Essays /

14720700810899239 Essay

Essay preview

Corporate Governance: The international journal of business in society Managing legitimacy issues in global supply chains: the case of the athletic footwear industry André Nijhof Dai Forterre Ronald Jeurissen

Article information:
To cite this document:
André Nijhof Dai Forterre Ronald Jeurissen, (2008),"Managing legitimacy issues in global supply chains: the case of the athletic footwear industry", Corporate Governance: The international journal of business in society, Vol. 8 Iss 4 pp. 506 - 517 Permanent link to this document:

http://dx.doi.org/10.1108/14720700810899239
Downloaded on: 14 November 2014, At: 15:41 (PT)
References: this document contains references to 43 other documents. To copy this document: [email protected]
The fulltext of this document has been downloaded 3166 times since 2008*

Downloaded by University of Plymouth At 15:41 14 November 2014 (PT)

Users who downloaded this article also downloaded:
Marie#Joëlle Browaeys, Walter Baets, (2003),"Cultural complexity: a new epistemological perspective", The Learning Organization, Vol. 10 Iss 6 pp. 332-339
Xiao Tong, Jin Su, (2014),"Exploring the personality of sportswear brands", Sport, Business and Management: An International Journal, Vol. 4 Iss 2 pp. 178-192 http://dx.doi.org/10.1108/SBM-08-2012-0032 Joseph M. Langmead, Ali M. Sedaghat, (2007),"INTEGRATING PROFESSIONALISM IN THE BUSINESS SCHOOL CURRICULUM: THE DEVELOPMENT OF A COURSE EXAMINING IMPLICATIONS OF THE FINANCIAL REPORTING CRISIS ON THE PROFESSIONALISM AND ETHICAL FRAMEWORK OF CORPORATE CONTROLLERSHIP AND FINANCIAL OFFICERS", Advances in Accounting Education, Vol. 8 pp. 135-157

Access to this document was granted through an Emerald subscription provided by 322519 []

For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information.

About Emerald www.emeraldinsight.com
Emerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.

Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. *Related content and download information correct at time of download.

Managing legitimacy issues in global
supply chains: the case of the athletic
footwear industry

Downloaded by University of Plymouth At 15:41 14 November 2014 (PT)

Andre´ Nijhof, Dai Forterre and Ronald Jeurissen

Andre´ Nijhof is Associate
Professor at the Nyenrode
Business University,
Breukelen,
The Netherlands.
Dai Forterre is based at
ASICS Europe, Amsterdam,
The Netherlands.
Ronald Jeurissen is
Professor of Business
Ethics at Nyenrode
Business University,
Breukelen,
The Netherlands.

Abstract
Purpose – This paper aims to explore new forms of control that can address the legitimacy problems of globally-integrated enterprises.
Design/methodology/approach – In a conceptual analysis the characteristics of the globally-integrated enterprise are used to put forward apt strategies of control. These proposals are examined and illustrated in a case study of the strategies in use in the athletic footwear industry. Findings – This paper argues that command-and-control strategies will be ineffective for globally-integrated enterprises. In order to behave like a global corporate citizen companies need to stress controls based on belief systems and interactive systems. Certain features of this shift in control are visible within the athletic footwear industry although many strategies in use are still based on thinking like a multinational.

Research limitations/implications – This paper is explorative in nature. More empirical research is needed to test the proposals this paper puts forward.
Practical implications – The results of this paper can be used as a framework to develop control strategies for companies working from a transnational perspective. Originality/value – The functioning of globally-integrated enterprises creates both tremendous economic possibilities as well as new problems of legitimacy. This paper is one of the first systematic attempts to provide a framework for dealing with these legitimacy problems and also serves as an illustration of this framework in the athletic footwear sector. Keywords Globalization, Footwear industry, Supply chain management, Legal process Paper type Case study

1. The globally-integrated enterprise
The globalization thesis maintains that our world is facing the progressive eroding of the relevance of territorial bases for social, economic and political activities, processes and relations (Crane and Matten, 2007, p. 17). If we apply the globalization thesis to the way business is organized in this world, we should expect the paradigm of the ‘‘multinational corporation’’ (MNC) with its peculiar territorial characteristics to be superseded by a new and truly ‘‘global’’ organizational form (Held et al., 1999). The ‘‘traditional’’ MNC is still dominated by territorial characteristics in several respects. Most of the world’s large MNCs and brands still have a clear national identity and foundation. Coca Cola is still largely perceived as an American brand, and Royal (!) Philips is clearly a Dutch company, even though most of its production takes place in East Asia and Eastern Europe. The dominant model for the MNC today is still the ‘‘hub and spoke’’ model, where the hub represents the company’s country of origin and where the headquarters are situated, and the spokes represent the company’s outlets and locally-operating companies on all continents (see McDonald’s, Starbucks, Unilever and Shell, for example), the ring of suppliers in other countries (see Airbus and IKEA, for example) or the international bundle of subsidiaries, joint ventures and investments (see Heineken and Tata, for example).

PAGE 506

j

CORPORATE GOVERNANCE

j

VOL. 8 NO. 4 2008, pp. 506-517, Q Emerald Group Publishing Limited, ISSN 1472-0701

DOI 10.1108/14720700810899239

Downloaded by University of Plymouth At 15:41 14 November 2014 (PT)

Following Palmisano (2006a, b) we put forward the concept of the ‘‘globally-integrated enterprise’’ (GIE) as the theoretical and practical heir to the MNC concept of thinking about the organization of business on a world scale. A GIE is not just characterized by its global operation; this is not a new phenomenon for many companies (Scholte, 2000). The predominant characteristic of GIEs is that state borders no longer define the boundaries of corporate thinking and practice in a radical way. Compared with the influential typology of multinationals by Bartlett and Ghoshal (1989) our conceptualization of the GIE comes closest to what they call the ‘‘transnational company’’. However, following Palmisano we believe that we should be more sensitive to the paradigmatically revolutionary innovation of a GIE type of company, when compared to an MNC. Palmisano, for instance, contends that the standardization of technologies and information processing facilitates integration of components from all over the world to such an extent that territorial base becomes irrelevant. Using Giddens’ terms we might say that the GIE represents a spatio-temporally ‘‘dislocated’’ form of business organization. The dislocation of time and space enables the development of value chains without a dominant system integrator, resulting in a network of rather loose customer – supplier relationships (Harzing, 2000). The GIE is a global organizational form of business without a hub and spokes, but with chains, made up of chains. At present many multinational companies still depend largely on sales within their region of origin. Rugman and Verbeke (2004) have shown that in 2001 only 9 of the 500 largest companies in the world were truly global in the sense that they each had at least 20 percent of their sales in Europe, North America and Asia. The vast majority still has on average 80 percent of their sales concentrated in only one of these regions. This is why Rugman (2003, p. 412) claims that the globalization of business does not exist. The rise of the Sovereign Wealth Funds also underscores the resilience of the territorial base as an important characteristic of world business. People are afraid that through Sovereign Wealth Funds (which are state-controlled investment funds) national governments might acquire too much influence over other countries’ strategic economic assets. When push comes to shove, the national unit of organization obviously still dominates our economic worldview. But this should not blind ourselves to important evidence to the contrary. To understand the functioning of GIEs the localization of sales and investments is of only relative importance. GIEs see the world as their working area and focus their strategy, management and operations on the integration of production worldwide. In order to estimate how many companies can be perceived as GIEs, especially deterritorialization should be taken into account (Scholte, 2000). However, empirical support for this is scarce (Rugman, 2003). Although in one of the most extensive studies Harzing (2000) was able to show that different types of multinationals exist, she could not demonstrate the relative importance of each type (see also Leong and Chin, 1993).

For this article the most important thesis is that the nascent shape of the GIE will increasingly prove to be a viable theoretical concept for understanding international business. At present, no single dominant model of the GIE has emerged, if it ever will. Just as multinationals exist in kinds, so too will GIEs. Their typological order, however, is likely to be that of a family resemblance, each individual company showing a specific individuation of a more general pattern (see also Harzing, 2000). Table I presents an overview of the characteristics of the GIE compared to more traditional multinationals – labeled as multidomestic companies by Bartlett and Ghoshal (1989).

2. New problems of legitimacy
In order to remain competitive, GIEs seek maximum freedom in choosing how and where they operate. At the same time, in order to perform efficiently at the local level, a certain degree of legitimacy is required from local stakeholders such as national or regional governments, workers, communities, and civil society organizations (Freeman, 1984; Donaldson and Preston, 1995). Legitimacy is understood as a ‘‘generalized perception or assumption that the actions...

Read more

Keywords

-06 -0701 -101 -111 -157 -17 -18 -192 -20 -22 -339 -36 -4 -40 -43 -46 -517 -610 -63 -64 -65 -7 -71 -8 -83 -89 -91 -94 /10.1108/14720700810899239 /10.1108/sbm-08-2012-0032 /14720700810899239 /authors /background/olympicreporteng.pdf /en/sustainability/reporting /press/ /reprints /responsibility 000 1 10 10.1108 100 101 103 111 12 122 127 13 133 135 14 14.95 1472 14720700810899239 15 169 17 177 178 18 184 19 1900 192 1970s 1975 1978 1980s 1984 1986 1989 1990 1990s 1993 1994 1995 1995a 1995b 1996 1998 1999 2 2/3 20 2000 2001 2002 2003 2004 2005 2005/2006 2006 2006a 2006b 2007 2008 2010 2014 204 22 235 24 250 250.000 257 26 267 28 290 3 30 31 316 3166 32 322519 33 332 338 35 350 376 392 4 40 409 41 412 42 43 448 449 45 46 466 492 5 5.1 5.2 5.3 50 500 506 507 508 509 510 511 512 513 514 515 516 517 53 560 571 574 6 6.831 60 600 63 65 657 69 7 700 704 705 73 8 8.7 80 82 821 85 88 9 90 91 95 954 97 a.m [email protected] a.w abil abl absenc abstract abus academi accept access accessori accomplish accord account achiev acquir across act action activ actor actual ad adam adapt addit address adida advanc advantag advis advisor affair afraid africa age agenc agency-l agent aggrav agreement aim airbus al ali allow almost alon alreadi also alter altern although america american among amongst amount amsterdam analysi andr andré annual anoth antenna antiglob anymor apparel appear appelbaum appli applic approach appropri apt arbitrari archiv area arena argu argument aris around articl ashfort asia asic aspect assess asset assign associ assum assumpt athlet attempt audit august author avail averag awar away b b-label b.e b.w baet balanc barrier bartlett base basil basketbal beckham becom behalf behav behavior behaviour behind belief believ benefit beset besid best better beyond bias big biggest billion blind blur bodi boger boncich book boost border boston bound boundari brand breukelen bring broad broader brought browaey build built bulletin bundl busi business-crit buttonhol buyer buyer-driven c.a ca call cambridg campaign cancel cannot capac capit captur care carri carrol case categor caus cent center central ceo certain certif chain chairman challeng chang channel chapter character characterist charg check cheng chin china chincilla choic choos chose cite citizen citizenship civil claiborn claim clash clear close closer closest cloth club co2 coca code cola collabor collect combin come command command-and-control comment commit committe commod common communic communiti compani compar comparison compens compet competit complet complex compli complianc compliant complic compon comprehens compromis concentr concept conceptu concern conclus concret condit conduct confront congruenc conscious consent consequ conservationist consider consist consolid construct consult consum contact contain contemporari contend content contest context contin continu contract contractor contrari contribut control controllership controversi convent convict coordin cope copi core corpor correct correspond cost could council count counter countri coupl cours craft crane creat credo crisi critic cross crossref crucial csr cultur current curriculum custom cut czinkota d d.b dai damag dame david deal debat decathlon decemb decid decis decision-mak deep default defin definit degrad degre deliv deliveri demand demis demonstr deni depart depend depth deriv design design/methodology/approach desir detail deterritori develop deviat diagnost dialog dichotomi differ differenti difficult digit digniti dimens direct directly-manag discuss disloc dismiss dispar dispers display dispos disrupt dissent distinguish divers do document doi dollar domain domin donaldson done dordrecht doubl double-edg dowl download dramat drive driven driver durham dutch dx.doi.org dx.doi.org/10.1108/14720700810899239 dx.doi.org/10.1108/sbm-08-2012-0032 dynam e e-mail e.g e.l eager earthscan easier east eastern ecolog econom economi ed edg educ effect effici effort ehq eitel either elabor eleven embedded emerald emerg emot emphas emphasi empir employ employe empower enabl encompass enderl energi enforc engag enlarg enough ensur entail enterpris entir entiti environ environment epistemolog equal era erod especi essenc establish estim et ethic eti europ european evalu even eventu ever everi evid evolut evolv exact examin exampl exceed except excess exchang exercis exist expand expans expect experi expert explan explicit exploit explor express extens extent extern face face-to-fac facil facilit fact factor factori factories/countries fair fall famili fashion fear featur feder feel fila final financi find finish firm first fish fit flagship focus follow footwear forc fore foreign form formal forterr forum forward foster found foundat four framework freedom freeman full fulltext function fund fundament fung furthermor futur fy05 g gain gap garment gb general generat genet geograph geographi gereffi get ghoshal gianpaolo gibb gidden gie give given global globally-integr globally-oper globe go goal goldblatt good goshal govern government grade grant grasp graz group grow growth guidelin hall hamilton hamper han handl harass harbor hard harper harvard harz haven head headquart heard heart heineken heir held help henc hierarch high high-involv high-valu higher highlight highly-polar histori holbrook hold holt home hot hour hous howev hrm hub human huntington hypothes icon id ident identifi ideolog ii iii ikea illustr ilo imagin impact implement implic import improv in-hous inand inc incent includ incom incorpor increas indic indirect individu indonesia industri ineffect inequ influenc influenti inform information-bas initi innov inspect inspector inspir instanc instead institut instrument integr intenet interact intercultur interest interlink intern interpret intervent interview intim intrins introduc introduct invest involv iron irrelev irrespect iss issn issu itglwf j j.a j.c jeurissen jin job joint jonker joseph journal joëll june kappa katz kaufmann keep key keyword kind knight knit knowledg known kolk korthal l l.e l.g label labor labour lack lament langmead larg large-scal largest last late law lead leader leadership lean learn least led legal legitim legitimaci leong less lessen level lever li lie life lifestyl lightn like limit limitations/implications line link list literatur liz lke local locally-oper locat lock lockss logist london long long-term longer look loom loos loss lot lotto low low-involv low-wag lower lower-cost loyalti ltd m m.c ma made mail main maintain major make maker manag manageri mani manufactur map marburi mari maria marin mark market market-bas marketplac mart massachusett master materi matten matter maximum may mcdonald mcgrew mean measur mechan media meet member mental merk met methodolog michael microsoft mid mid-1980s might million minimum mission mit mix mizuno mnc mncs model modern modif monitor moral moreov motion motiv move movement much multi multi-stakehold multidomest multiloc multin must mutual n name nascent nation natur need net netherland network neutral new newli newly-emerg next ngos nijhof nike ninemillion.org nj non non-government non-profit norm north nos note notr novemb nowaday npd nuclear number ny nyenrod object oblig obvious offer offic often olymp one one-on-on ong ongo onlin onward open open-sourc oper opportun optim order organ organiz orient origin originality/value other outbound outcom outfit outlet output outsid outsourc overal oversea overtim overview ownership oxfam oxford p pa pacif page palgrav palmisano paper paradigm paradigmat part parti particular partner partnership pass past pattern pay peculiar peopl per perceiv percent percept perform peripheri perman [email protected] permit perraton person perspect persuas pfeffer phd phenomenon phil philadelphia philip philosophi pitman place plan play player pleas plural pluralist plymouth point polar polici polit politician poor popul portfolio portico portion pose possibl potenti power pp practic practition predict predomin premis prentic prentice-hal prescrib presenc present preserv preset presid press pressur preston prevent price primarili prime privat problem problem-solv process processor produc producer-driven product profession professor profit program programm progress project promot proper propos protect protest prove provid pt public publish puma purchas purpos pursu push put q qualiti quarter quelch quest question r r.e r.m r.p radboud radic rais random rang rapid rate rather raw reaction reader realist realiz realli realm reason recast receiv recent recogn record record-keep reebok refer reflect refuge regard region regist regul reinforc relat relationship releases/press_061206.html relev reli reliabl remain remak renew repair replic report repres reprint [email protected] reput requir research resembl resili resourc respect respons result retail retain return reveal review revolutionari revu richest right rim ring rise river robert rod role ronald root rose rout routin routledg row royal ruedig rugman rule s.j s.m saddl safeti salancik sale save say scale scarc schedul scheme schoemak scholt school schuster scienc scientif scientist scope search secondari secret sector sector-wid secur sedaghat see seed seek seem seen segment seldom select self self-consci self-govern sens sense-mak sensemak sensit separ septemb sequenc seri serious serv servic set sever sew shape share shell shift shoe shortag shorter shove show shown side siggelkow signific simon sinc singl site situat six size skill slave small social socially-construct societ societi sociolog softer sole solut solv sometim sourc sovereign space span spatio spatio-tempor special specif speech speedo spin spirit spoke sport sportswear spread springer stabl staff stage stakehold stand standard stanford starbuck start state state-control statement stay step stephon stewardship still stimul store strateg strategi strengthen stress structur studi su sub sub-optim subcontractor subject submiss suboptim subscript subsequ subsidiari success suchman suggest suitabl summari supersed supplement suppli supplier support survey sustain symbol synonym system systemat t.t tabl tackl taiwan take taken target tata taylor techniqu technolog templ tempor tendenc term territori test theolog theoret theori therebi therefor thesi thing think third though threat threaten three throughout thus tie tight tilburg timberland time today tong took top topic total toward trade tradit train transfer transform transit translat transnat treat tremend trend truli trust tulder tune turkey turn two type typolog ultra ultra-complex umbro un unavoid underscor understand understood unilev union unit univers universiteit unknown unpredict unstabl unveil upon upper us use user usual valu van varieti various vast ventur verbek verifi version viabl vice vice-presid vietnam view vis vis-a visibl vision visit vital voic vol volum voluntarili vulner wage wal walter warm way wealth weav web week well wfsgi whether whole wide wider within without word work worker world worldview worldwid would write wwf www.adidas-group.com www.adidas-group.com/en/sustainability/reporting www.emeraldinsight.com www.emeraldinsight.com/authors www.emeraldinsight.com/reprints www.fairolympics.org www.fairolympics.org/background/olympicreporteng.pdf www.nikebiz.com www.nikebiz.com/responsibility www.npd.com www.npd.com/press/ xiao year yearn york young yue yuen zadek zucker