescara, micro firm, low-skill services, Int. 37)

Then he adds that in the cleaning activities “it is not possible to do in another way ” because of the pressures on costs and the constraints on the times of services delivering imposed by clients. A topic closely related to the issue of working time is that of work– life balance. As expected, few small enterprises have specific formalised conciliation policies. Instead, not-formalised practices are widespread, especially under the form of individually and informally negotiated leaves. Most interviewed owners emphasised the possibility for their employees to ask for and obtain family-related leaves, or for other kinds of needs/activities. This appears as a widespread informal practice for work–life balance across all types of enterprises with few variations. For instance, the owner of a high-skilled service sector company located in Lombardy says:

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about leaves… it is difficult to say no. (Milan, small firm, high-skill services, Int. 11)

Similarly, the owner of a manufacturing company in Calabria affirms: if a worker has some special needs, such as childcare needs, a medical examination, etc. there are no problems [to get a leave]. (Cosenza, micro firm, Made in Italy, Int. 64)

In addition to leaves, in several enterprises something like (informal) flexi-time schemes—i.e. possibilities to vary the beginning and end of daily working time—are spread. These possibilities are usually negotiated, individually and informally, with the employer. The owner of a manufacturing company, for example, argues: [actual working time] depends on the needs of the worker. We try to find the right compromise. Some people prefer to come early in the morning, other prefer to sleep an hour longer. If this does not affect production, it is good for us. (Bergamo, small firm, Made in Italy, Int. 7)

Of course, this is what emerges from interviews with the employers. However, even though we have not the workers’ points of view, it is very likely that these opportunities are effective to some extent. Finally, in the few companies covered by unions, specific work–life balance practices sometimes have been negotiated by the employer and workers’ representatives and formalised in collective agreements. For example: with our company-level collective agreement we have introduced hours of leaves for employees with children under 5 years. (Milan, small firm, Made in Italy, Int. 17)

Training About decisions-making process on training and skills development, the interviews reveal the prevalence of unilateral approaches. In other words, in most of the studied enterprises, the owner/manager

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unilaterally decides whether and what kind of training is necessary to address changes in demand, markets, production processes, technologies, etc. In this context, there is very limited employee involvement and space for negotiations. For example, according to the owner of a software development company: in this sector there is always something new to learn for them too [the software developers of the company], then we send them to courses. Often in the moment in which it [something new] is requested by a client. (Milan, micro firm, high-skill services, Int. 9)

In any case, it must be stressed that in most of these enterprises, the level of investments for training and skill development appears to be quite low. In most cases, training “opportunities” are limited to the so-called compulsory training imposed by the legislation, such as training on health and safety issues (see Chapter 3). Sometimes workers themselves propose and ask for training on specific issues; this occurs above all in the enterprises of the high-skilled service sectors. Generally, even in these cases, the employers decide unilaterally whether they will arrange or finance training initiatives; they also decide unilaterally on what kind of initiatives, how many employees, and which employees eventually to involve. As an example, the owner of the already mentioned software development company speaks about employees’ ­ requests; as the owner argues, he evaluates the necessity and possibility of further/specific training as to satisfy workers’ needs: there are some [employees] who say “if I knew more about this…”; they are asking me for training opportunities […] I evaluate and check if it [training] is really necessary and if there are the possibilities. (Milan, micro firm, highskill services, Int. 9)

Factors Influencing Patterns of Regulation The literature on small firms, especially the research on HRM in small enterprises, has highlighted different kinds of factors that affect the variability of labour management approaches, policies, and practices within

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companies. One of the most influential factors is the employees’ skill set; this has been considered an “inevitably determining factor” that significantly shapes labour management style (Goss 1991). Generally, studies have revealed that unilateral or autocratic styles tend to be more frequent where the type of production and its organisation require low skills. Instead, small firms are more likely to adopt participative styles, allowing certain levels of employee involvement in decision-making and formal/informal negotiations, if they employ highly skilled workers (Ram 1994; Moule 1998; Scase 2003). From another perspective, we can say that employees might have greater leverage regarding the ability to negotiate aspects of the employment relation if they hold valued skills and competencies. Our findings confirm the importance of the employees’ skill set. Indeed, participative patterns of labour regulation more frequently emerge in enterprises in which most of the workforce is highly skilled. These companies operate in sectors such as ICT services, financial services, business consulting, and marketing. More participatory decision-making processes are particularly evident, as discussed in the previous section, on work organisation and working time arrangements, including measures for work–life balance. More generally, our findings show the relevance of what can be termed the employer dependence on employees (Goss 1991; Ram 1994) in influencing decision-making processes on various aspects of the employment relation. Interviews with owners/managers brought out situations that can be described as forms of employer dependence on employees based on their high (sometimes uncommon) skills but also (or instead of their accumulated expertise) the experiences and abilities developed in the workplace, their in-depth knowledge of the organisation, and the production process, including its weaknesses, and of customers. For example, the owner of a small metalworking company talked about his employees and pointed out: there is a know-how that is learned over the years, some tricks on how to do things. (Milan, micro firm, Made in Italy, Int. 15)

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In the continuation of the interview, he notes that, for these abilities developed in the workplace, employees are considered difficult to replace and are often involved in decisions concerning above all the organisation of work. Similarly, another owner observes: most of my employees only knew … [name of the enterprise]. …They started working for us many years ago; they are the core of the enterprise; and for us they are a reference. (Florence, small firm, Made in Italy, Int. 28)

Yet another, owner of a textile company, says: a large part of the personnel has been here for many years, most [employees] know and can manage the whole [production] chain. (Teramo, small firm, Made in Italy, Int. 52)

This employer dependence on employees tends to be more widespread in the manufacturing small enterprises, without significant variations across territories, and in several enterprises operating in high-skilled services sectors. Rather obviously, it is correlated to high levels of employees’ seniority, and it is less frequent in enterprises in the low-skilled services sectors characterised by high levels of workforce turnover. More generally, it is worth noting that, together with the importance of expertise, in-depth knowledge, and the like, these “long common stories” (between employer and employee) introduce also to a reflection on the great significance, in small firms, of trust, affinities and ties that may go beyond the workplace. Already Ram (1994), among others, had disclosed the complex relations of trust, obligation, and mutual reciprocity that often characterise small enterprises. “Knowledge ”, “trust ”, and “mutual understanding ” are indeed the expressions with which several interviewed owners/managers explained why it would be difficult for them to give up on their workers (or on most of them). Having shared problems, critical events, and solutions increased this mutual reciprocity. In these cases, more participative labour management approaches with the involvement of employees in many decisions concerning work organisation and working conditions tend to be the rule.

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However, less participative labour management approaches turn to be more frequent in cases of negative company performance. In other words, situations of financial difficulty and stagnant or decreasing turnover push towards more unilateral patterns of labour regulation within the company. Our investigation suggests that in such circumstances, owners/managers tend to reaffirm their power to decide autonomously. According to the alleged justifications, this is because they fear that involving employees might slow down the decision-making process or lead to higher costs because they fear that they will have to make choices not favourable to workers and on which they will find opposition, as in the case of eliminating bonuses, freezing wage increases, blocking career trajectories, and the like. Across all types of our small enterprises (i.e. regardless of their characteristics in terms of size, sector, level of technology and employees’ skill-mix, type of product/ services provided) critical performance appears to hinder negotiations with employees (or their representatives, in the few cases in which they are constituted). Sometimes it may disrupt previous participative approaches. As an example, the owner of a small enterprise specialised in software developing and data processing with a tradition of participative labour management style admits: [with regards to pay increases, bonuses, benefits] we have always discussed and evaluated them with employees, but since the last year we have not done it. It’s a crazy time, we can barely pay wages; we have decided to suspend everything, we know our workers are not satisfied of this. (Cosenza, micro firm, high-skill services, Int. 53)

In other words, in this circumstance, the owner took a decision unilaterally, contrary to what he used to do previously. However, there are also cases in which, despite all difficulties, a more participative pattern of labour regulation happens to be confirmed. Almost a third (5 out of 18) of the enterprises facing situations of economic difficulty still tend to involve employees in the decision-making process on most important aspects of the employment relationship. An interviewed entrepreneur, speaking in general about working conditions of his employees, notes:

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these are hard times… we know their [of the employees] problems, we talk, we discuss the various situations, we try to meet, to find good solutions for everyone. (Pescara, small firm, Made in Italy, Int. 42)

In such cases, employers prefer to continue to discuss/negotiate with their employees, even if harshly constrained by the negative economic performance of their company. According to the situation, they might negotiate changes in the work organisation or in working time—for instance, on shifts or overtime—or hold discussions on future prospects. This is in line with the findings of several industrial relations studies in which negotiated responses to the crisis help to maintain cooperative relations and trust between employers and employees, avoiding further negative externalities on workforce morale and commitment (Marginson et al. 2014). In addition to the challenges raised by the situations of negative performance (intensively grown after the outbreak of the economic crisis), our investigation has disclosed that the actual characteristics of employment relations might be affected by the pressures of the so-called (invisible) third parties (Jaehrling et al. 2011), i.e. outsourcers, tenderers, and clients. A growing strand of research has emphasised the role of these actors, which indirectly shape the employment relationship through procurement and the conditions they attach to the granting of contracts, through the pressures on prices of products/services or on delivering time they exert and the competition they foment (Rubery et al. 2005; Havard et al. 2009; Lakhani et al. 2013). This is a key argument for small firms. Since the late 1990s, several studies have highlighted the relevant impact on small enterprises’ behaviours—including labour management practices—of the relation with larger enterprises and value chains. From this perspective, owners/managers are strongly constrained by their competitive position in front of larger customers and/or suppliers (Rainnie 1989; Scase 1995; Kinnie et al. 1998; Marlow et al. 2005). Among many of our small businesses that are providers of public and/or private organisations, one of the main practices to meet the requests of the clients (to win/maintain contracts) is “adjusting ” workforce inputs, terms, and conditions. This occurs in all sectors, but more extensively in the labour-intensive ones, where labour costs represent

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the major part of the operating costs. The enterprises suffering strong clients’ pressures show more frequently unilateral patterns of labour regulation, worse pay levels, and working time arrangements. Here are some examples from different kinds of enterprises. The first is a small firm operating in a high-skilled service sector, specifically in software development. The price is fundamental. If you do not make the right price, you do not get the contract. It is a knife fight. Prices are low, because they [customers] want to save on everything now. (Milan, small firm, high-skill services, Int. 10)

In the interview, the owner describes how clients’ pressures greatly affect working time, leading to an extreme variability and sometimes to a relevant extension of worked hours, and reduce the decision-making power not only for workers but also for the employer himself. The second example is from a manufacturing company. Here the client dictates the law! […] If they give you a job and hang you and you are forced to take it, at that point you have to try to do the miracle; you make the workers work overtime, how much it is necessary. If they say “you have to deliver it [the product] in 5 days,” you have to give it to them within that deadline. (Pescara, micro firm, Made in Italy, Int. 40)

However, there are also cases that bring to light a different kind of company response to third party pressures. They evidence attempts to resist these pressures and maintain their modalities of regulating employment terms and conditions. The owner of a micro-company in the same ICT services sector and same location as the one cited before says: Clients pressure on costs, but, at a certain point, you can say ‘ok, I’ll give you a discount, but if you want me to send you my workers, I cannot reduce more’. They [the clients] know the costs we have to bear. (Milan, micro firm, Made in Italy, Int. 9)

More generally, this means that the type of response is not entirely determined by economic variables, but it also depends on the employer’s attitude and organisational culture.

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Our investigation has also disclosed differences in employment relations according to the territorial context, differences that tend to cut across sectors and enterprises with similar structural and social characteristics (such as size, workforce skill-mix, union presence/absence, and the like). A major difference regards the prevalent pattern of decision-making in the field of labour regulation; the adoption of unilateral decisions-making approaches is indeed more frequent within small firms located in the less economically developed regions. Many could be the determining factors. However, labour market conditions are probably the most relevant; these are regions characterised, among other features, by higher unemployment rates and very limited opportunities of “good” jobs. These limitations tend to increase workers’ job insecurity, which is intended as a perceived threat to continuity in one’s job situation (Anderson and Pontusson 2007; Green 2009) together with the fear of retaliation from a contesting employer. The outcome is a greater imbalance of power between employers and employees, to the benefit of the former, which might enhance unilateral/autocratic approaches to labour management. On the matter, an interesting example is the case of a small enterprise located in a less economically developed region, operating in the ICT services sector, with highly skilled employees (mostly software developers). Contrary to what is the case in other similar firms located in developed regions, the management here adopts a unilateral style of employment relations characterised by a very low level of employee involvement in the decision-making process. During the interview, a clear awareness of a strong imbalance of bargaining power emerged. Finally, a reflection can still be devoted to the role played by the relationships with external actors—namely, employers’ association and professionals and labour consultants—in influencing labour management approaches, policies, and practices. In the literature, it is sometimes claimed that membership to an employers’ association or contacts with other organisations of business advice (for instance, the Chamber of Commerce) might expose small enterprises to new ideas (Ram et al. 2001) and have a beneficial role in the adoption of innovative work practices (Erickson and Jacoby 2003). However, other studies have raised considerable doubts on the fact that such relationships can affect

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labour management style, HRM approach, and practices including initiatives aimed to involve employees in the decision-making process (Bacon and Hoque 2005). Our evidence, based on in-depth interviews with owner/managers, did not disclose any clear relation or influence on the matter. The interviewed owners/managers did not show much interest in discussing the role of their associations on the topic. As to labour consultants, our findings suggest that they give a great contribution in shaping the regulation of employment relations in general, for instance inducing owners/managers to refer to a specific collective agreement or to introduce specific measures/practices. However, as in the case of membership to employers’ associations, the interviews did not clearly show whether and how their influence affects also the specific kind of labour management approach within the enterprise, i.e. the choice between unilateralism or employee involvement.

Conclusions In this chapter, we have discussed the ways in which some important aspects of the employment relationship are defined in small businesses. In other words, we have focused on the decision-making processes and dynamics between owner/manager, employees, and other actors with regard to work organisation, wage, working time arrangements, and other working conditions at the enterprise. Our analysis has highlighted a variety of patterns of regulation, with variations among enterprises and variations within the same enterprise on different employment aspects. Regarding the former, the findings revealed a great heterogeneity of approaches and practices among small firms, with different degrees of employer unilateralism/worker involvement and different degrees of formality/informality. In some enterprises, decision-making processes are prevalently characterised by unilateralism, and at times they feature autocratic styles of labour management and something similar to the traditional or paternalist variants of the so-defined “unitarism ideology” (Fox 1974; Cullinanea and Dundon 2012). In other enterprises, many decision-making processes are accomplished with the involvement of

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employees who are allowed spaces for negotiations with the employer. This takes place in companies with workplace-based employee representation institution, but also in others not covered by trade unions and without formal workplace-based representation. In these cases, informal negotiations are the norm. However, they can take different forms such as dialogue/ negotiations with all or some workers (more frequently on an individual way) or between management and key actors, acting as spokesperson or intermediary. As to the latter, i.e. differentiations internal to a firm, our findings revealed the possibility of variations within the same enterprise with respect to different employment aspects. In other words, it became evident that different issues, even within the same company, can be approached according to different practices and decision-making styles. Only when a union presence is recorded and a workplace-based employee representation has been constituted, almost all terms and conditions are discussed/negotiated in a collective way. However, in these as well as other cases, the exception is represented by pay levels, which are set directly by the owner/manager referring to a sectoral collective agreement. In the enterprises without the presence of a union, employee involvement is very rare on topics such as bonuses, economic incentives, training, and skill development opportunities, even where other aspects are regulated in a participative way. Recourse to dialogue and negotiation is more frequent on task-related issues and, even more, on the organisation of work and working time arrangements. Thus, enterprises may exhibit mixed patterns of regulation. Ultimately, our analysis is substantially in line with the view of a wide diversity of approaches, policies, and practices in the regulation of labour among small businesses as stressed by part of the literature (Barrett and Rainnie 2002; Ram and Edwards 2003), but it also opens somewhat more complex perspectives. Within this general scenario, an important point highlighted by our investigation is the key role played by the national/sectoral collective agreements. Contrary to widespread expectations, our analysis has shown not only a high sectoral collective agreement coverage across the studied small enterprises but also a wide supportive attitude and appreciation—although sometime implicit—of binding rules set up at a

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higher level. This is for two main reasons. Firstly, because reference to a sectoral agreement simplifies relationships with labour, establishing a floor of terms and conditions that can serve as a point of reference to define employees’ economic and normative treatment, reducing discussions and conflicts at the workplace. Secondly, as rule-abiding owners/ managers of small businesses often emphasised, because the adoption of sectoral collective agreements might reduce unfair competition between firms. Both reasons are of particular importance in a context such as the Italian one in which there is not a statutory minimum wage, but they might have a more general validity. In a period characterised by growing pressures towards the de-centralisation of collective bargaining (Guardiancich and Molina 2017; Leonardi and Pedersini 2018), they emphasise the beneficial role of centralised normative frameworks— both as enabling and constraining factors—for a better economic and social performance of organisations. Moreover, our analysis highlighted the important role of external professionals, particularly labour and business consultants, who constitute a major point of reference on many labour management issues for the majority of small enterprises and with whom they often have long-lasting relations based on trust. Our findings disclosed their significant influence regarding the adoption of sectoral collective agreements. Encouraging the recourse to a sectoral agreement and giving advice on which to apply, they play an active role in promoting isomorphic behaviours (Powell and DiMaggio 1983) and structuring the field of employment relations for small firms. Together with the role of consultants, our analysis revealed other factors influencing the regulation of employment relations at the enterprise. Of particular importance is the interest of employers to retain workers that for different reasons may be difficult to replace (Goss 1991; Ram 1994); this is the basis of what can be termed an employer dependence on employees. According to our findings, this dependence is not only linked to the worker skill level but also to softer competencies such as the experiences and specific abilities developed within the firm over time, the in-depth knowledge of the organisation, its customers, and its production process. In any case, such a dependence enhances more participative labour management styles; in other

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words, it reduces unilateralism. However, the decision-making processes on the organisation of work and working conditions are also strongly affected by structural and economic variables such as the market conditions of the company, its performance, and its positioning in inter-firm relationships. Regarding this last point, our findings have confirmed the effectiveness of pressures from the so-called (invisible) third parties (Jaehrling et al. 2011; Jaehrling 2014) such as clients and outsourcers. They significantly, even if indirectly, shape the regulation of employment relations at the enterprise through the conditions they attach to the granting of contracts. In particular, the pressures they exert to lower the prices of product/services and/or to shorten delivering time tend to hinder more participative decision-making processes and could deteriorate employment terms and conditions. This holds for small firms in all sectors, especially in the labour-intensive ones. However, deterministic approaches and interpretations should be avoided. Our evidence showed variations, i.e. attempts to resist and not to be completely dependent, in the employers’ responses to these pressures. More generally, the effective outcomes of such pressures are mediated by the employers’ agency, their choices, strategies, and initiatives in their dialectical relationship with structural forces and institutional contexts.

Notes 1. Collective bargainingat the territorial level takes place mainly where firms are very small and there are no workers’ representatives—for example, in the case of craft companies or in agriculture, construction, retail, and tourism sectors. 2. According to the findings of a periodical survey on company-level agreements (OCSEL-CISL 2013–2017), the main issues tackled by the decentralised negotiations were: pay rises, restructuring and crisis management, union rights, working hours, social benefits and training. In more recent years, the restructuring and crisis management issues have significantly increased.

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3. According to data provided by the Consiglio Nazionale dell’Economia e del Lavoro (CNEL, National council of economy and labour), responsible for keeping an archive of collective agreements, in Italy in 2017, there were 809 national-sectoral agreements. The number has been increasing over the years. Italy’s major trade unions (Cgil, Cisl and Uil) have signed less than one-third of these agreements. As a significant example, in the multi-services sector, there are 26 national/sectoral collective agreements, and the most representative social partners have signed only two.

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5 Small Firms and the External Context: Embeddedness Versus Dependency Andrea Bellini and Vincenzo Fortunato

This chapter draws attention to the relationship between small firms and the external context, with a specific focus on labour regulation processes. For this purpose, the first unavoidable step is to define what we mean precisely by “context”. A widely accepted approach in the AngloSaxon academia pragmatically identified the context with the product market and analysed its influence in the light of sectoral variations (see Edwards et al. 2006, 2010; Sengupta et al. 2007). Other contributions focused on the role of family culture in influencing regulation processes (see, for instance, Ram and Holliday 1993). Differently, we conceive the context as a complex—that is, multi-layer and multi-actor—set of A. Bellini (*)  Department of Political and Social Sciences, University of Firenze, Florence, Italy e-mail: [email protected] V. Fortunato  Department of Political and Social Sciences, University of Calabria, Cosenza, Italy e-mail: [email protected] © The Author(s) 2020 I. Regalia (ed.), Regulating Work in Small Firms, https://doi.org/10.1007/978-3-030-21820-1_5

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institutions, and we see the “inside-outside” relationship as a network of interactions and mutual influences. From the latter perspective, the notion of “context dependency” itself has a different semantic value. In line with the literature on local development, we postulate that the existence of external economies related to the availability of collective goods—that is, resources made publicly available by local institutions—influences entrepreneurial strategies and practices (see Crouch et al. 2001, 2004). On the other hand, we share with the literature on employment relations, mentioned above, the idea that the firms’ characteristics and their own sets of resources determine the ways in which they relate to institutions and use external resources. With this approach, we also share the focus on the firm (Shaw 2006)— rather than on institutions overall, as producers of collective goods— and the entrepreneur’s agency, albeit in its “dialectical relationship” with “structural forces” (Barrett and Rainnie 2002). In this sense, this chapter aims to go beyond the analytical perspective of the studies on the areas of diffused economy, such as Italian “industrial districts” (see Becattini 1975, 1989; Bagnasco 1977, 1988; Trigilia 1986a, b; Brusco 1989; Pyke et al. 1990; Bellandi and Russo 1994; Viesti 2000; and, more recently, Becattini et al. 2003, 2009; Becattini 2004; Zeitlin 2008). This literature, in effect, used to focus on the “virtues” of district areas, disregarding the modes and practices of labour regulation in small firms overall. What is more, it tended to emphasise the conditioning power of the context, underestimating institutional interdependencies. In order to overcome these limits, we assume with Edwards et al. (2010) that the need for external resources is influenced by a series of factors related to the firm’s characteristics—such as their position in the market and the type of management—in addition to specific contextual factors, of both an “objective”—the presence of labour supply constraints—and “subjective” character—the perception of institutional weakness and excessive bureaucracy. The underlying idea is that a variety of institutions contributes to providing the sets of resources which small firms may (or may not) decide to use to complement their—inherently poor—resources, with specific reference to the several aspects related to labour regulation, and that, on the other hand, small firms make a differential use of external

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resources, influenced by their own characteristics and strategies in addition to the presence of institutional constraints—either harmful or beneficial. In the following pages, we will focus on four types of institutions, as—actual or potential—producers of resources, operating at different regulation levels. These are: the main “sources of regulation”, which provide the regulatory frameworks, i.e. public policy and collective bargaining; “political institutions”, i.e. regional and local governments; the “actors of industrial relations”, i.e. employers’ associations, trade unions, and bilateral bodies or funds; and “other actors”, i.e. chambers of commerce, banks, consultants, public employment services, temporary work agencies, universities, and upper-secondary schools. The specific objectives of the analysis are: (1) exploring the ways small firms relate to external regulatory frameworks, and how the latter, in turn, influence (that is, enable or hinder) entrepreneurial choices concerning labour regulation; and (2) investigating the resources provided by local institutions, that small firms may (or may not) use, endeavouring to understand if they are “embedded” in an institutional network and whether they are “dependent” on the context in which they operate.

A Complex Network of Inter-institutional Relationships Public Policy and Collective Bargaining The regulatory frameworks designed at the national level are critical components of the external context in which the firms operate. They are the “frame of the picture”, as they provide the sets of norms that regulate the firms’ behaviours. It is, again, the Anglo-Saxon literature that, indeed, provides an example of the influence that regulatory frameworks exercise on entrepreneurial choices, although mediated by the firms’ characteristics (see Ram et al. 2001; Gilman et al. 2002; Arrowsmith et al. 2003). The case is about the introduction of the National Minimum Wage (NMW) in the UK, a “regulatory shock” that

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was supposed to impact on small firms, affecting pay determination and firms’ performances (a hypothesis partly denied by the finding that the impact of the NMW was mediated by informality in employment relations, which led to different patterns of adjustment). Nothing similar can be found in Italy, in the period when the research was carried out. Italian firms, in fact, still operate within the framework of the Workers’ Statute (Law No. 300/1970)—the primary source in labour law in the country. As a matter of fact, the Statute provided a flexible system of norms, which leaves the smaller firms— with less than 15 employees—free to regulate the volume of employment, with no restrictions on hiring and dismissal decisions. Several labour market reforms succeeded one another since the second half of the 1990s, but they did not modify significantly the regulatory architecture designed by the Statute, at least until 2014, when a further governmental intervention, the Jobs Act (Law No. 183/2014), increased the degrees of flexibility for firms with 15 employees or more.1 The Statute and its subsequent modifications, therefore, configured a non-constrictive regulatory framework, which is definitely favourable to small firms. Despite this, the attention of the small entrepreneurs interviewed was caught almost exclusively by the Jobs Act and its implications in terms of hiring strategies. In this regard, the semi-structured interviews2 revealed the prevalence of a “pragmatic” attitude of the employers towards this reform, that is, to hire people benefitting from the financial incentives. open-ended contracts for everybody! (Milan, micro-firm, high-skill services, Int. 9)

According to the interviewees, nevertheless, this occurred in the context of persistent “structural” problems, related to the labour cost (deemed to be too high). The owner of a relatively young food service company with seven employees, located in Milan, Lombardy, explains that the Jobs Act and the related incentives to hire are not helpful in the case of a company that is dependent on the workforce—which would require, instead, a structural reduction of the labour cost:

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In my opinion, the labour cost, in Italy, is too high. I had some experiences abroad, and I’d say that it’s something that we should work on. Now, the Renzi Act [namely, the Jobs Act ] allows you to hire people on open-ended contracts, benefitting from decreased social security contributions… but the labour cost, in this country, is unsustainable for us entrepreneurs… It’s not [a question of ] how much money they [the employees] earn, but [of ] how much money they cost us. Because, well, seven employees at that cost… it’s the most important cost item that we have. Our work activity relies on people who can’t be replaced… I would say that the labour cost is one of those things that should be reconsidered.3 (Milan, micro-firm, low-skill services, Int. 8)

An entrepreneur in the textile industry, owner of a firm with 11 employees, based in Prato, Tuscany, indicates taxation—in a broader sense—as a major problem, for its downward effect on the demand for goods and services: Working in Italy, today, is tricky. They speak of the Jobs Act, but if they don’t lower taxes… Just give me a little breathing room! If people had a little more money, they would restart buying things and, as a consequence, business would increase… then, I would hire a young person. But this is impossible, now. It’s even hard to keep ours [employees]… Renzi said: “Let’s do the Jobs Act!”. Then, he said: “Now, hire people!”. But if I don’t need it, for there’s no business, I can’t hire a young person only because it costs little money… It’s a question of tax oppression. (Prato, micro-firm, Made in Italy, Int. 32)

Another excerpt, taken from an interview with the owner of a company with 20 employees in the machinery industry, once again from Prato, reveals the perception of a “weak” state, due to its low spending capacity and excessive bureaucracy (which impede reduction of business expenditures). The real need of any enterprise is cutting costs. But bureaucracy and pension expenditure in Italy make it impossible, because while I cover my neck, I expose my feet… “We’re getting by… Hopefully, there’ll be business”, they say in Prato. (Prato, small firm, Made in Italy, Int. 33)

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Here, a few relevant remarks can be made. As a matter of fact, the above changes in the regulatory “frame” did not affect those firms we defined as “micro” (i.e. with less than 15 persons employed), which continued to operate in a regime of freedom in the use of their workforce. This group of firms, it is worth recalling, represents almost 80 per cent of the survey sample—the reference is to the data collected through a quantitative survey of a large representative sample of 2320 firms in the non-financial private sector (for an overview of this part of the study, see Chapter 2 in this volume). The reform, instead, interested the remaining part, which could therefore benefit from the partial removal of legal constraints on hiring and firing and, at the same time, take advantage of decreased social security contributions. In this regard, the analysis of interviews disclosed the sensitivity of small firms to even minor regulatory changes, to which they tend to adapt through micro-adjustments, following a pragmatic logic of action. Their responsiveness, nevertheless, appears to be influenced by their essential characteristics, their capacity to deal with structural constraints—such as the high labour cost—being proportional to their size and dependency on the workforce. That said, a fundamental source of regulation, in the Italian tradition, is represented by the industry-wide agreements negotiated at the national level (Contratti Collettivi Nazionali di Lavoro, CCNL). Referring to the data of the survey, almost all sampled firms (94 per cent), in effect, reported that they apply a CCNL, with no significant differences by geographical area or type of firm. Concerning the CCNL, several interviewees expressed a favourable evaluation, underlining its “practicality” as a unique source of regulation and information on labour issues. This is the case of two service companies of Bergamo, Lombardy, one operating in high-skilled services, the other in low-skilled services: I believe that 99 percent of Italian companies apply the [industry-wide] agreement, because it contains the regulation of everything, okay? There’s the regulation of disciplinary measures, career advancements, retribution… of employer-employee relationships, from all points of view. So, I mean… we do so, together with a vast majority of companies. (Bergamo, small firm, highskill services, Int. 1)

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[the industry-wide agreement] is more convenient and understandable, even for the employee. We started with it. Some things are done and are not modified. So, we didn’t think about it anymore. It was fine, so… (Milan, small firm, low-skill services, Int. 3)

The above passages also indicate that the use of industry-wide agreements is a deep-rooted habit in small Italian firms, to the extent that some interviewees believe they could not do without it. One of them, the owner of a Milanese metalworking company with 30 employees, even said—emphatically—that he felt “obliged” to apply it4: You are basically obliged to follow the collective agreement. (Milan, small firm, Made in Italy, Int. 16)

The absence of automatic mechanisms of extension of the coverage of industry-wide agreements, then, created favourable conditions for a flexible use of these devices, based on pragmatic choices. An interview with the owner of a retail company, for instance, reveals a tendency to apply the most “convenient” CCNL. Well, we apply the agreement for trade and services to all employees, because it’s more convenient. (Bergamo, small firm, low-skill services, Int. 3)

“Convenient”, it is nevertheless worth saying, does not necessarily mean “for the employer”. In this regard, two further excerpts taken from the interviews with two companies of Made in Italy clarify that the CCNL is often used as a benchmark to raise the wage levels above the minimum standards: well, we say that… we care about all our staff, because they are local guys. So, we follow the agreement, but we say that we don’t pay the minimum wage. They all get more “on the merits”, that is, according to the qualification level, the results achieved… they have more responsibilities and also higher wages. (Bergamo, small firm, Made in Italy, Int. 6)

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Well, I must say that we have a direct relationship with the persons [employed in the company]. Honestly, here, nobody’s on the [wage] levels determined by the agreement for metalworkers. We’re certainly on mediumhigh levels. (Prato, small firm, Made in Italy, Int. 33)

Complexity is the other side of the coin. Another entrepreneur in the metalworking industry, based in Milan, for instance, complained about the difficulty of reading and interpreting the texts of industry-wide agreements: [the CCNL] is messed up, to the extent that even the professionals of the pay office, sometimes, need to read up to answer specific questions of the employees. It is too varied, too vast. It has too many quibbles, marginal notes… I tried to read it several times. It is also difficult to read, because there are some parts that concern, for instance, holidays; then you go further and you find other references to holidays… and this is convoluted. (Milan, micro-firm, Made in Italy, Int. 15)

As an entrepreneur from Teramo, Abruzzo, testifies, the main criticisms pertain to job classification, considered too rigid: I don’t want to be critical, but I wonder how we can protect jobs by classifying and framing millions of persons within occupational categories. People are all different. They have completely different characteristics. They have subjective entrepreneurial spirit… Occupational categories, for what they are—as they don’t rely on meritocracy—[…], are something that, essentially, vexes those who are willing to work hard. [Teramo, small firm, low-skill services, Int. 48)

A significant implication is the need for expert knowledge to interpret the texts. For this purpose, due to their inherent lack of internal resources, small firms often make use of external expertise. This, of course, is a factor that potentially contributes to increasing small firms’ dependency on the context. The channels through which this expertise is purchased on the service market make a difference. It is likely, for instance, that employers’ associations, and their related service companies, tend to “sponsor” the industry-wide agreements of which they are

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signatories; this also may reflect the specificity of the context—the production sector and, by extension, the labour market area. On the other hand, independent consultants and consultancy firms, probably, tend to suggest the most favourable ones, according to the specific needs and requests of their clients. A further question, in this regard, is whether the selection and application of a collective agreement is an intentional and acknowledged action or, instead, a mediated routine. We will return to these subjects in the following pages.

Regional and Local Governments As elucidated in Chapter 2, the regulatory context within which small Italian firms operate is locally situated and highly informal, though characterised by a marked institutional density. This means that firms which, due to their small size, suffer from an inherent lack of resources can find support in a complex network of institutions at the local and national levels. At the heart of this network are political institutions, namely regional and local governments. These play a critical role in the production of local collective competition goods (see, again, Crouch et al. 2001, 2004), above all “tangible” goods (i.e. infrastructure, logistics, services, a qualified workforce and research and development centres, etc.), but also “intangible” goods (i.e. cooperative relationships, based on social networks and trust as well as skills and tacit knowledge) (Burroni 2012). Furthermore, they play a pivotal role in determining the conditions for use of policymaking mechanisms that imply the sharing of political space (on this concept, see Crouch 1993) and, indeed, cooperative relationships between different types of institutions, from both industrial relations and, as well, civil society. These mechanisms arose as crucial aspects of what was termed competitive regionalism—that is, a model of governance based on a process of “political construction” of economic competitiveness (Burroni 2014)—which, in the district areas of the Third Italy, often took the form of a strong and durable inter-institutional cooperation (Regini and Sabel 1989; see also Regini 1991, 2000). Here, we focus on a specific type of collective goods, those intentionally

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provided by political institutions through policy measures or services designed at the local and regional levels to safeguard the employment levels and promote the competitiveness of small firms. These included wage support schemes (such as the Cassa Integrazione Guadagni, CIG5) and, to a lesser extent, training programmes, in addition to funding grants or services for technological innovation, the certification of quality, promotional initiatives and other activities. As highlighted in Chapter 2, again, an analysis of the survey data revealed the existence of a group of firms—one-third of the sample— which benefitted from at least one measure or service provided by local or regional public institutions. These are more frequently firms with 15 employees or more, which operate in the sectors of Made in Italy, and have other firms or public administrations as main clients—less often those operating in Calabria and low-skilled services. The presence of trade union members and/or a worker/union representation body within the firm, then, is an “enabling” factor, since unionised firms are far more inclined to use external resources (such as those provided by public institutions). Among policy measures, then, wage support schemes are more often used by independent firms that have other firms or public administrations as main clients, especially in the sectors of Made in Italy. The analysis of the semi-structured interviews disclosed that the interviewed small entrepreneurs mostly refer to the municipalities: 18 interviewees mentioned them, against 14 who mentioned the regions and 5 the provinces. In detail, the municipalities are mostly evaluated for what they do in the policy field of promotional activities, the regions in financing, the provinces in income support. As for the latter, though, it must be noted that, during the time the research was carried out, they were deprived of their main powers, in the prospect of their definitive abolition—actually, not yet occurred.6 Among the measures/services undertaken by the municipalities, the promotional activities received the most favourable evaluations, while financing and training, overall, were more frequently associated with excessive bureaucracy. Below are some examples from the interviews. Two entrepreneurs, for instance, both based in Prato, expressed favourable evaluations of the promotional activities undertaken by the

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Municipality, although the second interviewee complained about the fragmentation of initiatives: The Municipality and the Chamber of Commerce, they both did a lot. They look with a different eye, try to innovate [within] the territory… it is an aspect that works. (Prato, micro-firm, low-skill services, Int. 29) So many activities are done, more than in other municipalities… but, unfortunately, they’re done with wrong methods. It’s all fragmented. For example, the Municipality makes a deal with Confindustria to organise an art exhibition; it makes a deal with Confartigianato to organise an event in Duomo Square; then, it makes a deal with CNA [i.e. an employers’ association, as Confindustria and Confartigianato]… This is wrong. They should get together, share all the resources and organise a huge event, so that the whole world talks about Prato. (Prato, small firm, Made in Italy, Int. 34)

Concerning financing, three Calabrian entrepreneurs, in contrast, expressed their dissatisfaction with the action of the regional government, complaining about the inefficiency and slowness of the bureaucratic machine which, in a given case, even makes it difficult to receive the money: This wing [of the hotel] was made with a non-repayable loan from the Calabrian Region […]. I referred to an external accounting firm to manage it. This experience was negative. […] I spent everything I had to finish this project. They give you a non-repayable 35 percent, but you don’t even get 20 percent of the costs, because you have: the expenses for the accountants, those for the bank guarantee which, if you have difficulties, nobody gives you… and, when you find it, you find it at high prices. […] I see it globally. If you’re not strong enough, you can’t finish building a hotel. (Cosenza, micro-firm, low-skill services, Int. 55) We already were awarded a loan four years ago for a piece of new machinery […]. And we have not yet received all the money. So, the Calabrian Region leaves a lot to be desired. It is, above all, a problem of bureaucracy. (Cosenza, micro-firm, low-skill services, Int. 56)

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The third one, though, introduces the issue of the relationship with politics as a critical factor that is likely to influence the possibility to solve concrete problems: “Protected” is a strong word. Certainly, the local institutions give a helping hand, and the Region helped us in different situations, especially for the issue of funding. Actually, things don’t work as they should, but there are many administrators and politicians, with whom we had a direct relationship, who supported us, always within the scope of their roles and duties. (Cosenza, micro-firm, Made in Italy, Int. 61)

The problems of bureaucracy and the relationship with politics recur very often in the interviews, as the excerpts below testify. These stress the unfavourable cost-benefit ratio of engaging in funding processes, which are nevertheless a crucial way, for instance, to finance training. On the other hand, they reveal the “perception” of greater difficulties for small businesses, especially those operating in the South, compared to those operating in the northern regions of the country: There would be [mechanisms for financing training]. We tried once… it was more the time spent collecting documents… the girl [the beneficiary of the course] told me: “Please, don’t make me do it again”. (Bergamo, small firm, high-skill services, Int. 1) A bureaucracy that hinders the small ones… The big ones, instead, are structured and can access credit, European funds, and so on… From this point of view, as a small one, I confirm that it’s tiring. (Milan, small firm, high-skill services, Int. 11) By “bureaucracy”, I mean all public institutions… Doing business in Calabria is ten times more complicated than in Milan or Bolonia. Bureaucracy is faster there… It’s the same for the various consultants: if you’re not breathing down their necks, you’re always late. We are Southerners, and this is our forma mentis. We are a little complacent. In the North, they are more responsive… not only the bureaucracy, but also the professionals. (Cosenza, micro-firm, Made in Italy, Int. 62)

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A further extract, then, poses the problem of the “discouraging effect” that bureaucratic constraints exert on entrepreneurial initiatives. We have so many constraints from the outside… from the payment of high taxes to the fact that any change, even a small one, needs the permission of the Municipality, which, however, does not always consent. These constraints are always present and, eventually, they degrade and discourage. To date, for example, we do not yet have the authorisation of the fire brigade. It was a considerable expense, and since we presented the project and tried to get it approved, problems have arisen due to a lack of documents that nobody had talked to us about before. (Florence, micro-firm, low-skill services, Int. 21)

Lastly, assessment of the role of local politicians, such as the mayors and town councillors, is bivalent. On the one hand, the interviewees recognise their superior capacity for management of public goods, if compared to that of governmental actors: If there were no mayors… The mayors, today, are the bulwark of the territories. They’re the only ones who listen, for example, about public use areas: where the mayors manage the lands of the municipalities, valley lands, river beds, woods, and all the land that can be used and exploited by agriculture, you can have a dialogue and answers; in the case of state-owned lands, there’s always a wall raised. Because there are many interests, and everyone believes that “others” are responsible for the management. (Cosenza, micro-firm, Made in Italy, Int. 63)

On the other hand, they complain about their little understanding of the world of production and the difficulty of finding effective interlocutors on economic issues: there are valuable town councillors, for the competencies they have, for instance on school and health issues… but nobody that you can say: “I go and talk to him and, maybe, he understands me”. No, there’s not. It’s already difficult at the European and national levels… no one understands industry, today. (Prato, micro-firm, Made in Italy, Int. 32)

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we go forward on our legs, because I believe that they [town councillors] can’t help us, basically due to a lack of competencies, as regards the market and production. (Pescara, micro-firm, Made in Italy, Int. 41)

In short, the analysis of the data of the survey brought to light the existence of different logics underlying the choice of using or not external resources, and what types of resources, clearly influenced by firms’ characteristics. Concerning wage support schemes, specifically, there seems to be a strong “sector effect”, since the profile of the firms frequently recurring to these measures is congruent with that of firms operating in a market highly exposed to international competition (also hit hard by the global crisis of 2008 and, as such, in need of external support). Besides, the analysis of interviews allowed an understanding of how bureaucratic constraints limit the “agency” of small entrepreneurs. In this sense, being embedded in a network of relationships, which includes social institutions such as employers’ associations and trade unions, can be an enabling factor. As we will see in the following pages, in fact, the latter help entrepreneurs find their bearings in the fragmented field of local initiatives and, as well, take advantage of the opportunities offered by public institutions. The interviews, though, also revealed the bivalent role of “politics”—mostly exercised through the mediation of individual actors on the basis of personal relationships—which can be either an enabling or hindering factor, depending on their competency and attitude towards problem-solving.

The Actors of Industrial Relations The analysis of the relationships with the actors of industrial relations outside the workplace, although little studied, plays a crucial role in the prospect of understanding more deeply the dynamics of labour regulation in small Italian firms. In this regard, a possible interpretive key is given by the different types of management and styles of leadership within sampled firms. These are essential elements for verifying the strength or weakness of firms in which the diffusion of forms of informal regulation is often related to the reduced size, along with the family-based

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nature, of enterprises. As Cersosimo (2014, 3, our translation) pointed out, “poor quality entrepreneurial and managerial resources allow at most survival strategies, as opposed to rich and varied endowments of internal resources as the enablers for achieving more open company structures for interaction and cooperation and better economic results”. The shortage of managers (different from the company owner), to some extent, is indicative of a simple organisational and management structure (closer to the artisan sector than to manufacturing) in which, very often (according to the data of the survey, around 80 per cent of sampled firms in the four regions), decision making and management functions are in the hands of the “owner-entrepreneur”, who organises the production, hires and personally deals with workers, and keeps the relationships with suppliers and customers. Even in cases where a formalised structure and an internal articulation exist, it is always the owner, supported by other family members who work in the company, or by a managerial figure, who plays the most relevant role in the company business. The strategic role of the owner is even more significant in the Centre (58 per cent in Tuscany) and the North than in the South of Italy (47 per cent in Calabria). The concentration of functions in the hands of the owner-entrepreneur or a small family unit, however, does not preclude some functions from being entrusted to people outside the company. As a matter of fact, accounting and administrative tasks—in some cases, even human resource management—are often outsourced to external consultants (see the following subparagraph). The prominent role of the owner-entrepreneur is also documented by the low unionisation of the surveyed firms. As reported in Chapters 2 and 4, in fact, only 34 per cent have union members among their employees, while 84 per cent have no worker or union representation bodies at the workplace. What is more, 80 per cent of the respondents declared that they had no contacts with external trade unions. A vast majority of small firms, thus, are not socialised with the unions. As the following extracts taken from the semi-structured interviews clearly show, then, it is not so unusual that an interviewee expresses hostility towards the unions—sometimes, manifesting an “ideological” opposition:

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We never felt the need [to contact local trade unions], neither us as owners nor the employees… I think that we made everyone feel free to talk to us directly, without involving third persons or associations. At the local level as well, we never had relationships. (Cosenza, small firm, low-skill services, Int. 58) The trade union is an obstacle for businesses, because in the end… It’s true that the employees must be protected… I was an employee, too, and I know what it means. But companies are all different from each other. (Pescara, small firm, low-skill services, Int. 39) Nowadays, the unions have nothing to say. (Milan, small firm, Made in Italy, Int. 17)

Small firms confirm to be a rough terrain for trade unions, first and foremost because they are “pulverised” in the territory and, secondly, because they are barely permeable to traditional union action and symbolism. Unionisation, in fact, is higher in firms that are larger in size and operate in manufacturing, especially in district areas. Union presence within the firm, though, appears as a precondition for building stable relationships with external unions. In this regard, there are, nevertheless, some differences across the four regions. The contacts between small firms and external trade unions, in fact, are more frequent in the Centre-North (21 per cent) than in the South (18 per cent). This might be explained by the specific union culture, which is deeply rooted in the manufacturing industries that are present in Tuscany and Lombardy, and the strong vocation of the production base of these regions—relying on networks or clusters of small firms—towards cooperation and social dialogue. If we look at the reasons behind the interactions between firms and unions, then, we apprehend that the latter are brought into play primarily during company crises, to activate and manage social safety nets (13 per cent), to a lesser extent to help in negotiating other issues such as work organisation and labour flexibility (6 per cent) and, rarely, to sign collective agreements at the local or regional level (4 per cent).

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On this point, semi-structured interviews give a notable contribution, since they help to clarify the ways in which management and leadership style influence the model of labour regulation and firm-union relationships. As highlighted in Chapter 4, in fact, these are linked to traditional—not very sophisticated—means of interaction between the owner-entrepreneur and his/her employees, in which power is concentrated in the hands of the former, in a context that we could define as a “company-community” or “family”. As argued by two Calabrian entrepreneurs, The union has never been present [in the firm], also because we have a very open relationship with the employees. And when you are a few people, you can also talk directly to each other, so that the problems can be solved sitting at a desk. The relationship with the employees is solid; we trust each other. (Cosenza, small firm, Made in Italy, Int. 65) There are no union members among the employees. At the local level, instead, we have excellent relationships [with the unions], especially with the UIL. We always interacted informally. Luckily for the employees, we don’t need them. (Cosenza, small firm, low-skill services, Int. 60)

The survey data confirm the prevalence of cooperative leadership, based on mutual trust and dialogue between management and workers. The entrepreneurs, in fact, declared that in 91 per cent of cases the employees approach them directly to request improvements in work organisation, in 80 per cent of cases even to deal with personal problems. In this regard, an interviewee explains that the small size and proximity at the workplace helps to build trust relationships: in 90 percent of cases, they [the employees] come to talk. We have a very close relationship, also because we’re always together at the workplace. It’s not like being at FIAT… we’re always there, and we work side by side. (Cosenza, small firm, Made in Italy, Int. 65)

Both the data of the survey and semi-structured interviews, therefore, contribute to drawing a picture of “good relationships” within

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small firms, which are subtracted from the label of “place of autocracy”. The success of this business model passes through direct and personal relationships (“like a family”), based on trust and shared values, and an almost unlimited availability to work, which finds an equivalent in the typical example of Japanese capitalism, as described by Dore (1987). The constituent elements of this flexibility refer to characters, qualities, and bonds that involve people in a “communitarian” dimension. Low unionisation and favourable company climate do not imply the absence of conflict. The latter, though, is usually addressed and recomposed through personal and direct relationships, with no need to resort to formal union action. On the other side of the river are employers’ associations. The surveyed firms show, at least formally, a good propensity to associationism; more than half (56 per cent), in fact, belong to an employers’ association. They are more often larger firms, which operate in traditional economic sectors—they are, in fact, less present in high-skilled services (44 per cent against an average 56 per cent). As shown by some previous research works (see, for instance, Fortunato 2005; Feltrin and Zan 2014), such organisations have good performances in some fields of activity, while have evident difficulties in others; only in recent years, though, they have started a process of reorganisation, which has translated into a better planning capacity. In particular, employers’ associations have proved to be of great support for their members, especially as suppliers of professional consultancy and services. Still, they have difficulties in exerting their primary function of interest representation and developing effective lobbying actions towards public institutions at the local and regional levels. The causes are linked to both objective and subjective factors, such as the organisational weakness of employers’ associations and the low level of participation in the associative life, also due to the limited number of initiatives promoted. This is what emerges from some interviews conducted in high-skilled services, such as the following: Honestly, we don’t use services, probably due to our disregard. However, the relationships with Confindustria are good, because they can keep us in touch

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with other companies in the territory. The problem is that this is a terrible moment for everyone. We never used services. We participate in conferences, presentations of new laws, tax incentives, and so on. If any European projects are presented, we go and see… They keep us informed about funding opportunities. It’s a question of information, more than helping us to find new clients. (Cosenza, micro-firm, high-skill services, Int. 53) We joined Confindustria to benefit from funding opportunities. We’re also members of Confartigianato, but this is a recent development. The use we do [of the associations], though sporadically, is mostly related to interest representation. In this regard, we indeed have some advantages, because people, there, are very busy, but also competent. We became members but, to tell the truth, we don’t use so many services… actually, also because of our lack of commitment. We should be there and take part in meetings, but we don’t. (Florence, small firm, high-skill services, Int. 19) We are members of Assolombarda. This is the eighth year. I had the idea [of becoming a member], because I thought that, after all, it was a good thing to have an exchange of views with other entrepreneurs, being informed about the services… because, in the end, you join an association or a union, but you don’t even know the services you can benefit from. These associations are, to a certain extent, “centres of relationships”… They offer a considerable amount of services. (Milan, small firm, high-skill services, Int. 11)

In this context, the registration with bilateral bodies or funds—that is, institutions set up and managed jointly by trade unions and employers’ associations on a sectoral basis—is far less diffused. Only 19 per cent of sampled firms, in effect, joined them. In this case, though, there are marked differences between the four regions, with a clear polarisation between Lombardy and Tuscany (26 per cent and 19 per cent, respectively) on the one side, Abruzzo and Calabria (13 per cent and 11 per cent, respectively) on the other. Furthermore, bilateral bodies and funds play a greater role among micro-firms, especially in the tertiary sector (i.e. in financial and business services, trade and food service) and construction, as well as in district areas. Among the variables exerting a greater influence on the choice of referring to these institutions, we

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nevertheless find the type of company—more frequently the artisan companies—and the presence of workers who are difficult to replace, while unionisation does not play a role. This might be explained by the fact that firms’ behaviours, in this specific case, are driven by pragmatism (being in need) and automatic mechanisms (determined by the industry-wide agreements), and mostly related to mandatory training and supplementary social insurance—what does not necessarily require the mediation of trade unions. According to the survey data, in fact, the most used measures and services provided by bilateral institutions are: vocational training, mostly concerning health and safety at work (27 per cent); health assistance and supplementary social security (27 per cent); and wage support for employees on a temporary lay-off, that is, the CIG (14 per cent). Far less utilised, in contrast, are: financial contributions for technological innovation and other various activities (8 per cent); and credit facilities (7 per cent). It is worth noting that, in this regard, the gap among the four selected regions becomes wider, with a difference in the use of the measures and services of more than 10 percentage points between Lombardy (66 per cent) and Calabria (55 per cent).

Other Actors Political institutions and the institutions of industrial relations are not the only actors that occupy the local arena of labour regulation. A plethora of actors is actually present. They are both traditional and emerging actors. Among the former are public actors that have an established position and a well-defined role within the network of local institutions. These are: the chambers of commerce, public employment services, universities, and upper-secondary schools. In addition, there are private actors such as: banks, temporary work agencies, private universities, and research institutes. Other actors, then, have proved to play a growing role. They are professionals and consultants, to whom small entrepreneurs outsource not only accounting and administrative tasks, but also the management of human resources and the negotiations with trade unions.

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Among institutional actors, the chambers of commerce are worth a mention. The interviewees cited them with reference to internationalisation, promotional activities and, to a lesser extent, business support, financing, innovation, and training. As the interview excerpts reported below demonstrate, assessments they expressed were mostly favourable, especially regarding the support they received that facilitated their participation in trade fairs and similar events: We participated in an exhibition in Tokyo. The Chamber of Commerce gave us this opportunity at a derisory cost. (Prato, micro-firm, Made in Italy, Int. 31) With them [the Chamber of Commerce], we participate in several exhibitions… We need to be present at these events, even if they’re not exactly what we’re searching for, but we need to participate anyway. (Pescara, micro-firm, Made in Italy, Int. 32) The Chamber of Commerce helped us to obtain reimbursement of expenses for participation in some exhibitions… Obviously, the support given by these institutions is minimum… you have to do it alone. (Teramo, small firm, Made in Italy, Int. 52)

The other side of the coin, as in the case of other public institutions, can instead be identified in an excessive bureaucracy, mainly linked to access to financing: when we applied for something, there were cumbersome bureaucratic procedures or administrative costs… and it was not worth the effort. (Bergamo, micro-firm, Made in Italy, Int. 5)

Due to their peculiar character of public bodies with functional autonomy and their organisational structure shaped on the associative model, however, the range of action of the chambers of commerce intersects that of business associations. What is more, it happens that these institutions cooperate and even exchange their leaders or staff members, as the two extracts below demonstrate.

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We try to do marketing within the firm, though there are the Chamber of Commerce and Confindustria, with which we created a consortium for the internationalisation of Calabrian enterprises. It’s a good showcase. (Cosenza, micro-firm, Made in Italy, Int. 62) With the Chamber of Commerce, we participated in some exhibitions and other events. The President is the former President of Confindustria; thus, we took part in some initiatives of Confindustria as well. (Pescara, small firm, Made in Italy, Int. 43)

On the other hand, the most representative case of “emerging” actors is that of professionals and consultants. The data of the survey, essentially, revealed that almost 20 per cent of sampled firms refer to a professional or consultant to manage human resources, with no significant differences across the regions, labour market areas, economic sectors, or even types of companies. As a matter of fact, this is an across-theboard feature. The discriminating factor, instead, is the absence of union members and worker/union representation bodies within the firm. Non-unionised firms, indeed, tend to turn more frequently to external figures for that purpose. Consultants were also the most cited figures in the interviews with the entrepreneurs: 38 interviewees out of 66 mentioned them, while only 22 mentioned the chambers of commerce. None of them expressed an unfavourable opinion. Quite the contrary, the interviews brought to light a kind of “unconditional trust” of small entrepreneurs in consultants’ professionalism; it is therefore not surprising that they often rely on them for the management of critical issues (such as the relationships with trade unions). The core of this heterogeneous group is formed of labour consultants and accountants, surrounded by a constellation of firms providing services in a variety of fields (i.e. health and safety at the workplace, vocational training, certification of quality, marketing, management consultancy, legal assistance, financial and insurance brokerage, and so on). Trust is the basis for the relationships with labour consultants and accountants. It was quite common, in fact, that the interviewees

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reported having long-term relationships with them, as the following excerpts demonstrate: I refer to a consultant, who manages everything. I have known him a long time. He used to cooperate also with our former company. It’s a continuous relationship. (Prato, micro-firm, Made in Italy, Int. 31) It’s the accountant who does the payrolls. He’s been our accountant for a long time. (Florence, micro-firm, Made in Italy, Int. 25)

A reason behind the stability of relationships between small entrepreneurs and consultants, however, may also lie in the need for specialised knowledge and services, as in the case of a transport company, located in Teramo: We chose them because we knew them. The consultants for these kinds of sectors, in effect, are not easy to find. In a generic sector, it doesn’t matter so much. In transport, it’s different. You have to know the rules… and few people know them. They are consultants who work in the industry. Our consultant is also a consultant for other transport companies. (Teramo, micro-firm, low-skill services, Int. 46)

In general, though, the interviewees who referred to consultants also showed the tendency to avail themselves of various types of consultants, such as in the cases mentioned below: We refer to an accountant and a labour consultant. (Florence, small firm, Made in Italy, Int. 28) Consultants for stylists, labour consultants… then, other types of consultants, such as financial brokers… It’s word-of-mouth… “Do you know someone who can do this?” “Yes, it’s he. He’s good”. You talk to him and make a deal. (Prato, micro-firm, Made in Italy, Int. 32)

It is frequent, then, that professional and consultancy firms themselves have a multidisciplinary character and offer a variety of services. As the owner of a Milanese software development company reports, it

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also happens that professionals and consultants become the employees’ privileged interlocutors, while the owner is relegated to a role of “intermediary”: The accountancy firm that takes care of us also has a labour consultant who manages everything. Family allowances, and so on… they manage all possible requests from the employees. I’m just a liaison. (Milan, micro-firm, high-skill services, Int. 9)

What is worth underscoring is that, as “market players” who try to meet all possible needs of their clients, the consultants tend to extend their activities to cover fields—from the management of wage support schemes to collective bargaining—that are usually controlled by other actors, such as employers’ associations: The CIG… yes, it was managed by our labour consultant. (Cosenza, small firm, low-skill services, Int. 58) I haven’t [direct relationships with trade unions], because the labour consultant manages everything. (Cosenza, small firm, Made in Italy, Int. 59) I refer to a labour consultant… he usually manages the negotiations [with the unions]. (Milan, micro-firm, high-skill services, Int. 8)

The extract reported below, taken from the interview with a small entrepreneur from Pescara, Abruzzo, then, clarifies that the possibility of having a “personal” relationship makes a difference in the choice to refer to a consultant instead of a business association: Before, my partner in business was responsible for health and safety…When we grew from 25 to 31 employees, we had to appoint an external consultant… Business associations proved to be unreliable. I never thought that I could depend on them. I preferred a consultant that I could personally refer to. (Pescara, small firm, Made in Italy, Int. 43)

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To sum up, the analysis allowed to identify different types of actors who contend for the arena of labour regulation with political institutions and the actors of industrial relations. Two of them, in particular, are likely to play a substantial role, although they rely on radically different logics of action. On the one hand, the chambers of commerce are constitutive nodes of local institutional networks. As such, they tend to cooperate with both political and social actors. Their main limitation, though, is that already identified for public institutions: excessive bureaucracy. On the other hand, professionals and consultants provide “rival” services but also act as “brokers”, connecting small firms with the opportunities available in the territory.

The “Disputed” Arena of Labour Regulation Interpreting the amount of data analysed in the previous paragraph within a coherent framework is not an easy task. A convenient way to proceed, as an exercise of synthesis, is using the survey data to build a typology of small firms, based on their different relationships with the institutional context. For this purpose, as a first step, we distinguished the selected dependent variables between “process” and “outcome” variables. Process variables refer to the existence (or absence) of relationships between small firms and local institutions. These include: (i) membership in employers’ associations; and (ii) contacts with external trade unions. The existence of relationships can be assumed as a rough index of “institutional embeddedness”. Outcome variables, instead, refer to the use (or not) of external resources. They comprise: (i) the use of policy measures and services provided by political institutions to support or promote the competitiveness of small firms; and (ii) the use of support measures and services provided by bilateral bodies or funds. The basic idea is that the use of external resources is a rough index of “institutional dependency”. We, then, created two dichotomous variables (0, 1), in which the value “1” indicates, respectively, the existence of at least one relationship and the use of at least one type of external resource (which implies

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the assumption of very broad definitions of the concepts of institutional embeddedness and dependency). The objective, here is not determining the degree of embeddedness or dependency but, rather, the existence or absence of relationships with the institutional context. After that, we combined the two variables to build a typology index. This led to identifying four ideal types, as reported in Fig. 5.1. Below is a characterisation of the four groups. Rooted firms. These firms have relationships with local institutions and tend to use external resources. They, therefore, are firms with “deep roots” in the territory, such that changing location does not seem to be a feasible option. Their dependency on the territory is also demonstrated by the presence of workers who are difficult to replace and a medium-high incidence of the primary client—often located in the proximity of the firm—on company turnover. Further, they are highly unionised. This group accounts for 30 per cent of the sample and is primarily composed of firms with 15 employees or more, which operate in the sectors of Made in Italy, refer to intermediate clients, and are present on international markets. ŵďĞĚĚĞĚ

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Fig. 5.1  Breakdown of small firms by type of relationship within the institutional context

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Integrated firms. These firms, as well, have relationships with local institutions, but tend not to use external resources. This is the most numerous group, which accounts for 33 per cent of sampled firms. It is characterised by a higher presence of firms with 15 employees or more, frequently cooperatives, which operate in low-skilled services and the sectors of Made in Italy, with no significant differences concerning firms’ characteristics, except for a lower dependence on the workforce and a higher international vocation. Rootless firms. These firms have no relationships with local institutions and tend not to use external resources. They, indeed, have a weak link with the territory and are far less unionised. This group represents 25 per cent of the sample. It is mostly formed of firms with less than 15 employees, which operate in high-skilled services, less frequently referring to international markets. Isolated firms. These firms have no relationships with local institutions but tend to use external resources. They are “isolated” in the sense that they have a weak link with the territory, although they express the need for external resources. This is a small group, which represents only 12 per cent of the sample. Those belonging to this group are more often firms with less than 15 employees, which operate in high-skilled services, with no significant differences concerning firms’ characteristics, except for low unionisation. Going further, an interesting aspect that emerged from the analysis of quantitative data concerns the relationship between the above ideal types and the tendency to outsource the management of human resources to external figures, such as professionals or consultants. This, in fact, is higher among “isolated” and “rootless” firms (24 per cent and 21 per cent, in that order) than in “rooted” or “integrated” ones (18 per cent and 16 per cent). Given that a substantial part of sampled firms outsources the management of human resources to professionals and consultants, and considering that this practice is more diffuse among those firms with a weak link with the surrounding territory, we may conclude that the use of these figures is associated with a “disembedding” effect. This fact has important implications, both theoretically and practically. First, it discloses a peculiar mode of business management, which implies the outsourcing of strategic functions, inherent to employment

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relations; it is also likely to be typical of small firms. Second, this seems to impact on industrial relations, since it offers small entrepreneurs an—easy and seemingly convenient—alternative to joining business associations and having contacts with trade unions. Third, it entails a shift of the focal point of regulation processes from “institutional” to “personal” relationships, which rely on the trust between entrepreneurs and consultants. Fourth, the entrepreneurs tend to “trust the fate” of their business to external figures, who act as “brokers” who “mediate” between the inside and outside; hence, the entrepreneurs tend to loosen their relationships with local institutions.

Fig. 5.2  The arena of labour regulation: (1) types of actors

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The analysis of semi-structured interviews, essentially, confirmed these results. In this regard, Figs. 5.2 and 5.3 provide graphical representations of the local arena of labour regulation as a “disputed” space, wherein different types of actors “compete” for users/clients, in this case, small firms. The two figures are based on NVivo Models. In detail, rectangles represent ‘nodes’ (types of actors or key actors); circles represent ‘case nodes’ (the small entrepreneurs interviewed); connectors, finally, indicate the presence of ‘coded text’, which means that an interviewee (case node) indicated a specific type of actor or key actor (node) as influential.

Fig. 5.3  The arena of labour regulation: (2) key actors

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Figure 5.2, specifically, provides an idea of how three types of actors, namely political institutions, the actors of industrial relations, and other actors—share the arena and a large part of the potential public, that is, the small firms that indicated them as influential actors. The same figure easily allows to identify the “other actors” as those that cover a broader area: 58 interviewees out of 66, in fact, mentioned them, as opposed to 44 who cited the actors of industrial relations and 28 who named political institutions. A small group of firms (the 6 circles outside the ring, on the right), then, referred only to them. Figure 5.3, then, focuses on three key actors: employers’ associations, the chambers of commerce and consultants. Here, two further remarks can be made. First, consultants proved to be influential actors as much as employers’ associations (both scored 38 interviewees mentioning them). Second, a significant number of firms (the 13 circles outside the ring, at the bottom right) referred only to consultants.

Conclusions This chapter has provided evidence of the existence of various ways in which small firms relate to the external context to regulate labour. In this sense, it has raised the awareness that small firms are not in a vacuum but operate against the backdrop of complex institutional networks. These are formed of different types of actors—namely public and private, collective and individual actors—which contribute to creating sets of collective goods that are intended to complement small firms’ inadequate resources. As seen, however, small firms use external resources in very different ways, influenced by the structural characteristics and strategies of the firms themselves, even more than by the presence of institutional constraints, either harmful or beneficial. The reference to the Italian case gives the analysis an added value. The Italian production system, in fact, is highly heterogeneous, with significant discrepancies at the regional level. In particular, Lombardy and Tuscany can count on “mature” industrial systems, while Abruzzo— and, above all, Calabria—are part of the “under-industrialised” South. Persistent gaps, therefore, can be identified in both business and labour

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market indicators. On the other hand, the analysis has brought to light the existence of regularities that go beyond the regional differences, as they depend more on firms’ characteristics. Furthermore, it has revealed the emergence of unusual and little known—or not known at all—patterns, which are across the board and, as such, have significant implications, both theoretically and practically. Starting from the end, the suggested typology of small firms (i.e. rooted, integrated, rootless and isolated ) represents a fruitful exercise that helps us understand the ways small firms relate to the institutional context. What really seems to make a difference, of course, is the size of the firm (which is closely related to the macro-sector and the position within the market). Small firms (i.e. 15 employees or more), operating in the sectors of Made in Italy and low-skilled services and referring to international markets, in fact, are frequently rooted or integrated firms, while micro-firms (i.e. less than 15 employees), diffused in high-skilled services but less internationalised, are often rootless or isolated. A further polarisation effect, then, is due to the degree of unionisation, which is higher among the former than the latter. As for rooted firms, particularly, their dependency on the territory is mostly related to the availability of specific skills, which respond to the need for qualified workers, who are difficult to replace. What is worth noting, here, is that the processes labelled as “embeddedness” and “dependency” seem to act—at least, in part—independently. This means that embeddedness in an institutional network does not necessarily imply dependency on the external context, and vice versa. Concerning the emerging patterns, the last part of the analysis has drawn attention to the crucial role of professionals and consultants, to whom small entrepreneurs increasingly outsource administrative and, even, managerial tasks. This phenomenon has also been regarded as having a “disembedding” effect, since it is related to a lesser propensity to join business associations and have contacts with trade unions and, generally, to the weakening of the relationships with local institutions. This does not mean that local institutions are becoming less relevant in absolute value but that in those firms where human resource management is

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outsourced to external experts—a minority, anyway—these actors tend to count less. As noticed, professionals and consultants provide rival services. This implies that they compete with public institutions and collective organisations, which are more likely to reflect the specificity of the local context. This change configures a peculiar mode of business management and labour regulation, which is popular among small Italian firms, its success being determined by several factors: (i) small firms’ inherent lack of internal resources; (ii) their need for external expertise to deal with the complexity of the institutional context (e.g. the regulatory framework, the variety of local collective goods and relationships with political and social institutions, such as local governments and trade unions); (iii) the possibility of access to a wide range of “tailored” services, relying on personal relationships, based on trust; and (iv) the difficulties experienced by key competitors in exerting their primary functions (such as bureaucratic constraints on the activities of the chambers of commerce and, above all, the reduced capacity of business associations to represent employers’ interests). Although the presence of managerial staff within the firm seems to be a factor that increases the probability of outsourcing functions to external experts, this pattern is also compatible with an owner-led business model, which implies that decision making and other strategic functions are in the hands of the owner-entrepreneur or a small family unit. This allows to look at small firms as “company-communities”, in which the “family-like” business is run flexibly and informally, through direct and personal relationships. These findings confirm the assumption, well established in the Anglo-Saxon literature, about the critical role of informality in employment relations, among small firms. In this regard, a further remark must be made concerning the relationship with politics. Another mode of regulation, in fact, entails referring directly to local politicians to face and solve concrete problems. This, it must be noted, does not necessarily imply corruption and deviance from social norms, as in Banfield’s “amoral familism” (1958). Conversely, it is more likely to indicate the recognition of the capacity of local politicians to manage public goods and, once again, a certain

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inclination to resort to personal relationships instead of using institutional or associational channels. To conclude, the prevailing model in the transformation of contemporary capitalism gives new centrality to small firms, provided they tend not to be isolated, but are rather embedded in institutional networks with high functional flexibility, involving business associations, trade unions, bilateral bodies and public institutions. The support of public institutions, in particular, has proved to be essential for small firms. Most essentially, their role appears to be necessary in some areas (such as the most fragile ones or those most affected by profound economic transformations), to compensate for organisational and structural deficiencies in production models—allowing the survival of those firms, often smaller, isolated and operating in traditional sectors with lowadded value, which struggle to remain in the market. Local institutions are also important actors to deal with, even if less decisive than in other more developed territories, such as Lombardy and Tuscany, in which the presence of larger companies—often included in networks or clusters and open to international markets—are able to provide by themselves internal resources to compensate for the lack of institutional support as well as the cost of excessive bureaucracy. That being said, the current analysis has revealed that small firms’ networks of relationships are far more intricate than one would expect. In this context, both public and social institutions, as producers of collective goods, can be enabling factors which support small entrepreneurs when dealing with strategic choices concerning labour regulation. Alternative patterns, which involve a broader range of actors, are nevertheless emerging. Further research along this line would be needed.

Notes 1. In 2014, the Jobs Act (Law No. 183) intervened to bypass Article 18 of the Statute—which regulates the protection against dismissal, applying to all persons employed in companies with 15 employees or more— by introducing an open-ended contract with increasing employment

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protection addressed to newly hired workers, supported by the provision of financial incentives for businesses. 2. For the analysis of interviews, we used a CAQDAS (computer-assisted qualitative data analysis software )—that is, QSR NVivo 10 for Windows (on NVivo, see Bazeley and Jackson 2013), adopting the following strategy: in detail, we made case nodes and attached them attributes corresponding to the independent variables listed in the previous paragraph; then, we coded the data sources in tree nodes, identifying a total of 120 items, and generated a coding summary by nodes report. Going further, we ran matrix coding queries with attribute values, and stored query results in node matrices, in order to compare the attitudes and behaviours of specific groups of firms for every single item. Finally, we explored the emerging understandings through models. This analytical approach helped to identify both patterns and outliers. What is more, it allowed to describe a wide range of means of interaction between the firms and the external context. 3. All the excerpts from the interviews are translations from the Italian language. 4. In the Italian system of industrial relations, there is no obligation for the employer who is not a member of an employer’s association (that is a signatory of an industry-wide agreement) to apply the CCNL of the product sector in which the company operates, nor is there a duty to apply a CCNL. 5. The CIG is a wage support scheme for employees on a temporary lay-off, designed to support companies with 15 employees or more in the event of documented economic difficulties related to sectoral or local crises, or even to processes of company restructuring or reorganisation. In the context of the global crisis of 2008, however, it was extended to companies with fewer than 15 employees (CIG in deroga ). What is noteworthy, here, is that the procedure for the activation of the CIG implies the obligation, on the part of the employer, to inform local trade unions. 6. The Del Rio Act (Law No. 56/2014) introduced transitional rules, pending the reform of Title V of Part II of the Italian Constitution, which should have led—amongst other things—to the abolition of the provinces. The negative results of the referendum consultation of December 4, 2016, however, implied that the latter would remain, but with the new structure designed by Law 56 itself. This law provided for the transformation of the provinces into “second-level” administrative bodies,

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with their own organs elected by limited suffrage, as well as the creation of ten metropolitan cities.

References Arrowsmith, James, Mark W. Gilman, Paul Edwards, and Monder Ram. 2003. “The Impact of the National Minimum Wage in Small Firms.” British Journal of Industrial Relations 41 (3): 435–456. Bagnasco, Arnaldo. 1977. Tre Italie: la problematica territoriale dello sviluppo italiano. Bologna: Il Mulino. Bagnasco, Arnaldo. 1988. La costruzione sociale del mercato. Bologna: Il Mulino. Banfield, Edward C. 1958. The Moral Basis of a Backward Society. Glencoe, IL: Free Press. Barrett, Rowena, and Alistair Rainnie. 2002. “What’s So Special About Small Firms? Developing an Integrated Approach to Analysing Small Firm Industrial Relations.” Work, Employment and Society 16 (3): 415–431. Bazeley, Pat, and Kristi Jackson. 2013. Qualitative Data Analysis with NVivo, 2nd ed. London: SAGE. Becattini, Giacomo, ed. 1975. Lo sviluppo economico della Toscana. Firenze: IRPET. Becattini, Giacomo, 1989. “Riflessioni sul distretto industriale marshalliano come concetto socio-economico.” Stato e mercato 25: 111–128. Becattini, Giacomo. 2004. Industrial Districts: A New Approach to Industrial Change. Cheltenham, UK: Edward Elgar. Becattini, Giacomo, Marco Bellandi, Gabi Dei Ottati, and Fabio Sforzi. 2003. From Industrial Districts to Local Development: An Itinerary of Research. Cheltenham, UK: Edward Elgar. Becattini, Giacomo, Marco Bellandi, and Lisa De Propris, eds. 2009. A Handbook of Industrial Districts. Cheltenham, UK: Edward Elgar. Bellandi, Marco, and Margherita Russo. 1994. Distretti industriali e cambiamento economico locale. Torino: Rosenberg & Sellier. Brusco, Sebastiano. 1989. Piccole imprese e distretti industriali. Una raccolta di saggi. Torino: Rosenberg & Sellier. Burroni, Luigi. 2012. “The Boundaries Between Economy and Society.” In Economy and Society in Europe: A Relationship in Crisis, edited by Luigi Burroni, Maarten Keune, and Guglielmo Meardi, 185–205. Cheltenham, UK: Edward Elgar.

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Burroni, Luigi. 2014. “Competitive Regionalism and the Territorial Governance of Uncertainty.” Transfer 20 (1): 83–97. Cersosimo, Domenico. 2014. “Il profitto della cooperazione.” StrumentiRES 6 (1): 1–8. Crouch, Colin. 1993. Industrial Relations and European State Traditions. Oxford: Oxford University Press. Crouch, Colin, Patrick Le Galès, Carlo Trigilia, and Helmut Voelzkow, eds. 2001. Local Production Systems in Europe: Rise or Demise? Oxford: Oxford University Press. Crouch, Colin, Patrick Le Galès, Carlo Trigilia, and Helmut Voelzkow, eds. 2004. Changing Governance of Local Economies: Responses of European Local Production Systems. Oxford: Oxford University Press. Dore, Ronald. 1987. Taking Japan Seriously: A Confucian Perspective on Leading Economic Issues. Stanford, CA: Stanford University Press. Edwards, Paul, Monder Ram, Sukanya Sen Gupta, and Chin-Ju Tsai. 2006. “The Structuring of Working Relationships in Small Firms: Towards a Formal Framework.” Organization 13 (5): 701–724. Edwards, Paul, Sukanya Sen Gupta, and Chin-Ju Tsai. 2010. “The ContextDependent Nature of Small Firms’ Relations with Support Agencies: A Three-Sector Study in the UK.” International Small Business Journal 28 (6): 543–565. Feltrin, Paolo, and Stefano Zan. 2014. Imprese e rappresentanza. Ruolo e funzioni delle associazioni imprenditoriali. Roma: Carocci. Fortunato, Vincenzo. 2005. Imprenditori, organizzazione e rappresentanza collettiva degli interessi: I caratteri dell”associazionismo imprenditoriale nella provincia di Cosenza. Soveria Mannelli: Rubbettino. Gilman, Mark W., Paul Edwards, Monder Ram, and James Arrowsmith. 2002. “Pay Determination in Small Firms in the UK: The Case of the Response to the National Minimum Wage.” Industrial Relations Journal 33 (1): 52–67. Pyke, Frank, Giacomo Becattini, and Werner Sengenberger, eds. 1990. Industrial Districts and Inter-firm Cooperation in Italy. Geneva: International Institute for Labour Studies. Ram, Monder, Paul Edwards, Mark W. Gilman, and James Arrowsmith. 2001. “The Dynamics of Informality: Employment Relations in Small Firms and the Effects of Regulatory Change.” Work, Employment and Society 15 (4): 845–861. Ram, Monder, and Ruth Holliday. 1993. “Relative Merits: Family Culture and Kinship in Small Firms.” Sociology 27 (4): 629–648.

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Regini, Marino. 1991. Confini mobili: La costruzione dell”economia fra politica e società. Bologna: Il Mulino. Regini, Marino. 2000. Modelli di capitalismo: Le risposte europee alla sfida della globalizzazione. Roma-Bari: Laterza. Regini, Marino, and Charles Sabel, eds. 1989. Strategie di riaggiustamento industriale. Bologna: Il Mulino. Sengupta, Sukanya, Chin-Ju Tsai, and Paul Edwards. 2007. “When and Why Is Small Beautiful? The Experience of Work in the Small Firm.” Human Relations 60 (12): 1779–1807. Shaw, Eleanor. 2006. “Small Firm Networking: An Insight into Contents and Motivating Factors.” International Small Business Journal 24 (1): 5–29. Trigilia, Carlo. 1986a. Grandi partiti e piccole imprese. Bologna: Il Mulino. Trigilia, Carlo. 1986b. “Small-Firm Development and Political Subcultures in Italy.” European Sociological Review 2 (3): 161–175. Viesti, Gianfranco. 2000. Come nascono i distretti industriali. Bari: Laterza. Zeitlin, Jonathan. 2008. “Industrial Districts and Regional Clusters.” In The Oxford Handbook of Business History, edited by Geoffrey G. Jones and Jonathan Zeitlin, 219–243. Oxford, UK: Oxford University Press.

Part III Conclusions

6 Prospects for Employment Relations: Between Informal and Formal and Inside and Outside Ida Regalia

In this concluding chapter, we return to the main aspects discussed in the previous chapters, highlighting how, on the one hand, they aid understanding of the specific features of employment relations in small businesses and, on the other, enable reflection on the prospects of employment relations in the globalised economy more generally.

Does It Still Make Sense to Talk of Small Firms? Or—better stated—to use the significant title of a provocative short paper published by Charles Sabel (2009) a decade ago: “Is the small firm still a category of analysis?” According to Sabel, considering small firms as such, i.e. as isolated objects, makes increasingly less sense. It made sense when the crisis of large, rigidly organised companies began in the last decades of the twentieth century and spaces were created for I. Regalia (*)  University of Milan, Milan, Italy e-mail: [email protected] © The Author(s) 2020 I. Regalia (ed.), Regulating Work in Small Firms, https://doi.org/10.1007/978-3-030-21820-1_6

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the proliferation of small businesses at the local level (with a logic of production opposed to that of larger companies). Also, studies of small businesses multiplied. They were investigations which distanced themselves from the centrality of big business in a period when, in industrialised countries, the logic of large-scale production of standardised goods was being questioned and alternatives were being sought. Since then the strand of studies on small firms has developed and expanded. By sheer coincidence, while we were preparing this book, a special issue of the journal Work, employment and society was published, with the significant title “Small business revivalism”, devoted in particular to employment relations in small and medium-sized enterprises (Mallet and Wapshott 2017). In fact, today it is not so much the small amount of analysis that is the problem, although there is still a lot to study and understand, and all contributions to understanding some aspects are welcome—and although there are still almost unexplored themes. The problem is rather a sort of “conditioned reflex”, or rather two, that one easily finds oneself having when addressing these issues: that of imagining small firms as a substantially homogeneous whole, while also regarding them as a “system” that is substantially closed, circumscribable and opposed to the rest of the economy and society. In reality, almost none of those who reflect on the topic of small businesses would openly admit this. And perhaps most of those who talk about small firms—starting with the present writer—feel that they are immune from these distorted simplifications, which are actually errors at the cognitive level. The first distortion, however, is implicit whenever “small” firms are identified, or are compared to “big” ones, substantially on the basis of size: whether it is done to describe the general characteristics (on the economic level, that of production, work and/or social relations in the workplace); or whether it is done to identify and explain their strengths and weaknesses; or to consider the possible contribution that the “sector” of small businesses can make in terms of economic performance, development or employment—or vice versa—to outline what policy, institutions, educational system, research and training could do to support small firms. It is a distortion, because it is obvious that, behind the label “small firm”, there lies an extremely diverse and heterogeneous

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world, whose features, dynamics, limitations and contribution to the functioning of the economy and society are quite variable and depend on many other circumstances. To reason about small firms, one must— to the contrary—be ready to deal with the variability and differences among them. The idea is certainly not original: the point was already underlined by Rainnie in 1991 and controversially resumed by Barrett and Rainnie in 2002. Yet a certain tendency to talk about small firms as a “natural” category (as one sometimes reads in the literature), to which correspond empirically based analogies and similarities, continues to be widespread. The second distortion, connected but not entirely coincident with the first, concerns the idea that, as a whole, the aggregate of small firms has its own separate identity, with logics and functions opposed to the “world” of large companies. It is here that the provocative question of Charles Sabel, from which we started, arises. Sabel contended that things had changed compared to the period when the crisis of the large corporation began. With the evolution of production methods in the new globalised contexts, small and large enterprises have been cooperating for some time and are dependent on one another. Rather, it is the connections among companies—of different sizes and forms—and the principle of “connectability” that count, not the characteristics of the individual firms so connected. Sabel’s analysis belongs within the mainstream of approaches that tend to “denature”—as it has been put—the characteristics of small businesses as such and therefore do not to recognise their specificities. In reality, one can still speak of the specificities of small businesses if one considers, not so much their economic and productive characteristics, but rather the characteristics of social relations within them. As was observed some time ago by Mancur Olson (1965)—who spoke about the propensity or otherwise to undertake collective actions— dynamics within small groups are different from those that occur within large ones. The former, in fact, are characterised by a greater density and by a greater weight of face-to-face and interpersonal relationships. This is why it makes sense to investigate employment relationships in small businesses as such. Beyond the conditionings that derive from the diversity of the sectors of operation, location, the characteristics

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of production and the market, the economic performances of firms— common to employment relationships in such firms—are aspects arising from the dynamics that tend to emerge within small groups and, in particular, the tendency of their social relations to be largely of an informal kind. As we have seen in the previous chapters and, as highlighted by the literature, the propensity to resort to informal practices in employment relations, in fact, is a recurrent feature, whether one observes the behaviour of the parties in the labour market and in the definition and redefinition of the firm’s boundaries, or considers the styles and models for regulating the terms and conditions of employment within the workplace or focuses on the dynamics of relations with the firm’s external environment.

A Plurality of Patterns and Outcomes As we have already done elsewhere (Regalia 2017a), we can summarise the main results of the many observations presented in Chapter 2 by focusing on two fundamental aspects of the employment conditions of workers in small firms: (i) whether labour is represented by collective organisations (trade unions) and (ii) whether work is secure, with its terms and conditions sufficiently and satisfactorily regulated. The former regards the possibility for employees in such firms to be protected and represented by collective agents. The latter regards the quality of employment conditions, or, more precisely, whether workers in these firms enjoy socially acceptable levels of employment security and welfare. In other words, the former denotes a prerequisite considered fundamental for obtaining good employment conditions according to the consolidated tradition of industrial relations. The latter concerns the outcomes of the employment relations actually adopted in firms. As evidenced by the multiple analyses conducted in Chapter 2, the two aspects can be interrelated, but they do not overlap: one is not necessarily a condition for the other. Nor are they mutually exclusive. It is possible to classify firms on the basis of how they rank on both dimensions: that of the presence or absence of a representation of labour and that of the level (low or high) of employment security and welfare.1

6  Prospects for Employment Relations …     209 Table 6.1  Patterns of employment relations within small firms

no Labour representaon yes

Workers’ security and welfare + I II Unilateral/authoritarian style Direct of decision making paternalisc/parcipave management 34% 28% III Ritual collecvely mediated ER

IV Effecve collecvely mediated ER

22%

16%

Combining the two dimensions yields four ideal-typical patterns of employment relations (see Table 6.1). The first corresponds to situations in which workers lack both collective representation and protection and sufficiently good terms and conditions. This is the model that can be identified with the “bleak house” scenario. It also corresponds to the “black hole” in Bordogna and Pedersini (2001; see also Guest and Conway 1999), whose approach is very similar, albeit not identical, to our own. Conversely, the fourth pattern corresponds to the situations in which workers are endowed with both collective representation and good terms and conditions. This is a case of the positive collectively mediated employment relations model envisaged by the traditional ER/IR (employment relations/industrial relations) paradigm. In reality, both patterns can be interpreted in light of the traditional paradigm, since the absence of collective representation and action may be seen as the reason for the poor conditions of cases falling in the first type. Somewhat inconsistent with consolidated expectations, instead, are situations pertaining to the other two patterns. Distinctive of cases in the second pattern is that they are characterised by the availability to workers of fairly good levels of security and welfare, but the absence of a collective organisation of their interests. This is the circumstance that can be

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identified with the “small is beautiful” metaphor, in which it is management that paternalistically takes the initiative to care for its employees or it seeks their direct active involvement to cope with productive imperatives. The third pattern, finally, corresponds to the opposite situation: one in which workers enjoy collective protection and representation but not sufficiently good terms and conditions. This is the case, we may say, of a ritual, or purely formal, largely ineffective, collective organisation. Considering how the firms in the sample distributed across the various patterns, it is not surprising that the relatively largest proportion of them (a good third) corresponds to the first pattern, characterised by the absence of labour organisation and poor conditions. This is fairly predictable, given that the sample comprises small and micro-firms. Similarly, it may seem rather obvious that the opposite situation—the one in which labour is organised and workers enjoy positive terms and conditions (Pattern IV)—is the smallest (16 per cent of firms). Note that this is the case which is most consistent with the expected functioning of a collectively mediated model of industrial relations. However, that this is not necessarily the case—i.e. that the collective organisation of labour does not necessarily lead to better worker conditions—is shown by the larger group of firms, accounting for about one-fifth of the total, in which the presence of unions is recorded but without a significant impact on workplace welfare (Pattern III). It is with a certain surprise, finally, that we discover the relatively large proportion (almost 30 per cent, i.e. our second largest group) of firms in a situation which is precisely the reverse of the previous one: in which better worker conditions are granted without the intermediary role of a collective organisation (Pattern II). To be noted is that the first two patterns mentioned—which correspond to traditional expectations on the functioning of collectively mediated industrial relations systems—account for exactly half the sample. The other half, instead, is characterised by so-to-speak anomalous configurations, in the sense that labour organisation and workplace welfare appear to be disconnected from one another. As regards the characteristics of the firms within the various patterns, it is first possible to observe that the patterns are differently distributed according to geographical area of location, consistently with Italy’s socio-economic and institutional diversity. The firms pertaining to the first model (“bleak house”), on average, are in fact more common in less

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developed southern regions; those of the second (welfare without representation) tend to be more present in the economically most robust region; those of the third and fourth model (characterised by a more or less efficient trade union presence) tend to be more widespread where unions have historically had a strong presence in the small firm industrial districts (Tuscany), and, to a lesser extent, in Lombardy. But even more interesting for our general discourse are the relations with the economic-productive characteristics of firms and with the logics of the parties’ behaviour. The first model is typical of micro-enterprises (under 10 employees): often artisan in basis and managed directly by the owner. These firms have a low propensity to enrol with employers’ associations and, further, operate mainly in a limited market, selling products or services to local final customers. Their economic and employment performance is modest. They use a low-skilled workforce (easily replaceable) and adopt a production process based on very standardised tasks. Consistent with this profile, labour relations tend to be characterised by a unilateral decision-making style which does not provide for the use of off-the-job training and in which—not only are there no forms of protest or negotiation by workers, as to be expected—but also very limited or non-existent are relations with the outside world and the ability or interest in obtaining resources from it. The other model characterised by a low level of welfare, but in which there is labour representation, is more typical of larger small enterprises (15–49 employees). As in the previous model, these are largely managed directly by the owners, operating mainly in local markets and recording modest economic and occupational performance, while tending to use quite easily replaceable labour. Unlike the previous model, however, these firms, on the one hand, tend to produce goods and services also for intermediate customers, on whom there is a high degree of dependence and, on the other, tend to leave some organisational autonomy to employees. In this case, firms have a high propensity to join employers’ associations. Above the average, moreover, are recourse to forms of protest by workers, the reaching of formal agreements, contacts with external unions and the use of support from institutions. In sum, this constitutes a pattern of conflictual labour relations of a rather traditional type, but in an economic-productive context that does not seem

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to allow for significant successes: a kind of ritual repetition, as pointed out, of a model inherited from the past which has lost its capacity to effectively exert influence. The other model with labour representation, but associated with a high level of welfare, tends to be more widespread among larger small firms. These are firms with a high level of membership of employers’ associations, as in the previous case, but managed with the support of specialised managers and professionals. This model appears typical of firms operating on domestic and international large-scale markets, mainly for intermediate customers, using skilled, difficult-to-replace labour, the cost of which significantly affects total costs. Consistent with this profile, labour relations tend to be characterised by a participative and mixed decision-making style which involves the use of offthe-job training. Above the average is recourse to forms of protest by workers (although to a lesser extent than in the previous model), and especially high is the reaching of collective agreements of both a formal and informal type that interests nearly half the sample. Contacts with external trade unions are very frequent, as is the use of support and benefits from bilateral bodies and, to a lesser extent, local governments and institutions. In short, this is a pattern of collectively mediated labour relations with considerable participative characterisation, that render firms dependent on the consensus of workers and where relations with the outside world and the capacity to obtain resources are strong. Finally, the last model—the one in which there is a high level of welfare in the absence of labour representation—tends to be more likely in small to intermediate-sized enterprises (10–15 employees), which tend to be part of larger organisations. On average, these firms are not particularly inclined to join employers’ associations. Even more than in the previous case, the model appears typical of successful economic-productive situations, which operate in national and international markets, with specialised production, and in which particularly high use is made of skilled, very difficult-to-replace labour, working on low-standardised tasks and with considerable autonomy. Again, as in the previous case, labour relations tend to be characterised by a participative style of decision-making, and much use is made of off-the-job training. Not influential, as expected, is recourse to forms of protest by workers, and

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collective bargaining is rare, although informal agreements are sometimes reached. Contacts with the outside are insignificant. This is a pattern of labour relations with considerable direct employee participation, favoured by economic and productive conditions which make firms especially dependent on the consensus of their employees, even if they are not collectively organised. Overall, the data highlight a plurality of models of employment relations and a plurality of results, even within the apparently simple reality of smaller firms. Probably the most intriguing results, from the point of view of our more general discussion, concern the two models characterised by high levels of workplace welfare, both when the latter develops in the presence of workforce representation and when it does not. The former case is the one that most closely corresponds to a good model of traditional industrial relations—in a situation, however, in which firms may be insufficiently endowed with resources of their own to deploy in relations with employees and their representatives. However, they appear to be able to increase such resources through their embeddedness in the external environment, according to dynamics that somehow make it possible to enlarge their playing field and opportunities. We shall return on this shortly. The other pattern (welfare without representation) is the most intriguing with respect to consolidated models of collectively mediated industrial relations. To be stressed especially is the fact that it does not seem possible to simply speak in this case of paternalism and unilateral initiative by management. On the one hand, in fact, the index of workplace welfare (see Note 1) includes the propensity of firms to resort to direct negotiation with workers on pay levels, rather than determining them unilaterally. On the other hand, as said, characteristic in this case is a participatory decision-making style, sometimes supplemented by informal agreements. While in the previous positive case for workers, the aspect to explain was the possibility of collectively mediated efficient labour relations (i.e. able to obtain good results), given the small firm size, what requires explanation in this case is the possibility of good labour relations—also in the absence of representation. To continue our reasoning usefully, we should now turn to the question of informality and formality in employment relations, as well as

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that of the company’s relations with the external environment. We do so on the basis of the results of the qualitative analyses conducted by the case studies (see Chapters 3–5).

Informality and Formality It has been observed that the propensity to apply logics of informality in the case of small firms and, vice versa, those of formality in the case of large firms, reflects differences in the nature of the uncertainties that firms face and hence in their employment relations (Storey and Sykes 1996). For small firms, this—above all—is an external uncertainty associated with the low levels of control over the environment in which they operate. Their success, in fact, is more closely tied to their ability to respond to—rather than shape—their marketplace over the short term. This is why it becomes fundamentally important for them as they manage their work (the variable that they are best able to control) to resort to direct, not very standardised interactions, characterised by informality and face-to-face relations, in the course of which changes to circumstances can be sought and negotiated. Large companies, on the other hand, which have greater control over their external environment, suffer primarily from internal uncertainty: that is, from the distance between those who take decisions and those who carry out or respond to such decisions, and the ensuing problems with communication, disaffection with work, and the like. This is why it is fundamental that they have internal codified practices and procedures, based on formal, official rules and behaviours, that are known to everybody and can help reduce ­perceptions of unfairness. This point of view seems important to us because it underlines the positive, and not simply negative, reason for acknowledging more extensive use of informal practices and norms in the case of small firms. In other words, instead of stressing an absence (i.e. something that is lacking, that is not there)—as we are often more or less consciously induced to do as when we note, for instance, that recruitment does not take place through formal channels and practices—we are encouraged to disclose what is there: that is, a logic of action that differs from what

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is/was considered appropriate in the case of large firms. In this manner, we can overcome the more or less implicit assumption that the IR/ER reference model must be the same one that had been developed to regulate employment relations in large mass-production corporations—a model based on formal rules. In the case of small firms, in fact, it is not a given that systematic—or in any event more widespread—recourse to formal rules and procedures is correct or beneficial: certainly for the efficient operation of the companies, but maybe also—at least under some circumstances—for higher levels of satisfaction among the workers. Anyway, resorting to informal customs and practices that are more appropriate to the circumstances is facilitated by the distinctive features of social relations within small groups. Although just in exploratory terms, the qualitative analysis of the cases considered (see Chapters 3–5) enables us to analyse informality and formality in greater depth. That solutions based on formal rules are not the most appropriate in many cases—sometimes for both sides—seems immediately evident if, for example, one looks at essential company functions such as the selection of its personnel, the ways workers are hired and trained and the search for adjustments in the management of working hours (see especially Chapter 3). There is more to be said about this, however. One first aspect that should be more generally emphasised is that informality is not the same as a unilateral, uncontrolled approach by an owner-manager. Nor, on the other hand, is formality equivalent to an owner-manager’s increased willingness to take decisions with involvement of the personnel. As Storey et al. (2010) suggested some time ago, informality can be defined as being dominated by custom and practice, with an absence of written procedures, while formality is measured by the presence of written procedures and rules and policies to design, measure and regulate the employment relationship. As our qualitative investigations demonstrate, unilateral styles of conduct can be found in both cases, as can forms of conduct that are open to some form of involvement on the part of workers. This latter point had been noted by Ram (1994) when he wrote about negotiated order.

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Focusing once again on the logic of informality, even in the case of unilateral conduct—where owner-managers decide by themselves—we do not only find pure authoritarian impositions based on the exercise of power over subordinates. There can also be ways to confer benefits ­unilaterally. In this case, these might be bonuses added to the minimum compensation established by existing norms (as illustrated in Chapter 4), as well as gifts of other kinds: for instance, the tablet that the child of an employee needs, or a surprise payment of leave that was not supposed to be paid. Moreover, as far as informal negotiation methods—or, in any event, the involvement of workers—are concerned, the cases we have observed show that the possible alternatives are not just between individual negotiation/direct participation, on the one hand, or collective types of involvement through trade union representation, on the other. Informal representatives can also be involved, de facto: these are persons with long-term experience and knowledge of the firm who enjoy the trust of the owner-manager and workers (see Chapter 4). These observations bring us to the core of the issue of informality in employment relations: the conditions under which this informality may not be the same as the pure exercise of the owner-manager’s power to impose terms. As we have seen in the previous chapters, and as has been shown in the literature (Goss 1991), one fundamental condition is the level and quality of the skills and competences required of the workers—that is, their market power: the rarer and/or more crucial these skills and competences are, and therefore the greater the firm’s dependence on the workers whose active consent is needed, the greater the likelihood that informal types of relationship will be characterised by benevolence and/or a propensity for involvement and negotiation. Our cases have also shown, however, that one factor that may be added to or may replace those we have mentioned above is company seniority combined with trust. Above all, in small environments and/or those in which the organisation of labour is not based on a rigid predetermination of duties and functions, lengthy service in the company encourages the acquisition of experience and knowledge of the organisation and the development of relationships of trust, all of which tend to make these workers difficult to be replaced—even in the absence of high skill levels.

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In all these cases, the development of informal relations may prove not to be a disadvantage for the workers. For their part, firms gain the benefits associated with a form of management which is not—or only in a limited way—constrained by external rules, which is easier to adapt depending on the circumstances, and which is based on consent and trust. As has been noted in the previous chapters, this can also be especially advantageous in times of economic difficulty, when a firm can more easily scale down its workers’ legitimate expectations through communication and discussions without this giving rise to protests. One might imagine that the social corporate dynamics that enable the development of the employment relations model that we have previously defined as direct paternalistic/participative management, in which workers are able to enjoy comparatively superior conditions of welfare and security despite the absence of traditional collective representation, may find their foundation above all in these various informality mechanisms. Conversely, in cases where the conditions that make the adoption of informal relations characterised by benevolence and/or a propensity for involvement and negotiation with workers advantageous for a firm are not present, it is likely that in the absence of a trade-union tradition of collective representation, a purely unilateral and authoritarian employment relations model will tend to prevail. From a more general perspective, however, it should be noted that the main limitation of informality, even if it may favour (certain) workers, is that it encourages the emergence of discretionary conduct without being able to guarantee sufficient levels of overall fairness. To tackle the risk of arbitrary decision, and therefore the lack of systemic fairness, one may therefore be induced to shift to a formalisation of procedures and rules. The logic of formality, in fact, being based on a prior (and usually written) definition of the reference criteria and rules, which are therefore made objective and generally apparent, should discourage favouritism and arbitrary decision-making and thereby increase the fairness of the system. Conversely, its drawback consists in the impossibility—or at least difficulty—of taking all the circumstances into account beforehand, on the one side, and promoting a sufficiently flexible adaptation of the solutions when needed, on the other.

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Note, for example, the complaint by an owner-manager that it is impossible to adopt formalised methods for allocating bonuses based on criteria of individual attainment of results in a small firm (where organisation of labour must be based on a multi-tasking logic). On considering the previous chapters carefully, one easily notes a certain recurring discomfort about whether or not to use preordained, formalised mechanisms and procedures. On the one hand, they are clearly seen as not totally adequate for a particular productive situation while, on the other, they are perceived to be somewhat fairer. It is no coincidence that it is within this context of ambivalence that we can discover the useful purpose of referring to a collective actor which, in some way, is able to negotiate adaptations to the rules according to the circumstances, but on the basis of non-arbitrary principles. We might imagine that this is largely the case of the two preceding models, which we have defined as Ritual collectively mediated ER and Effective collectively mediated ER. They combine increased use of the logic of formality with the presence of a collective representative actor. In the former case, however, this cannot ensure truly effective action, while it can be successful in the latter case.

Between Inside and Outside Our case studies have also shown that another way of going beyond the limitations and issues associated with the pure formal/informal alternative is to enlarge the horizons, or the playing field (Wever 1998), beyond the specific boundaries of the firm. We have seen in the previous chapters, and especially in Chapter 5, that relations between small firms and the outside can develop according to a broad variety of relationships that is more extensive than the one customarily considered in the international literature. If we adopt a criterion—albeit an approximate one—of closeness to or distance from a company, it becomes possible to identify relations with familial and local communities, with other companies in the area (under the form of districts, networks, and the like), with trade associations, or local workers’ representation organisations, with consultants and other

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parties with know-how or other resources useful for the firm, with local institutions and governments, with external regulatory frameworks (as multi-employer collective agreements, laws, international rules) and other companies elsewhere, both nationally and internationally. This complexity is especially significant in a territorialised and institutionally dense economy such as Italy’s, but with the due differences it regards all economies. One initial way of looking at these relationships is to highlight how, and to what extent, they constitute opportunities from which small firms can acquire benefits and resources for the effective operation of their organisation—and, directly or indirectly, for the effective management of their personnel: resources which are all the more important as they are difficult to find or to develop independently within the company. Conversely, one may also point out the extent to which they cause constraints on the liberty of firms to act independently. Resources and assets may be tangible or intangible. Tangible resources and assets can take the form of access to credit facilities, pensions and supplementary health care; training for workers and management; support for employees’ income in the case of lay-offs; contributions for technological innovations; improvements in workplace safety; participation at trade shows and events; assistance from trade unions and help with resolving bureaucratic and administrative matters, conciliation and mediation services; and many others. Intangible resources and assets may be in the form of social capital, trust or connectability, which make up the immaterial, soft aspects of those local collective competition goods that have been the subject of important research and reflections for some time now (Crouch et al. 2001, 2004). Constraints may be the result of dependency relations or negotiation with contractors, suppliers or customers; or of the presence of normative frameworks—contractual, legislative, or arising out of international regulations—that establish standards with which even small firms must comply to avoid the risk of slipping into the more or less illegal informal economy. As we have underscored on several occasions in the previous chapters, especially with reference to the national collective sectoral agreement, both the requirements arising out of relations with other companies

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and the restrictions established by the relevant normative framework can constitute real impediments that may drive companies to adopt less than optimal forms of conduct and even cease business activities; conversely, they may act as “beneficial” constraints (Streeck 1997) that “force” the adoption of modes of conduct that at the distance turn out to be more advantageous than those that the company would have adopted of its own preference. There is, however, a further way of looking at these relationships. In fact, our investigations suggest that these relations with the outside world can also be interpreted in a manner that goes beyond viewing them as an external source of resources and limitations that should or should not be internally used, or referred to or not (when it is possible to choose), based on convenience and the company’s vision or strategy. They also can be interpreted as a broader environment within which firms—consciously or not—move, or from which they can withdraw, at least partially. If we look at the relations with the outside world from this angle, which corresponds to an opening up or expanding a firm’s boundaries, the outcome can be a redefinition of both the firm’s dimensions and logics of conduct. As far as the former aspect is concerned, the more a firm is part of broad, multiple relational networks with other public or private actors, the more we can expect that it will tend to act by internalising resources and pressures from outside its own formal perimeter and will de facto end up behaving as if it were larger. The recurrent observation that there is a greater tendency towards dynamism and a more participative management structure when a firm belongs to broader corporate networks (see Chapter 2) seems to follow this hypothesis. As regards the latter aspect—i.e. the influence on a firm’s behavioural logics—more or less stable contacts with other actors as well as the influence of normative frameworks external to the firm (and the pressures arising from them) can also lead to the internal dynamics of informality and formality being redefined. We have seen previously that the role of a collective labour representation agency can be significant when it comes to combining and harmonising, so to speak, the adaptive benefits of informality with the search for greater fairness that is associated

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with more rigid formal rules. As emerged in the previous chapters, this concerns not only possible relations with a trade union within the company, but also with unions externally. It is important to note here (see Chapter 2) that there tend to be more positive assessments of the ability to cooperate outside the company—between social partners, between local governments and social partners—where the companies concerned have had contacts with local unions (whereas they are not significantly associated with belonging to employers’ associations). Otherwise put, within barely formalised frameworks, more fluid relations (and possibly therefore greater cooperation) can be facilitated by interaction on the part of firms with representative organisations that mediate labour interests, including on the outside. Another example can be found in the role played by external professionals and consultants whom companies frequently contact to address issues concerning the management and regulation of labour that they are unable to handle internally. For our purposes, their contribution, by referring to the existing normative frameworks, will tend to reduce tendencies towards discretion and increase the level of isomorphism in the conduct of individual firms (see Chapter 5). One might say, therefore, that they perform de facto, at a different level, a formalisation function of employment relations. Another example that has been discussed in detail in the previous chapters is the role played by the national collective agreement in reducing arbitrary decisions and harmonising behaviour. In conclusion, the interplay between the inside and outside can take concrete form in the acquisition of external resources, or in practices of adaptation that to a greater or lesser degree conform with the pressures or requirements from the outside to which an individual company is subject. It may, however, also translate into behaviours of looking and moving outwards: in these cases, the firm will expand its range of action and/or will act at different levels, entering into more or less stable relationships with other actors. In both situations, the tendency towards informality that is typical of small firms, to a greater or lesser degree, is transformed, redefined or mitigated without, however, reaching the levels of the formal employment relations models that are—were?—typical of large traditional companies.

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We should also note that our data (see especially Chapter 2) have demonstrated that the use of outside services by firms can occur regardless of whether a collectively mediated form of human resources management has developed on the inside. In other cases, by contrast, the extensive use of a multiplicity of external opportunities to develop the company adds to negotiations and social dialogue within it, however, limited they may be. There are also firms that remain isolated and make no use of external resources. Also, from this point of view, behaviours are not homogeneous and a multiplicity of patterns can be highlighted (see Chapter 5). We should also briefly point out that, when there is recurrent use of tangible or intangible external resources—especially where there is strong and stable integration in the local context—it may be that this use ends up by seeming to be natural and ordinary. It should come as no surprise, therefore, that the firms we interviewed often undervalue the role of local institutions, even in cases where they have made use of their services.

Beyond the Small Firm To sum up, our empirical investigation has enabled us to observe the various ways in which employment is regulated in small firms and has made it possible to offer greater detail on the topic of informality and formality in employment relations, in two different directions. First, we have seen that what may lie behind the “informality” label concerning relations within a firm, in itself, is more varied and more detailed than had been expected. We have also seen that enlarging the vision beyond the firm’s boundaries, resources—both tangible and intangible such as laws or agreements—that change the basis of calculation of what is convenient for a firm can come into play and enable more formalised solutions for regulating employment (which might be called quasi-formal solutions) to be attained. Informality and formality are not total alternatives, therefore: it is rather a question of degrees, as was noted some time ago by Ram et al. (2001), albeit using a different approach.

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Second, we have seen that informality in employment relations gives a firm unquestionable benefits associated with more rapid adjustment to the uncertainties of the outside environment, and that the informal arrangements arising therefrom can also offer benefits for employees. This may be the case, for example, when employees are difficult to replace or when they have long-standing ties to the firm and enjoy its trust. In these and other cases, workers can obtain or negotiate personalised benefits (such as autonomy, flexible working hours and leave). It has also been seen, however, that informal arrangements involve the risk of discretion and therefore of discrimination in terms of the general fairness of the system, even when they are welcomed by (some of ) the firm employees at a given time. In fact, the general dilemma between flexibility for the firm and security or fairness for employees that is an indelible feature of any system of employment relations (Sisson 2010) also arises in the case of small firms. This may reintroduce—perhaps in an unexpected manner—the importance of a firm’s having a collective actor available which can represent the workforce and negotiate the most appropriate ways to partially reduce the discretionary nature of informal arrangements on a case-by-case basis, without the rigidity of formal rules and requirements. Our case studies, in most of which there is no trade union presence within the company, reveal a variety of positions taken by ownermanagers on this issue, which should be analysed in more detail: some respondents claimed that they had no problem dealing with trade unions; in one case, it was stated that there had been no trade union presence under the previous management, but that it had been introduced on the initiative of the interviewee. There are respondents, on the other hand, who reported that a trade union was never present in the company (luckily for the employees, who did not need one…). In various cases, however, reference was made to informal types of representation by expert workers who had emerged as a kind of natural leaders. This suggests that, for many firms, it is helpful to have even an unofficial channel through which employees can express their voices, over and above direct individual contacts. Ultimately, therefore, all these observations offer insights into how socially acceptable, positive models of employment relations

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(for both sides) can be imagined. But is this an argument that applies only to small firms? In our introductory chapter, we stated that—within the general framework of the debate on the future of employment—the approach we intended to adopt would move beyond the two main strands that characterise recent studies on human resources management in small firms: the one that tends to “denature” small firms, finding them indistinguishable from larger firms; and those that acknowledge their “specificity” and seek to uncover their particular dynamics (Curran 2006). It was our intention, actually, to reverse the procedure, the idea being not so much to investigate the extent to which small firms are similar to or dissimilar from large companies but, rather, how far observing what takes place in small firms enables a better understanding of the tendencies that characterise the entire world of work, including that of large companies. Most of our previous observations may have broader validity, in fact, starting from the issue of the propensity to rely more on the logics of informality or formality of relations. We first pointed out that the differences between using one or the other logic of action have been linked by Storey and Sykes (1996) to differences in the nature of the uncertainties faced by companies. In the case of small firms, this is above all a question of external uncertainty: owing to the low level of control that they exert over their external environment, from which they receive powerful pressures to which they must adapt flexibly, they tend to use employment relations based on the logic of informality within an internal environment, in which face-to-face relations predominate, allowing adjustments according to circumstances. Conversely, in the case of large firms, which have greater control over their external environment, the issue is above all one of internal uncertainty: owing to their low level of control over their internal environment, which is characterised by more impersonal relations, problems of communication and disaffection in the workplace, large firms are induced to adopt employment relations based on the logic of formality (and therefore on codified practices and procedures deriving from formal, official rules and conduct defined in advance, and of which everyone is well aware).

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This distinction undoubtedly made sense when production was dominated by large, vertically integrated corporations that were able to dominate the external environment, especially their outlet markets. Does this still remain true today, however, in an era that—as we said in our introductory chapter—is typified by productive fragmentation, where firms have (for the most part) resized, have powerful interconnections within globalised contexts and are constantly seeking more efficient ways of responding to frequently unpredictable fluctuations in demand—or at a time when they must continuously review and renovate the ways in which they offer their services to demanding consumers? In reality, the difficulties (and sometimes the profound crises) encountered by the traditional institutions of employment relations— starting from collective bargaining—which have been discussed by a wide range of studies on the dynamics of the globalised capitalism to which we referred previously, and the debate on the decline and possible revitalisation of trade unions, reveal the substantial inadequacy and insufficiency of the regulatory models that had been structured according to large company paradigms and enjoyed their most extensive development during the Glorious Thirties of the last century (Regalia 2017a). The need to be able to adapt, in a flexible manner, to external requests, pressures and constraints does not appear to be any less urgent today for larger firms than it is for smaller ones. That informal solutions, even based in part on direct relations with workers, may be somewhat more appropriate to current circumstances is a realistic finding that does not apply just to medium-sized and large firms in which trade unions are absent or where they are opposed. In an interview by this author with the industrial relations manager of a large Italian employers’ association for a manufacturing category (famous for its tradition and practice of good industrial relations, based on a firm belief in the positive role of trade unions), the interviewee made the claim that there was a need to carve out a space for informal internal relations with employees that would sit alongside the constant dialogue and negotiations with the workers’ collective representatives.2 After all, for many years, empirical research on employment relations in the workplace

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in Italy has made it possible to shed light on the practice of informal understandings between trade union representatives and management that are less demanding—that is, less binding—and better adapted to external circumstances than are formal collective agreements. Even more so, broad-based recourse to various methods of informal regulation based on logics of both unilateral imposition and individual or collective involvement and negotiation will be a feature of employment relations in companies in which recognised collective representation is no longer or has never been present. These and other aspects of a reflection on the potential of informality in employment relations may prove to be especially interesting in the case of private service companies, where often trade unions have never been introduced. More generally, for a reflection on employment relations that does not simply record what already exists, also in the case of larger firms (as we have previously said with regard to smaller ones), the crucial question, rather, becomes the conditions under which recourse by firms to informal means of acting and intervening is not reduced to a merely unilateral exercise of power. In general, one might imagine that this is more likely to be the case, the more the firm needs to ensure the active—and not simply passive—consent and involvement of the workforce. Depending on the particular case, this may be contingent on the type of relationship with the market (and therefore the degree of flexibility required from personnel); on the type of productive and organisational strategy adopted (and therefore what is expected from the workforce); on the characteristics of the personnel (their qualifications and how easy or difficult it is to replace them) and, possibly also, on the management culture and values. In the absence of these conditions, even in larger firms the gloomier side of informality can emerge. But even if these conditions are present—and notwithstanding the fact that the use of informal means of regulating labour might also be beneficial for workers, or at least some of them—it is also true that the risks of partiality, possible discrimination and lack of fairness in the regulatory system still remain. Indeed, in the case of larger firms, these risks, or limitations of regulation based on the logic of informality, are likely even higher and more critical due to the higher complexity of the social systems of these companies (given their size). This means that

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there is a greater need for managerial strategies to deal with the social consequences of informality in these circumstances. This makes a strong new case for the role of—formal—rules to reduce the negative consequences of the informality that firms even more require. However, these formal rules need not be the same as those sought to reduce uncertainty in the past (by attempting to foresee in advance every possible situation where an intervention might prove necessary). On the contrary, to be beneficial, these rules should aim at identifying shared and socially acceptable solutions for tackling problematic situations as they emerge according to a logic of procedural rationality, instead of a priori. As in the case of small firms—and to an even greater extent—all this recreates a space for the role of collective representation with which rules that are appropriate for the circumstances can be negotiated, and which should be involved in the joint management of the flexibility the firm requires. These may be in the form of only slightly formalised arrangements whereby the workforce gets a voice, as has been disclosed in our cases (see, in particular, Chapter 4), and also of a trade union. Our case studies have shown that the attitudes of small firms’ ownermanagers towards trade unions are varied and ambivalent. We found negative assessments (where the union is openly seen as an obstacle to the efficient operation of the firm) and a possibly greater number of opinions of its substantial irrelevance or extraneousness (the union has nothing to say, it is pointless, or there is no need for it). On occasion, the assessments were inspired by a sober realism (the trade union serves in cases of corporate crisis as a go-between for obtaining benefits and support), or—albeit more rarely—they were very positive (union relations are not viewed as a problem but as an opportunity for the flexible management of the firm). In any event, it is not the trade union with a powerful, structured role within a firm, as would have been typical in the traditional model of employment regulations as practiced by large companies, that is being considered. It has always been like this in small firms, but is it not perhaps increasingly the same also in larger ones? In both cases, the role of trade unions in a firm can be a useful means of simplifying the process of adapting work to productive requirements in a sufficiently fluid and flexible—as well as a socially positive

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and acceptable—manner and of contributing to increasing the fairness of the system. Of course, a trade union may not be ready or willing to adopt a line of action based, not so much on a joint definition of uniform rules that are supposed to be valid for all, as it is on a continuous search for rules aimed at protecting the various interests of workers who are more different from one another than they once were, in a more differentiated and softer way. Nor is it inevitable that a firm—whether it be small or large—will be interested in investing, or decide that it is convenient to invest, time and resources in relations with an organisation that has also been weakened by a decreasing following among workers (a phenomenon that, with few exceptions, is common to all trade unions in developed countries).3 In fact, as we have seen, data from the survey and qualitative investigations presented in Chapters 4 and 5 have shown that trade unions are present in small firms in a limited number of situations, and that they seem to be in a position to be able to carry out their role effectively in an even smaller number of cases. Further, the data on the trends towards a decline in union membership and collective bargaining coverage in highly industrialised countries (Baccaro and Howell 2017) indicate that this is not only true of small firms. It comes as no surprise, therefore, that small firms tend to resolve their problems of compliance with external rules and, with a greater or lesser degree of awareness, those of fairness, by relying on external consultants. Nonetheless, in a certain—albeit limited—number of cases, trade unions appear to be able to perform their positive functions within firms. Moreover, as we have seen, they can also carry out other functions outside firms (see also Regalia 2017b). These include the joint definitions of normative frameworks with broad-based validity, collective negotiations at territorial level, and actions as a facilitator of access to the external resources (both tangible and intangible) provided by administrations, governments and other public and private institutions. What is certain today is that, as we have said, the importance of being able to access external resources to support productive development and good relations with labour no longer applies mostly to smaller firms because they are not able to secure them independently due to their small size. It applies to most firms, as the external pressures they

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encounter gradually increase. These pressures include market volatility, the need to keep pace with technological-productive innovations, the increasing numbers of controls and requirements of compliance with standards established by supranational bodies and agencies, changes in the laws on the labour market, and the like. All this prompts unprecedented reflection on the future prospects for work regulation. It is no longer possible to relegate such an issue to a totally internal matter for a firm, after it has acquired the resources it needs to operate from the external market (see Chapter 3). Especially in Chapter 5, we discussed the multiplicity of relations with the outside and the important role that actors other than those traditional in the industrial relations field can play in the development of a firm and, as well, the efficient regulation of employment relations: trade unions, therefore, but also a far from negligible variety of other organisations and institutions of various kinds.

For a New Perspective on Employment Relations In light of the foregoing discussion, it is apparent that the field of employment relations is becoming a land of uncertain borders during this phase of capitalism, one that largely remains to be explored. And yet the exploration that we have conducted by focusing on employment relations in small firms suggests that we can acquire a more adequate idea of them if we imagine such a field as one characterised by the combination of two fundamental tensions: that between informality and formality in the definition of rules and practices and that between closure to the inside and openness to the outside in identifying the range of action and acquisition of the resources necessary for regulation. In other words, we may provisionally sketch the outlines of this uncertain field if we combine, on one side, the propensity of firms to privilege the logic of informality or that of formality and, on the other, their propensity to seek to remain as enclosed as possible within their own perimeters—or to open up and take root in the broader external environment (see Fig. 6.1).

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Fig. 6.1  The (new) field of employment relations

But is this new terrain for employment relations, or is it instead a different way to depict, and primarily to conceive, the diverse dynamics of relations between the agents and institutions involved in the task, never completely fulfilled, of regulating labour with general validity? Certainly, the scheme corresponds to a simplification of the reality, but one that is useful as a starting point for exercising the imagination towards a more inclusive and integrated understanding of the various models and practices of employment relations—and to be used, we hope, for developing empirical research programmes. Meanwhile, if we start breaking down the two lines of tension into low and high degree of formalisation and into low and high degree of openness/exposure to the outside, we obtain two dichotomous variables that, combined, engender four ideal types, as in Fig. 6.2. The first (characterised by low levels of both formalisation and openness/exposure to the outside) is typical of cases in which work is unilaterally and authoritatively regulated by a management that remains substantially isolated from the outside. This is the model of many small businesses, as we saw earlier when commenting on Table 6.1.

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н Fig. 6.2  Patterns of employment relations between formality and informality and between inside and outside

But it is also the model of many medium-large firms, for example, in the low-skilled sectors of private services, and in general in those whose workers have low-market power and labour representation organisations do not yet exist or are ineffectual. To the second type (high formalisation and low degree of external exposure) can be associated the traditional, paradigmatic model of industrial relations, the one especially typical of large companies during the hegemony of the Fordist production model in the Glorious Thirties. It is characterised by the strong presence of a labour representative organisation within the firm, which pushes towards a high formalisation of rules, within a more or less elaborate external regulatory framework, on which it seeks to depend to the least possible extent—and which constitutes, as has been said (Streeck 1997) a “beneficial constraint”. This, as we know, is the model to which we have become accustomed in considering the appropriate, or at any rate preferable way, to regulate work, the one to be imitated or at least seek to approach even in new work situations. Needless to say, this is not the dominant model in the case of small firms—it never was nor could be. But neither is it the dominant model in many emerging work situations, characterised by high interaction with/dependence on volatile market trends, the vital

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connection within a network of companies in movement, and sometimes the evanescence of the entrepreneur as in the case of the platform economy. In these and other cases, not only is this not the model, it would not be the desirable one. The third type (high informality and close relations with the outside) is what characterises some of the most dynamic small firms (see Chapter 5), and with which can be associated the economy of flexible specialisation, the territorially widespread production of districts (Piore and Sabel 1984; Pyke, Becattini and Sengerberger 1990), of industrial or business clusters (Porter 1990) and, in general, of localised production systems (Whitford and Potter 2007). Many of the emerging work situations can also be linked to it. In all these cases, the necessarily high production flexibility, facilitated by the informality of relations, combines positively with a multiplicity of opportunities and resources—tangible and intangible— variously available on the outside. It is therefore the quality of the local social, administrative and political environment that makes the difference, as has been highlighted by the literature on local collective competition goods (Crouch et al. 2001, 2004). Finally, the fourth type (high formalisation and high degree of rootedness/exposure to the outside) is perhaps the most difficult to define, but also the one that can best indicate ways to imagine virtuous models of labour regulation. They should combine a sufficiently elaborate framework of rules capable of limiting arbitrariness and discretionality in corporate decisions, but without the uniformity and a certain rigidity often characteristic of the second type, and a fruitful rootedness in the surrounding social, economic and political environment (from which to draw tangible and intangible resources able to foster the efficiency of the firm and the well-being of its workers, as in the previous model). The group of small firms identified as “rooted firms” in our investigation (see Chapter 5) can be associated with this model. In fact, these are companies deeply rooted in the outside environment, which operate successfully on competitive national and international markets, with an above-average trade union presence (which favours their positive attitude towards formalisation of the rules), and which maintain relations with local institutions, using their resources.

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On the basis of the data available, it is not possible to go further. Further empirical research is required to specify in greater details the dynamics between informal and formal and between inside and outside the firm beyond the specific field of small businesses, in order to broaden our way of conceptualising and interpreting the prospects for employment relations more in general. To this, we will add just a couple of comments. The first relates to the actors. As we have already said, they are no longer simply the traditional industrial relations actors. These, especially the trade unions, may even not be present, or may have an indirect role, as when they negotiate a multi-employer contract that has an ­important—but frequently not socially perceptible—effect (and therefore, de facto, socially insignificant). As for the many potential other actors, we must stress their heterogeneity: they are both representative and nonrepresentative players, whose logic of interaction may be intrinsically contradictory and needs to be closely investigated. Our second observation concerns outcomes: to be stressed in particular is that there may be positive and socially accepted ways of defining the rules of work that arise with no collective representation (at least in the way that we have been accustomed to conceiving it). This opens up avenues for analysis and research on the logic and methods of regulatory processes. Finally, if we look around us today, we see that it becomes necessary to add that firms, as actors, can change their nature and escape their solid, defined space to become virtual, so to speak, taking on the physiognomy of a platform, for instance, or becoming the hub of a network. This was not our starting point, and it is not possible at this stage to enter into a discussion that requires a quite different framing. However, awareness of this issue, changing expectations, leads us to stress, from an initially unexpected perspective, how important it is to continue to pose questions on the best ways to regulate labour. This turns out to be—or rather, is confirmed to be—a central question of fairness and justice, one that leads us back to the importance of socially shared rules.

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Notes 1. Empirically, the variables used to build the first dimension were the presence in the workplace of union members and/or workers’ representatives. The index of labour representation was dichotomised by distinguishing between firms with no union membership or worker representation and firms with at least one of these forms. The variables used to build the second dimension regarded a higher generosity in wages determination (i.e. individually/collectively negotiated extra pay beyond national minima); the provision of additional economic bonuses (such as productivity incentives); the endowment of company welfare programmes; and the possibility for workers to contact management on their problems. The obtained index of workers’ security and welfare was dichotomised by considering with low security and welfare firms with a value equal to, or lower than average and with high security and welfare those with values above the average. 2. This interview was conducted as part of the research programme entitled The Impact of Industrial Relations Reforms on Collective Bargaining in the Manufacturing Sector, which has involved various European countries (Colombo and Regalia 2016). 3. For some slightly different considerations on the Italian case, see Regalia and Regini (2018), in which data are also provided on other developed countries.

References Baccaro, Lucio, and Chris Howell. 2017. Trajectories of Neoliberal Transformation: European Industrial Relations Since the 1970s. Cambridge: Cambridge University Press. Barrett, Rowena, and Alistair Rainnie. 2002. “What’s So Special About Small Firms? Developing an Integrated Approach to Analysing Small Firm Industrial Relations.” Work, Employment and Society 16 (3): 415–431. Bordogna, Lorenzo, and Roberto Pedersini. 2001. “Relazioni industriali e gestione delle risorse umane nelle piccole imprese.” Giornale di Diritto del Lavoro e di Relazioni Industriali 90: 2.

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Colombo, Sabrina, and Ida Regalia. 2016. “Changing Joint Regulation and Labour Market Policy in Italy During the Crisis: On the Edge of a Paradigm Shift?” European Journal of Industrial Relations 22 (3): 295–309. Crouch, Colin, Patrick Le Galès, Carlo Trigilia, and Helmut Voelzkow, eds. 2001. Local Production Systems in Europe: Rise or Demise? Oxford: Oxford University Press. Crouch, Colin, Patrick Le Galès, Carlo Trigilia, and Helmut Voelzkow, eds. 2004. Changing Governance of Local Economies: Responses of European Local Production Systems. Oxford: Oxford University Press. Curran, James. 2006. “‘Specificity’ and ‘Denaturing’ the Small Business.” International Small Business Journal 24 (2): 205–210. Goss, David. 1991. Small Business and Society. Routledge: London. Guest, David, and Neil Conway. 1999. “Peering into the Black Hole: The Downside of the New Employment Relations in the UK.” British Journal of Industrial Relations 37 (3): 367–389. Mallett, Oliver, and Robert Wapshott. 2017. “Small Business Revivalism: Employment Relations in Small and Medium-Sized Enterprises.” Work, Employment and Society 31 (4): 721–728. Olson, Mancur. 1965. The Logic of Collective Action: Public Goods and the Theory of Groups. Cambridge, MA: Harvard University Press. Piore, Michael J., and Charles F. Sabel. 1984. The Second Industrial Divide. New York: Basic Book. Porter, Michael E. 1990. The Competitive Advantage of Nations. New York: Free Press. Pyke, Frank, Giacomo Becattini, and Werner Sengerberger, eds. 1990. Industrial Districts and Inter-Firm Cooperation in Italy. Geneva: International Institute for Labour Studies. Rainnie, Alistair. 1991. “Just-in-Time, Sub-Contracting and the Small Firm.” Work, Employment and Society 5 (3): 353–375. Ram, Monder. 1994. Managing to Survive: Working Lives in Small Firms. Oxford: Blackwell. Ram, Monder, Paul Edwards, Mark Gilman, and James Arrowsmith. 2001. “The Dynamics of Informality: Employment Relations in Small Firms and the Effects of Regulatory Change.” Work, Employment & Society 15 (4): 845–861. Regalia, Ida. 2017a. “Labour Regulation in Small Firms: In Search of a More Comprehensive Employment/Industrial Relations Paradigm.” Employee Relations 39 (3): 335–350.

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Regalia, Ida. 2017b. “Beyond Workplaces and Industries: Possibilities for Organized Action at the Territorial Level.” Comparative Labor Law & Policy Journal 38 (2): 233–256. Regalia, Ida, and Marino Regini. 2018. “Trade Unions and Employment Relations in Italy During the Economic Crisis.” South European Society and Politics 23 (1): 63–79. Sabel, Charles F. 2009. “Is the Small Firm Still a Category of Analysis?” In The Role of SMEs and Entrepreneurship in a Globalised Economy, edited by Anders Lundström, Expert Report No. 34. Stockholm: The Globalisation Council. Sisson, Keith. 2010. “Employment Relations Matters.” Research Studies and Reports, Paper 29. ILR Collection. Accessed 23 June 2019. http://digitalcommons.ilr.cornell.edu/reports/29. Storey, David, and Nigel Sykes. 1996. “Uncertainty, Innovation and Management.” In Small Business and Entrepreneurship, edited by Paul Burns and Dewhurst Jim. London: Palgrave. Storey, David J., George Saradakis, Sukanya Sengupta, Paul Edwards, and Robert A. Blackburn. 2010. “Linking HR Formality with Employee Job Quality: The Role of Firm and Workplace Size.” Human Resource Management 49 (2): 305–329. Streeck, Wolfgang. 1997. “Beneficial Constraints: On the Economic Limits of Rational Voluntarism.” In Contemporary Capitalism: The Embeddedness of Institutions, edited by J. Rogers Hollingsworth and Robert Boyer. Cambridge: Cambridge University Press. Wever, Kirsten S. 1998. “International Labor Revitalization: Enlarging the Playing Field.” Industrial Relations 37 (3): 388–407. Whitford, Josh, and Cuz Potter. 2007. “Regional Economies, Open Networks and The Spatial Fragmentation of Production.” Socio-Economic Review 5 (3): 497–526.

Index

A

Acs, Zoltan 4 Afonso, Alexandre 138 Anderson, Christopher 154 Arrowsmith, James 16, 167 Atkinson, John 98 Australia 4, 10 Autocracy 182 B

Baccaro, Lucio 16, 134, 228 Bacon, Nicolas 13, 90, 107, 155 Bagnasco, Arnaldo 14, 36, 103, 166 Banfield, Edward 196 Barrett, Rowena 12, 132, 156, 166, 207 Bazeley, Pat 197 Becattini, Giacomo 14, 15, 166, 232 Bellandi, Marco 166

Beneficial constraints 231 Berger, Suzanne 7, 8 Bilateral bodies 42, 52, 78, 80–83, 85, 104, 167, 183, 189, 197, 212 Birch, David 3 Blackburn, Robert 3, 13, 96, 97 Bleak house 209, 210 black hole 209 Blyton, Paul 63 Bolton, John 11, 131 Bolton report 5 Bordogna, Lorenzo 209 Bottazzi, Giovanni 12 Brock, William 3 Brusco, Sebastiano 166 Bulfone, Fabio 138 Burroni, Luigi 35, 36, 42, 173 Business owner 11, 12, 40, 51, 106. See also Entrepreneur

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020 I. Regalia (ed.), Regulating Work in Small Firms, https://doi.org/10.1007/978-3-030-21820-1

237

238     Index C

Cardinaleschi, Stefania 135 Cardon, Melissa 132 Career 63, 75, 76, 95, 97, 98, 104, 106, 120, 126, 137, 151 career prospects 121 Carroll, Marilyn 54 Cella, Gian Primo 40, 134 Cersosimo, Domenico 179 Collective agents 208 Collective agreement company level collective agreement 84 cross sectoral collective agreement 13 national sectoral collective agreement 69 territorial collective agreement 78, 79, 85, 134, 228 Collective bargaining 18, 34, 40–42, 52, 66, 68, 72, 74, 77, 79, 85, 134–136, 157, 158, 167, 188, 213, 225, 228, 234 -coverage 134, 135, 228 Collective goods 166, 173, 194, 196, 197 Colombo, Sabrina 35, 36, 68, 138, 234 Company welfare 75, 76, 234 Conflict 5, 11, 16, 17, 66, 71, 95, 106, 119, 123, 125, 126, 137, 157, 182 latent conflict 97 management of grievances 126, 128 Consultants 125, 132, 135, 139, 154, 155, 157, 167, 173,

184, 186–189, 191, 192, 194, 195, 218, 221, 228. See also Human resource (HR) consultants Conway, Niel 209 Corò, Giancarlo 15 Cotton, John 64 Crisis management of the- 73, 74, 79, 119, 126, 158 Crouch, Colin 16, 90, 132, 166, 173, 219, 232 Cullinane, Niall 155 Curran, James 5, 6, 13, 19, 96, 224 D

D’Amuri, Francesco 135 De Santis, Stefano 135 Di Maggio, Paul 139, 157 Discretionary conduct 217 arbitrary decisions 217, 221 Discrimination 101, 104, 223, 226 Dismissals collective- 125 -protection 78 Doherty, Liz 13, 96 Dore, Ronald 3, 182 Dundon, Tony 100, 155 Duranton, Gilles 14 E

Ebbinghaus, Bernhard 39 Edwards, Paul 11–14, 40, 43, 90, 96, 97, 101, 105, 132, 156, 165, 166 Ellison, Glenn 14

Index     239

Embeddedness 22, 190, 195, 213 social – of the economy 10, 15 Emerging countries 4 Emmenegger, Patrick 16 Employee representatives 74, 142 Employer associations 82 Employment contracts agency work 56, 80, 111 non-standard- 55–57, 63–65, 111, 115, 127 permanent- 56, 65 temporary- 55, 56, 63–65, 80, 102, 103, 105, 110–114, 118, 145. See also Fixed-term Employment relations (ER) 6, 10, 12, 14, 15, 18, 19, 22, 33, 34, 39, 40, 50, 51, 63, 66, 70, 72, 75, 85–88, 90, 95, 119, 123, 124, 126, 128, 131–133, 139, 149, 151, 152, 154, 155, 157, 158, 166, 168, 191, 196, 205– 209, 213–217, 221–226, 229–231, 233 system of 5, 20, 34, 41, 68, 223 Employment security 208 Entrepreneur 90, 98, 135, 136, 140, 141, 151, 166, 168, 172, 174, 175, 178, 179, 181, 184, 186–188, 192, 195–197, 232. See also Business owner entrepreneurial choice 167 Erickson, Christopher 154 Ethnicity 14, 60, 96, 101 ethnic relationships 77, 96 European Union (EU) 4, 21, 36, 43

Evans, David 3 External actors banks 167, 184 Chamber of commerce 154, 167, 184, 185, 189, 194 research institutes 184 secondary schools 167, 184 universities 167, 184 External context 22, 108, 165, 167, 194, 195, 198 External resources grants 174 incentives to hire 168 training programs 174 F

Fairness 217, 220, 223, 228, 233 lack of 217, 226 Family 45, 50, 54, 96, 98, 101, 146, 165, 178, 179, 181, 182, 196 -members 179 Feltrin, Paolo 182 Fixed-term 56, 57, 111, 123 Flexibility external flexibility non-standard contracts 56, 57, 63–65, 127 outsourcing 57, 64, 118, 196 internal flexibility task flexibility 65, 74, 85, 115–117, 127 working time flexibility 55, 58–60, 113, 115, 118. See also overtime work Flexible specialisation 7, 14, 20, 35, 232

240     Index

Fordism 7, 18–20, 36, 37, 63, 231 Formality 132, 155, 213–215, 217, 218, 220, 222, 224, 229, 231 benefits from- 74, 221 formalisation 40, 217, 221, 231, 232 limits of- 96, 126, 218 Forth, John 13, 45, 50, 54, 97, 101 Fortunato, Vincenzo 182 Fox, Alan 155 Fragmented global production system 7, 8 Future of work 10, 18–20 G

Germany 7, 35 Gilman, Mark 13, 14, 96, 97, 101, 167 Giorgiantonio, Cristina 135 Glaeser, Edward 14 Globalisation 15, 16 globalised scenario vii Golden age of IR vii Goss, David 11, 13, 47, 50, 97, 122, 132, 149, 157, 216 Government 4, 38, 77, 177, 219, 228 local- 80, 87, 167, 173, 196, 212, 221 regional- 167, 173, 175 Granovetter, Mark 15 Green, Francis 154 Guardiancich, Igor 134, 157 Guest, David 209 H

Hall, Peter 35

Hancké, Bob 35 Hann, Agnes 98, 105 Harney, Brian 19 Harrison, Bennett 14 Harris, Richard 13 Havard, Christell 152 Helg, Rodolfo 8 Hillberry, Russell 8 Holliday, Ruth 14, 96, 101, 123, 132, 165 Holten, Ann 132 Hoque, Kim 13, 90, 107, 155 Howell, Chris 16, 134, 228 Human resource (HR) -consultants 125, 139, 179, 191. See also Consultants -department 139 -managers 51, 57, 83, 139 I

Industrial districts 10, 14, 15, 18, 20, 37, 38, 42, 77, 100, 166, 211 Industrial relations (IR) 3, 16, 41, 87, 133, 134, 152, 167, 173, 178, 184, 189, 192, 193, 198, 208–210, 213, 215, 218, 225, 229, 231, 233. See also Employment relations (ER) institutionalisation of- 16, 41, 134, 184, 189, 192 voluntarism in- 41, 134 Inequality 16 Informality benefits from- 132, 216, 217, 220, 223 informal practices 13, 55, 98, 99, 102, 208, 214

Index     241

limits of- 96, 126, 217, 226 spontaneous adjustment 11 vs. formal rules 11, 215, 223, 227 Ingham, Geoffrey 5, 11, 131 Institutions 13, 19, 21, 36–39, 42, 52, 77, 78, 81, 83–85, 88, 102, 127, 134, 138, 156, 166, 167, 173, 174, 178, 182–185, 189, 191, 192, 194–197, 206, 212, 219, 222, 225, 228–230, 232 J

Jackson, Kristi 197 Jaehrling, Karen 152, 158 Japan 35 K

Kinnie, Nick 132, 152 Kitching, John 13, 96, 97 Koukiadaki, Aristea 134 Krugman, Paul 8 L

Lakhani, Tashlin 152 Large firms 12, 35, 45, 50, 214, 215, 224, 225, 231 large mass production companies 9, 215 vertically integrated corporations 8, 17, 225 Leonardi, Robert 134 Leonardi, Salvo 134, 136, 157 Local collective competition goods 173, 219, 232

Local development 166 Longley, Robert 5 Luchetta, Giacomo 12 M

Mallett, Oliver 13, 14 Management style managerial autocracy 11, 131 participative 67, 68, 150, 151, 157, 209, 217, 220 paternalistic 209, 217 unilateral decisions 11, 154 Marginson, Paul 134, 152 Marlow, Susan 96, 97, 122, 124, 132, 152 Mass production 7, 14, 215 Matlay, Harry 50, 96 Meager, Nigel 98 Mezzogiorno 37–39 Micelli, Stefano 15 Mills, Karen 9 Moffatt, Mike 4, 6 Molina, Oscar 35, 134, 157 Morris, Jonathan 63 Moule, Chris 14, 63, 97, 122, 149 Mueller, Pamela 4 Municipalities 174 N

Negotiated order 11, 215 Nolan, Ciara 19 Nordic countries 35 Normative framework 51, 68, 90, 157, 219–221, 228 contractual 51, 219 international regulations 219

242     Index

legislative 219 Norton, Ann 13, 96 O

Olson, Mancur 207 Overman, Henry 14

Milan 23, 37, 116, 119, 168 Pescara 24, 188 Teramo 24, 121, 172, 187 Public administration 42, 46, 83, 87, 174 Pulignano, Valeria 16 Putnam, Robert 100, 104 Pyke, Frank 14, 166, 232

P

Patton, Dean 96, 97, 106, 122, 124 Pay 6, 13, 68, 69, 136, 140, 153, 168, 213 bonuses 140, 156 incentives 140, 156 pay for performance 168 Pedersini, Roberto 16, 134, 136, 157, 209 Performance 15, 43, 48, 53, 57, 59, 60, 62, 73, 74, 76, 78, 81, 82, 84–87, 115, 151, 152, 157, 158, 182 economic- 15, 43, 48, 50, 51, 53, 57, 59, 62, 68, 69, 74, 78, 80, 82–84, 86, 87, 152, 157, 206, 208, 211 occupational- 48, 49, 59, 68, 211 Piore, Michael 7, 14, 20, 35, 232 Pontusson, Jonas 154 Potter, Cuz 14, 232 Powell, Walter 139, 157 Productive fragmentation 3, 225. See also Fragmented global production system Provinces Bergamo 23, 116, 117 Catanzaro 24 Cosenza 24, 116 Florence 23, 24

R

Rainnie, Alistair 3, 5, 6, 11, 12, 77, 97, 122, 152, 166, 207 Ram, Monder 11–14, 43, 77, 90, 96, 97, 101, 105, 107, 132, 149, 154, 156, 157, 165, 167, 215, 222 Recruitment advertisement 104 informal- 98, 100, 101, 126 personal knowledge 100 private agencies 55, 102, 103, 105 public employment centres 102, 103, 105, 167, 184 self-candidature 55, 98 social networks 55, 104, 105 word of mouth 98, 100, 101, 104, 127 Regalia, Ida 18, 35, 41, 42, 52, 68, 79, 138, 208, 225, 228, 234 Regini, Marino 35, 36, 41, 68, 138, 173, 234 Regions Abruzzo 21, 24, 38, 39, 55, 61, 69, 81, 87, 89, 100, 172, 183, 188, 194 Calabria 21, 24, 38, 39, 44–46, 48, 55, 58, 59, 61, 69, 73,

Index     243

81, 87, 104, 133, 147, 174, 179, 183, 184, 194 Lombardy 21, 23, 37–39, 44, 48, 53, 55, 58, 59, 61, 69, 73, 81, 87, 89, 102, 133, 136, 146, 168, 170, 180, 183, 184, 194, 197, 211 Tuscany 21, 23, 38, 39, 44, 53, 55, 58, 61, 69, 81, 87, 89, 100, 103, 136, 169, 179, 180, 183, 194, 197, 211 Regulation of labour 10, 19, 34, 39–42, 51, 79, 89, 132, 134, 140, 143, 149, 151, 153–158, 165–167, 170, 178, 181, 184, 189, 192, 193, 196, 197, 221, 226, 227, 229, 232 of work 5, 16, 18–22, 86, 139 Relations with external environment 15, 77, 128, 208, 214 with outside 15 Remuneration. See Pay Renda, Andrea 12 Resources internal/external 86, 126, 166, 172, 174, 178, 179, 189–191, 194, 196, 197, 221, 222, 228 Rhodes, Martin 35 Robinson, Robert 12 Rubery, Jill 152 Russo, Margherita 166 S

Sabel, Charles 7, 14, 20, 35, 173, 205, 207, 232

Sanford, Jacoby 154 Scase, Richard 132, 149, 152 Schumacher, Ernst 5, 11 Sectors high-skill services 22–24, 44, 101, 104, 107, 109–111, 114–116, 119–121, 126, 127, 142, 146, 148, 150, 153, 170, 182, 191, 195 low-skill services 22–24, 103, 108, 114, 117, 141–143 made in Italy 22–24, 35, 44, 144, 171, 174, 190, 191, 195 Semi-structured interviews 22, 168, 174, 179, 181, 193 Sengupta, Sukanya 13, 14, 165, 215 Shaw, Eleanor 166 Skills 13, 44, 64, 65, 86, 96, 97, 100, 104, 105, 111, 113–116, 127, 132, 137, 147, 149, 173, 195, 216 Smallbone, David 3 Small firms definition 21, 99, 220 dependence of- 46, 47 growth of- 9, 12 quantitative relevance of- 5, 9, 20 social relations in- 96, 128, 206, 215 specificity of- 19, 173, 195, 224 typology of- 12, 35, 189, 195 Small is beautiful 5, 10, 131, 209 Social partners Assolombarda 183 CGIL 40, 159 CISL 40, 159 Confartigianato 175, 183 confindustria 40, 52 UIL 40, 159

244     Index

Social shock absorbers 48, 74, 79, 80, 125 Cassa Integrazione Guadagni (CIG) 174 wage support schemes 174, 178, 188 Soskice, David 35 Stanworth, John 5, 6, 13, 96 Stevens, Christopher 132 Storey, David 7, 105, 214, 215, 224 Storper, Michael 14 Streeck, Wolfgang 220, 231 Substitutability 47, 62 Survey 21, 22, 37, 48, 52, 76, 81, 86, 89, 96, 132, 135, 158, 170, 174, 178, 179, 181, 182, 184, 186, 189, 228 Sweatshop 11 Sykes, Nigel 214, 224

on-the-job training 96, 106–108, 110 Trigilia, Carlo 15, 35, 36, 90, 166 Tsai, Chin-Ju 12–14 Turner, Barry 13 Turnover 12, 21, 46, 48, 49, 59, 68, 73, 78, 88, 95–97, 108, 115, 119–121, 126, 150, 151, 190 U

Uncertainty 101, 227 external vs. internal 214, 224 United Kingdom (UK) 5, 10, 11, 40, 50, 90, 167 United States (US) 4, 6, 9, 10, 43 V

T

Tajoli, Lucia 8 Taylor, Stephen 98, 104 Terza Italia 37, 38 “Thirty Glorious” 18, 225, 231. See also Golden age of IR Trade unions external- 78–80, 123–125, 179, 180, 189, 212 -membership 52, 53, 58, 71, 78, 133, 228, 234 Training formal/informal training 96, 105, 107, 110 off-the-job training 105, 106, 108, 110, 211, 212

van Apeldoorn, Bastiaan 35 van Osnabrugge, Mark 12 Varieties of capitalism coordinated market economies (CMEs) 35, 36 liberal market economies (LMEs) 35, 36 mediterranean capitalism 35 mixed market economies 36 Viesti, Giancarlo 166 Visser, Jelle 134 W

Wapshott, Robert 13, 14, 206 Westhead, Paul 105, 108 Wever, Kirsten 218

Index     245

Whitford, John 14, 232 Wilkinson, Adrian 5, 6, 11, 100, 132 Workers’ Statute 40, 44, 54, 78, 168 Working time night work 59, 60, 66, 67, 115 overtime work 66, 67, 115 shift work 59, 60, 66, 67, 115 Work-life balance 132, 140, 146, 147, 149 Work organisation 13, 58, 61, 63–65, 67, 74, 97, 115,

131, 137, 140, 143, 144, 149, 150, 155, 180, 181 Wynarczyk, Pooran 105 Z

Zan, Stefano 182 Zeitlin, Johnatan 14, 166