Analysis of the CSR policies implemented in the Ludhiana

I

Analysis of the CSR policies implemented

in the Ludhiana knitwear cluster

through the perspective of

MSMEs

Nameoftheprogramme:MScScinManagementofCreativeBusinessProcessesHandinDate:16.01.2017SupervisorName:PeterLund-ThomsenNumberofpagesandcharacters:72(188933)NON-CONFIDENTIALNONT

Master’sThesis

Author:GiudittaPresentatiCopenhagenBusinessSchool,2017

II

TableofContentsAbbreviations...........................................................................................................................................IVAbstract.........................................................................................................................................................V1.Introduction............................................................................................................................................1

1.1Researchquestion.............................................................................................................................................31.3Researchdesign.................................................................................................................................................41.3.1Epistemologicalandontologicalconsiderations..........................................................................................41.3.2Researchstrategy......................................................................................................................................................51.3.3Researchmethod:Casestudy...............................................................................................................................61.3.4Datacollectionmethods..........................................................................................................................................71.3.4.1Insighttothesemi-structuredinterviews...............................................................................................................10

1.3.5Datacollectionanalysis........................................................................................................................................131.4Qualityassessmentapproach:ValidityandReliability............................................................................141.5Ethicalconcerns..............................................................................................................................................151.6Limitationsencounteredduringthefieldwork..........................................................................................151.7Chaptersóverview.........................................................................................................................................15

2.LiteratureReview..............................................................................................................................162.1Clusters.............................................................................................................................................................162.1.1Definitionsandcharacteristicsofclusters...................................................................................................162.1.2Classificationsofclusters....................................................................................................................................182.1.3Relationsbetweenindustrialclusters,economicandsocialupgrading.........................................202.1.4IndustrialclustersandCSR.................................................................................................................................21

2.2MicroSmallMediumEnterprises(MSMEs)........................................................................................242.2.1DefinitionsandcharacteristicsofMSMEs....................................................................................................242.2.2MSMEsandCSR.......................................................................................................................................................26

2.3Informalisationoflabor...........................................................................................................................282.3.1Definitionsanddebatesoninformality.........................................................................................................282.3.2InformalityandCSR...............................................................................................................................................31

2.4CorporateSocialResponsibility(CSR).................................................................................................342.4.1Definitions,characteristicsandperspectivesofCSR..............................................................................34

2.5Initialconceptualframework.................................................................................................................373.Casepresentation..............................................................................................................................393.1BriefoverviewoftheLudhiana’sknitwearcluster.........................................................................393.1.1Horizontalties..........................................................................................................................................................433.1.2Verticalties................................................................................................................................................................463.1.2.1Backwardties.......................................................................................................................................................................463.1.2.2Forwardties.........................................................................................................................................................................47

4.Analysis.................................................................................................................................................494.1Ludhiana’sknitwearcluster...................................................................................................................494.1.1Classificationofthecluster.................................................................................................................................494.1.2CollectiveCSRinLudhiana.................................................................................................................................504.1.2.1CollectiveEnvironmentalCSR......................................................................................................................................514.1.2.2OthercollectiveCSRactivities......................................................................................................................................544.1.2.3SummarycollectiveCSRinLudhiana........................................................................................................................56

4.2Ludhiana’sMSMEs......................................................................................................................................564.2.1CharacteristicsanddifferencesoftheMSMEsinterviewed.................................................................564.2.2IndividualCSRinLudhiana................................................................................................................................584.2.2.1IndividualinternalCSR....................................................................................................................................................58

III

4.2.2.2IndividualexternalCSR...................................................................................................................................................614.2.2.3SummaryindividualCSRinLudhiana.......................................................................................................................63

4.3InformalityinLudhiana............................................................................................................................634.3.1WorkforcecompositionandcharacteristicsinLudhiana.....................................................................634.3.2Informalisationoflabourinfactory-realmsofproductioninLudhianaandtheconsequentrepercussiononCSRimplementation.......................................................................................................................65

4.4CSRperceptionsinLudhiana..................................................................................................................664.4.1DefinitionsandperceptionsofCSRforLudhiana’sMSMEs.................................................................664.4.1.1DriversandrecipientsforCSRinvolvement..........................................................................................................674.4.1.2CommunicationofCSR.....................................................................................................................................................684.4.1.3ObstaclesandbenefitsofCSR.......................................................................................................................................69

5.Conclusion............................................................................................................................................696.Bibliography........................................................................................................................................737.Appendices...........................................................................................................................................82

IV

AbbreviationsBKTK–Bahadur-KeTextileandKnitwearAssociation

BRIC–Brazil,Russia,India,China

CICU–ChamberofIndustrialandCommercialUndertaking

CETP–CommonEffluentTreatmentPlant

CSR–CorporateSocialResponsibility

DIC–DistrictIndustryCentre

ESI–Employees’stateinsurance

FICO–FederationofIndustrial&CommercialOrganization

FMC–FoundationforMSMEClusters

GVC–GlobalValueChain

ILO–InternationalLabourOrganization

INTUC–IndianNationalTradeUnionCongress

ITI–IndustrialTrainingInstitute

LDA–LudhianaDyeingIndustriesAssociation

LKA–LudhianaKnittingAssociation

MSME–MicroSmallMediumEnterprise

MSME-DI–MicroSmallMediumEnterprisesDevelopmentInstitute

PDA–PunjabDyeingAssociation

PF–ProvidentFund

PPCB–PunjabPollutionControlBoard

STP–SewageTreatmentPlant

UP–UttarPradesh

ZLD–ZeroLiquidDischarge

V

Abstract ThemainobjectiveofthisthesisistoinvestigateandunderstandtheCorporateSocialResponsibility(CSR)

practicesimplementedbymicro,smallandmediumenterprises(MSMEs)intheLudhianaknitwearclusterin

IndiaandhowCSRisperceivedbythem.CSRpracticeshasgainedanewresonanceintheglobaleconomyin

the last thirty year and it is a result of globalization and international trade. Despite this increasing in

attention,verylittleisknownonthepracticeofcorporatesocialresponsibleactionsindevelopingcountries.

Indeed,thereisawesterncentrefocusinacademicpublicationsonthistopic.Furthermore,theresearcher’s

choiceoffocusingonMSMEsisduenotonlytotheirnumericalstrength,butalsototheirlabour-intensive

productionprocesses,whichmakeMSMEscrucialinthedevelopmentprocessofrisingeconomies.Forall

thesereasons,thisresearchaimstofillinthegapintheliteratureprovidinganempiricalresearchbasedon

theLudhiana’sknitwearcluster.Inordertogainthenecessaryinformationtoanswertheresearchquestion

posed,17semi-structuredinterviewswithmanagersofMSMEsandexternalstakeholders(likegovernment

officialsortradeunions)havebeendone.Secondarydatahavebeenaddedonlywhenconsiderednecessary.

The findings show that no universal definition of Corporate Social Responsibility exist between the

respondentsandthemainconnotationsrefertolabourwelfareandenvironmentalwelfare.Furthermore,

CSRactionsareperceivedprimaryassupportactivitiesimplementedbythemonavoluntarybasisandnot

as ´monitoring systems´ imposed by outsiders. Regarding the typologies of CSR actions implemented,

informal individual activities mainly directed towards the labour force are dominating, followed by

environmentalactionsona collective level. The research is thenconcludedwith theprovisionof further

policyandresearchimplicationsregardingthisparticularcase-study.

1

1. Introduction Thetitleofmythesisis''AnalysisoftheCSRpoliciesimplementedintheLudhianaknitwearclusterthrough

theperspectiveofMSMEs”.InthisresearchIwillexhibitandinvestigatetheCorporateSocialResponsibility

(CSR)practices/policies implementedbyMSMEs intheLudhianaknitwearcluster in IndiaandhowCSR is

perceivedbythem.

CorporateSocialResponsibility(CSR),isgenerallydefinedastheprocesswherebycorporateactorsintegrate

economic, social and environmental concerns into their core business activities (Lund-Thomsen& Pillay,

2012),hasattractedagreatdealofattentionworldwideandgainedanewresonanceintheglobaleconomy

inthe lastthirtyyears (Raynard&Forstater,2002).Thisgainofpopularity isaresultofglobalizationand

internationaltrade,whichinturn,hasbeenreflectedinincreasedbusinesscomplexityandnewdemandsfor

heightened transparency and corporate citizenship (Jamali & Mirshak, 2006). Moreover, processes of

privatisationandderegulationhavere-drawnthelinesbetweenstateandthemarket,changingthebasison

whichprivateenterprisesareexpectedtocontributetothepublicgood(Raynard&Forstater,2002).Inthis

situation, the spotlight is increasingly turning on the role of business in society and the consequent

importanceofCSRactivities.Inrecentyears,increasingattentionhasbeengiventoCSR,asapostulatefor

ethicalandresponsiblebehaviour inbusinessandvery little isknownon thepracticeofcorporatesocial

responsible actions in developing countries. Various scholars have highlighted awestern centre focus in

academicpublicationsonthistopic,andthefewpublicationsthatarepresentonCSRindevelopingcountries

areusuallyexcessivelyconcentratedonexport-orientedfirms(Lund-Thomsenetal,2016a).Mymotivations

for focusing on CSR in developing countries, as distinct from the developed world is manifold. Firstly,

developing countries are the fastest expanding economies and therefore themost lucrativemarkets for

business(IMF,2006inVisser,2008).Secondly,risingeconomiesarewhereglobalization,economicgrowth

andbusinessactivityare likelytohavethemost intensesocialandenvironmental impact,makingsoCSR

practices fundamental. Thirdly, developing countries present a different set of CSR agenda challenges

comparedtothosefacedbydevelopedcountries.

Globalization, economic liberalization and deregulation/privatization processes, have allowed developing

countriestointegrateintotheglobaleconomy.Thisprocessisseenasthebestwaytoovercomepovertyand

inequalities,bringingnotonlyeconomicgrowthbutalsosometimessocialupgrading(Raynard&Forstater,

2002).Thisiscrucialinthedevelopmentoftheprivatesector,inwhichmicro,smallandmediumenterprises

2

(MSMEs)playa central role.MSMEs formaround90%of thebusinessesandaccount forat leasthalfof

employment in developing countries (Luetkenhorst, 2003). Apart from their strength in number, their

importance in the development process is also due to their labour-intensive production processes, that

usually distinguish them from larger enterprises. For this reason,MSMEs have a meaningful impact on

employmentand,consequently,theirengagementinCSRactivitiesiscrucial,havingasignificantinfluence

onsocietyaswhole.Forme,alltheseaspectsmakestudyingandfosteringCSRactionsinMSMEsatopicof

risingimportance.Lookingatthecontextofdevelopingcountries,MSMEstendtoagglomerateinindustrial

clustersinordertoovercomegrowthconstraints(e.g.lackofhumanorfinancialresources)andtocompete

in global markets (Lund-Thomsen & Pillay, 2012). Industrial clusters are geographical concentrations of

companies, operating in the same or related industries (Giuliani, 2005) and their organizational form is

usuallyseenasanencouragingriseinproductivityandincomesbetweenthememberfirmsandthelocal

communities(Nadvi,1999inPyke&Lund-Thomsen,2015).Eventhough,clustersareportrayedasbreeding

ground of local economic growth and innovation, few studies have shown whether their development

actuallyproceedsalsoinaneconomically,sociallyandenvironmentallyresponsibleway(Lund-Thomsenet

al,2016b).Moreover,rarestudiesrelyontheCSRdiscourse(Accountability,2006inIbid).Therefore,forall

these reasons, I chose to focus on researching CSR inmicro-small-medium sized industrial clusters in a

developingcountrycontext.

MyattentionwillbespecificallyfocusedonIndiawhereIfoundthreemainreasonsthataidtomychoiceof

choosingIndiaasmyresearchsubjectinthiscontext.Firstly,theIndianeconomyhasgrowntremendouslyin

the recentperiod,achievingnowthestatusof theBRIC (Brazil,Russia, India,China)countries (Mezzadri,

2014a).Secondly, Indianenterprisesnotonlysellproductssuccessfully in internationalmarkets,butthey

alsodetainincreasinglargeconsumer-basewithinthenationalborders,makingforaninterestingstudyon

CSRimplementationinlocalsuppliers.Lastly,severalattemptstopromoteCSRadoptioninIndiahavebeen

seen,directednotonlytowardsbigenterprises,liketheCompanyAct2013,butalsotowardsMSMEs(e.g.

IICAandGIZproject).TheseserveasapreviouslaboratoryforshadingsomelightonMSMEs’viewsonCSR

andunderstandingtheextenttowhichCSRhasbeenadopted.

MyinterestandfocusonthisthesisreliesandiscentredaroundtheIndianapparel,whichisoneoftheoldest

industries in the Indian economy but also one of themost important, nowadays. India has steadily and

progressivelyturnedintooneofthemajorglobalgarmentexporters,detainingin2016thesecondlargest

manufacturingcapacity intheworld(Make In India,2016).Thetextileandapparelsectorarethesecond

largest employment provider in the country, employing nearly 51million people directly and 68million

3

peopleindirectly,onlyin2015-2016(Ibid).Moreover,itcontributesapproximately5percenttoIndia’sGross

DomesticProduct(GDP),makingitanimportantsectorforthenationaleconomicandsocialgrowth.Dueto

theimportanceoftheindustryforthenationaleconomyandforitslabour-intensivecharacteristic,whichis

reflectedinaheavilyexploitationof informalworkers(Mezzadri,2016b), itseemsrelevanttoexhibitand

investigate CSR implementation and perception in this sector. Therefore, I selected Ludhiana’s knitwear

districtinordertoexploreandinvestigate,inanIndiancluster,CSRperceptionandengagement.Thedecision

istwofold.Firstly,becauseatanational level,theLudhianacluster isoneofthemost importantgarment

centres, specifically the principal for producingwoollen knittingwearmainly dedicated to the domestic

market(Uchikawa,2012).SecondIgottheopportunitytoget intouchwithFMC(FoundationforMSMEs

ClusterDevelopment),aNGObased inDelhidedicated to thegrowthof clusteredMSMEs in India.After

talking to them, I got the suggestion to study in depth this industrial district, and their expertise and

knowledgeinthisfield,helpedtremendouslywithmyresearch.Forthisreason,Iwillfocusmyattentionon

CSRengagementintheLudhiana’sknitwearclusterinIndia,investigatingtheextentandexhibitingtheway

localMSMEsengageinsocialresponsiblepracticesandhowCSRisperceivedbythem.

1.1 Researchquestion Inmythesis,Iwillexplore,investigateandbeabletoanswer,thefollowingresearchquestion:

HowdotheMSMEsintheLudhiana’sknitwearclusterinIndiaperceiveandimplement

CorporateSocialResponsibilityactions?

TheresearchquestionsetsthecontextofmystudyanddeterminesitsmainvariableswhicharemainlyCSR,

industrial clusters and MSMEs. Informality, in the form of informalisation of labour, is another topic

influencingthisresearch,evenifnotexplicitlystatedintheresearchquestion.Eachtheoreticalthemewill

be described in details in chapter 2. Existing literature on the topic argues that threemain drivers lead

clusteredMSMEstobeinvolvedinCSRactivities,whicharestakeholderpressures(bothlocalandglobal),

business case to achieve efficiencies and profitability; personal/cultural values and the motives of

owners/managers.ItisbelievedthatacertaindegreeofCSRengagementwilloccurintheclusterinquestion,

but it is unclear towhich extent and inwhat form thiswill happen. It is also assumed that the specific

institutionalandculturalcontext,thenationalpolicyframeworkandthecharacteristicsandnatureofthe

valuechainsinwhichthelocalsuppliersareembedded,willinfluencethediscourse.Althoughitisnotknown

exactlyhowthiswillplayout.

4

1.3Researchdesign

This sectiondescribes the researchdesignused to study the topic. Informing thisdecisionshouldbe the

epistemological and ontological dimensions considered or philosophy of science, the relation existing

betweentheoryanddataorresearchstrategy,theselectedstrategyofinquiryorresearchmethodandthe

specificmethodsofdatacollection,analysisandinterpretation.

1.3.1Epistemologicalandontologicalconsiderations

Epistemologicalandontologicaldimensionsrefer,correspondingly,tothetheoryofknowledge(Justesen&

Mik-Meyer,2012),andthenatureofsocialreality(Saunders&al,2008).Whileontology,inbrief,refersto

thequestionof“whatweperceivetobethenatureoftheworld”(Justesen&Mik-Meyer,2012),epistemology

isconcernedonwhatis,orshouldbe,consideredasacceptableknowledgeinaparticularsubjectareaand

myabilityastheresearcherinattainingthisinformation.Myresearchstartswithaweaksocialconstructivist

perspective. Social constructivism isaphilosophicalparadigmthat isbasedona relativistontologyanda

subjectivistepistemology(GubaandLincoln,1989)anditgenerallyassumesthatrealityisnotanindependent

entityandsomethingnaturallygivenordiscovered;butitisaconstructionamonghumans(Justesen&Mik-

Meyer,2012).However,amoderateorweakinterpretationofsocialconstructivismisquitedifferent.The

strongsocialconstructivismperspectivedeniesthepresenceofanindependentrealityoutsideahuman’s

perceptionof it. In turn, thisasserts thatboth these representationsmadeby individualsand theactual

entities to which these representations refer, are socially constructed (Ritzer & Ryan, 2010; Scott &

Hargreaves, 2015). In this case a weak or moderate viewpoint sustains the existence of a reality at an

ontologicallevel,whichisindependentofpeople’sperceptionsofit,thatinturnexertsaninfluence,inthe

wayinwhichitisrepresentedatanepistemologicallevel(Ritzer&Ryan,2010).Moreover,whatiscounted

asknowledge(theepistemologicallevel),isdependentnotonlybythecontextinwhichitiscreatedbutalso

bypeople’sperceptionofit(Ibid).Forthisreason,theobjectofstudyisalwayslookedbesidethespecific

contextofitsemergence,likethehistoricalandculturalconditions,aswellasthesocialprocesses.

The choiceof anontological andepistemological assumptionshas crucial consequences for thepractical

implementation of a study. The aim of this research, as stated earlier, is to understand the complex

phenomenonofCSRperception and implementation in the context of aMSMEs’ cluster in a developing

country like India. A weak, social constructivist viewpoint has been chosen because it allows, me the

researcher,inpresentingmyownspecificvisionofthesocialreality,whichhasbeendefinedbytheempirical

observations (locally socially constructed) andboundedbymy subjectivity. Thepurposeof the research,

5

indeed,isnottofindonedefinitiveuniversaltruth(likecriticalrealistsdo)buttoacknowledgethepossibility

ofmultipleformsofknowledge(Järvensivu&Törnroos,2010).Moreover,thechoiceofamoderatesocial

constructivism perspective is evident at a number of levels. Firstly the way the research question is

formulated. Indeed, the attention is placed on the how, leading the interest towards the process of

implementingCSRactivities in clusteredMSMEs indevelopingcountries,which isbelieved tobea social

reality.Secondlyintheprocessofgatheringdatathroughpersonalorgroupinterviews,wheretheinterview

wasdevelopedinanactiveway.Thismeansthetalkisconsideredasanoccasionforproducingreportable

knowledgewherebothpartiesareactive,andknowledgeisbuiltcollaboratively(Holstein&Gubrium,1997

in Ibid). Thirdly the research question will be answered by different social actors, both engaged and

disengagedinMSMEs,andthiswillofferdifferentperspectivesaboutthesocialreality.Thiswillalsoallow

me, the researcher, to describe as many facets as possible, of this phenomenon, both complex and

ambiguous.

1.3.2Researchstrategy

Twogeneralrelationsbetweentheoryanddata(researchstrategies)exist;theorycancomefirstandguide

theprocessofgatheringandanalysisofdataortheorycanbetheoutcomeofresearchandanalysisofsome

or all data related to a research project (Bryman and Bell, 2015; Bryman, 2008). These twomethods of

reasoning are respectively called deductive and inductive and, when ‘combined together’, form a third

processofreasoningcalledabduction.Thisstudyisanabductiveresearchstrategy.Inthisparticularcase,

abductiveapproach,itismeantasaresearchstrategywhichoccupies“themiddlegroundbetweeninductive

and deductive approaches to knowledge production” (Järvensivu & Törnroos, 2010). Unlike induction,

abductionacceptsthepresenceofexistingtheoryinexplaininganempiricalphenomenon,butalsoenables

for a less theory-driven research process than deduction, and by that, allowing a data-driven theory

development(JärvensivuandTörnroos,2010).Inthisway,thesocialworldisseenasanempiricalsourcefor

theoreticalideas,ergoinvolvingme,astheresearcher,inabackandforthengagementbetweenthesocial

worldandliteratureinaso-calledprocessof“dialecticalshuttling”(Atkinsonetal,2003;Schwartz-Shea&

Yanow,2012inBryman&Bell,2015).Thiscontinuousmatchingandredirectionbetweenabstracttheory

and concrete data is well suitable for testing theories in unexplored contexts, likemy research project.

Moreover, during my research process, the conceptual framework initially developed was successively

modifiedduetotheempiricalfindings,asitcanbeseeninsection4.5,sobeinginlinewithanabductive

researchstrategy.Finally,Ididnotintendtoformulategeneralizedconclusionsortoinventnewtheories,

buttosimplyachieveaclearerpictureoftheresearchedphenomenaandtoanalysetheappropriatenessof

6

theexistingtheoriesonthecasestudied.So, in linewiththeabductiveapproach,Iprovidedaninformed

‘guess’aboutthecase.

1.3.3Researchmethod:Casestudy

This research starts with a ‘problem to elucidate’: understanding how CSR (the social phenomenon of

interest)isperceivedandimplementedbytheMSMEsintheLudhiana’sknitwearcluster.Startingfromthis

point,itappearedcleartomethatthebestsocialscienceresearchmethodtouseisacasestudyapproach.

Indeed,casestudiesareempiricalinquiries,whichascopetoinvestigateacontemporaryphenomenon(the

caseinquestion)indepthandwithinitsreal-worldcontext,wheretheboundariesbetweentheeventand

thecontextarenotclear(Yin,2014).Iassumedandsubsequentlydiscoveredthatthisunderstandingislikely

toinvolveimportantcontextualconditionspertinentandspecifictothiscase.

The choice of a case study researchmethod ismanifested at different levels. Firstly, in the form of the

researchquestionposed;Iwantedtounderstandandexplain‘how’acomplexsocialphenomenon(CSR)is

perceivedandimplementedbyalocalcommunity(Ludhiana’sknitwearMSMEs).Thisunderstandinghasto

dealwithsocialandcontextuallinksthatneedtobetracedovertime,ratherthandescribetheincidenceof

aphenomenon,instead,typicalofsurveyorarchivalanalysis‘methods(Ibid).Secondlythechoiceisevident

in the lackof control fromme, the researcher,of thebehaviouraleventsexaminedandon the focuson

contemporary events as opposed to historical ones. Indeed, opposing to experiments, case studies are

preferredwhen the researcher cannotmanipulate the relevant behaviours andwhen currentevents are

explored.Moreover,theaspecttoexplainpresentcircumstancesismanifestedintheuseofinterviewsasa

datacollectionmethod,whichwouldnotbepossibleinthecaseofahistoryresearchmethod.Specifically,

thisresearchconsistsina“maximumvariationcasestudy”(Flyvbjerg,2006),whereitspurposewastoobtain

informationregardingtheimportanceandinfluenceofseveralcircumstancesforcaseprocessandoutcomes.

IwanttounderstandhowthephenomenonofCSRisseen,understoodandimplementedamongthedifferent

industrialunitsintheLudhiana’scontext.Thisisdonethroughtheuseofasmallnumberofunitsasasample,

where each are specifically selectedon thebasis of their information content. In order tomaximize the

diversity(andcomplexity),relevantinansweringtheresearchquestionposed,differentrespondentshave

been chosen, representing not only dissimilar MSMEs on different dimensions (like size, activity done,

marketsandcustomersdetained)butalsoexternalstakeholders,inordertoobtainoutsideperspectiveson

thetopic.Thebasicprincipleofthischoiceistogaingreaterinsightofthephenomenonbylookingatitfrom

differentangles.

7

Regarding theselectionof thecase,aconveniencesamplingwasused. Indeed,afteran introductoryand

explanatorySkypecallbetweenmeandoneemployeeofFMC,whereIexplainedindetailtheresearchtopic

andpurposes,theNGOselectedtheLudhiana´sknitwearclusterastheunitofanalysis.Ipreferredtoleave

thisdecisiontotheFMCduetotheirexpertiseandknowledgeinthefield.

1.3.4Datacollectionmethods

With the term research strategy, Bryman (2008), means a broad orientation to the conduct of a social

research.Twomaingeneralorientationsinconductingasocialresearchexist:qualitativeandquantitative.I

consideredusefulforthereadertoexplainthedifferencesbetweenthesetworesearchstrategiesinorder

to understand the data collectionmethods used in this paper.While quantitative research, emphasizes

quantificationboth in thecollectionandanalysisof thedata,qualitative researchhighlightswords (Ibid).

However,thedifferencebetweenthetwo‘approaches’isdeeperthanthepresenceornotofquantification

in collection and analysis of the data. Therefore, the two lines of research differ with respect to their

epistemologicalandontologicalconsiderationsandontherelationshiptheoryandresearchused.

Theuseofaqualitativeresearchstrategywasthepreferredchoice,inordertogetaninsightandexplaina

complex social phenomenon, like how CSR is perceived and implemented byMSMEs in the Ludhiana’s

knitwearcluster.Ididnotapplyanymeasurement,insteadfocusinginthedataintheformofwords.Forthis

reason,Ipreparedadatacollectionstrategypredominantlyfocusingonsemi-structuredinterviews,which

are often referred to as qualitative research interviews (King, 2004 as cited in Saunders & al, 2008).

Particularly,thechoiceofsemi-structuredinterviewsarealsoinlinewithanexplanatoryanddescriptivecase

study, like this research, where a more flexible approach is preferable in order to explain and infer

relationships/connections between variables that describe themanifestation of a complex phenomenon

(Saunders&al,2008).

Mostoftheintervieweeswererecordedwiththeuseofadigitalaudio-recordingdevice,whenpermission

was given. This was done, in order to control bias and to produce reliable data for the research (Ibid).

Moreover, by audio-recording the interviews, I was able to concentrate on questioning and listening,

particularlyonthefacialexpressionsandtheothernon-verbalcuesgivenbytherespondents(Ibid).Forthe

interviewswherethepermissionofrecordingwasforbade, I tookdetailednotesoftheanswersgiven. In

ordertobeabletoprocessandanalysethedataobtainedthroughtheinterviews,Imadeatranscriptionof

therecordingandthenotestaken.Particularly,regardingtherecordedconversations,atranscriptionfrom

spokentowrittenlanguagewasmadebutfollowingsomeguidelines:suchasexcludingrepetitionofwords

8

orpausesofself-reflectionwhennotconsideredrelevant.Sometimes,alsorephrasingoftheanswerswas

neededbecauseofthebadEnglishproficiencyoftherespondents.

Interviewswerethemainformofsourceofdataforthisresearch.However,secondarydataintheformof

previousformalstudies,officialwebsitesandpress-articleswasalsoanalysed.Specifically,throughSangeeta

Agasty,generalmanagerofFMC,IgotaccesstoapreviousDiagnosticStudyReportontheLudhiana’sdyeing

clusterdonebytheNGOfortheIndian‘Ministryofmicro,smallandmediumenterprises’,while,regarding

all theother secondarydata sources, the researchergainaccess to themthrough Internet searches.The

samplingofthesecondarydata,wasbasedontheassessmentoftheoverallandprecisesuitabilityofthe

datagainedtoanswertheresearchquestionandmeettheobjectivesofthepaper(Ibid).Attentionwaspaid

onthereliabilityandvalidityofthesecondarydatafoundonlineandaquickassessmentoftheseaspects

was done by looking at their sources. For this reason, only officialweb pages, national newspapers and

previous formalstudiespublished in international journalsorconductedbyvaluable institutions (e.g. the

NationalCouncilofAppliedEconomicResearch(NCAER))werepickedandanalysed.Finally,Ialsotookinto

considerationthepurposeforwhichtheexistingdatawasoriginallyintendedforand,regardingthisaspect,

onlydocumentsgeneratedforresearchpurposewereanalysed.

Thismulti-sourceapproach,ishighlyrecommendedwhendoingcasestudyresearchandthemainadvantage

ofusingmultiplesourceofevidence,istodevelopconverginglinesofinquirythatmakethecasefindings

more convincing and accurate (Yin, 2014). The following table summarizes all themethods used in this

research:

Overviewofthedatacollectionmethods

Datacollectionmethods Periodofcollection

Interviews • 16 semi-structured face-to-face interviews with

various MSME’s owners, governmental officials,

employeesintradeunionsandtraininginstitutions;

• 1 semi-structured group interview with

governmentalofficials.

25.04.2016–03.05.2016

Document

analysis

• Previousformalstudies:

Uchikawa S., “The Development of Apparel

Industrial Cluster in India. A Comparison between

LudhianaandTiruppur”,2012

Prior, during and after field

research

9

MSME DI, “Brief Industrial Profile of district

Ludhiana”,2010

ACDS, “Ludhiana Knitwear and Apparel Cluster:

DiagnosticStudyReport2014”,2014

Sameeeksha, “Cluster Profile: Ludhiana knitwear

cluster”,2011

FMC, “Diagnostic Study Report: Dyeing Cluster –

Ludhiana”,2016

Tewari M., “Successful adjustment in Indian

industry: The case of Ludhiana'swoolen knitwear

cluster”,1999

NCAER,“Assessingtheprospectsfor India’stextile

andclothingsector”,2009

• Analysisofwebpages:

http://www.ppcb.gov.in/

http://aepcindia.com/

http://www.bktkindia.com/

http://www.cicuindia.org/

• Pressarticles:

“Three years on, CETPs for dyeing units hanging

fire”,2013(industantimes.com)

“TirupurshowsLudhianahowitisdone”,2003

(economictimes.indiatimes.com)

“Dyeing units seek years? Time for setting up

treatmentplants”,2009

(timesofindia.com)

Table1:Overviewofthedatacollectionstrategy;Source:theauthor

Inthefollowingsection,Iwillpresentanin-depthdescriptionoftheinterviewsundertakenandthesampling

methodused.

10

1.3.4.1Insighttothesemi-structuredinterviews

With the purpose to get information on how MSMEs in the Ludhiana’s knitwear cluster perceive and

implement economic, social and environmental responsibility of business, I needed to gather in-depth

informationfromdifferentpeople,bothinsideandoutsidetheindustrialunits.Thiswasdonethroughthe

useofsemi-structured interviews, conductedboth face-to-face/individuallyand inagroup.Thechoiceof

conductingsemi-structured interviewswasmainlydue tomychoice inbeing flexible, towards the inputs

givenbytherespondents;keepinga listofquestionsandspecific themesreferredasthe interviewguide

(Saundersetal,2008;Bryman,2008).Particularly,threedifferentinterviewguideswerepreparedforthe

respondents(Appendix1,2,3);onefortheMSME’sowners/managers,oneforthegovernmentinstitutions

andthe last forthestakeholders interviewed,suchastrade laboursandatrain institution.Theseguides,

containanoutlineofthetopicstobecoveredandalistofquestions,whichhelpedmeleadtheconversation.

However, they also allowed for the process to be flexible towards the respondent’s inputs, letting the

sequenceofquestionstovary,inordertofollowuptheconversationandtheanswersgivenbythesubjects

(Kvale,1996).Consequently,thisleadtotheexplorationofnewanglesoftheresearchproblem,(howCSRis

perceivedand implemented inadevelopingcountrycluster)previouslyconsidered irrelevantbyme.The

threeinterviewguidescontainedsomecommonandstandardquestionsmainlynecessaryingivingabrief

descriptionofthecompanyorinstitutioninquestionandtofollowforamorerelaxedatmosphere.Theyalso

enclosedspecificinquiriesthatdifferedfromrespondenttorespondentbasedontheirposition(e.g.inside

oroutsidetheindustrialunits)andtheirrelationshipswiththeMSMEs.Furthermore,theinterviewquestions

wereallbasedontheresearchquestionposedandonthetheoreticalassumptionspreviouslyundertakenby

methus,alwayscoveringthefourmaintopicsofthisresearch:MSMEs,clustering,workforce&informality

and CSR. In regard to the interview guide prepared for theMSMEs, the interviewwas quite long and it

contained around 50 questions; in order to allow for fluidity in the conversation, the questions were

distributed in categories covering the previous listed topics. Finally, the 17 semi-structured interviews

conducted,lastedfromaround25minutesto1hourand23minutes,dependingontheavailabilityofthe

participants.Beforestartingtheconversation,abriefdescriptionoftheresearchwasalwaysgiventhrough

theprovisionofaparticipantinformationsheet(Appendix4).

Thereareseveralwaysandstrategiestogetaccessintospecificsocialsettings,dependingiftheyareaclosed

oropen/publicsettings,accordingtoBryman(2008).Thisstudyisbasedonclosedsettingscharacterizedby

differentMSMEsandotherinstitutions/organizationsofvariouskindsintheLudhiana’scluster.Thestrategy

used,wastoplayanovertrole,whichmeansthatIdisclosedthefacttobearesearcherinordertogetaccess

11

toorganizations(Ibid).Initially,thiswasnotdonedirectlybymebutbyFMC(FoundationforMSMEclusters)

aNGOspecializedinpromotingMSMEsbasedinDelhibutdetainingabranchofficeinLudhiana;andthus,in

directcontactwithlocalindustrialunitsandinstitutions.Theorganizationvouchedformeandthevalueof

the research, placing themselves in the role of a ‘sponsor’ (Ibid). The selection of the interviewees,was

directlydonebythembutwiththeadviceandundermysupervisionwhereIdecidedtoapplyapurposive

sampling.Thissamplingtechnique,isessentiallystrategic(Ibid),andtheselectionoftherespondentswas

basicallybasedonmyjudgment“toselectcasesthatwillbestenabletoanswertheresearchquestionposed

andtomeettheobjectives”(Saundersetal,2008).Forthisreason,therespondentshavebeenselectedwith

theaimtorepresent,ononeside,all thedifferentcore-clusteractorspresent intheLudhiana’sknitwear

cluster and, on the other side, the main external stakeholders directly and indirectly related with the

industrialunits regardingthe implementationofCSRpractices. Iwantedtoachieveagoodvarietyof the

samplesrelatedtomyresearchandthelogictopickparticipantsalsooutsidetheindustrialunitsistoprovide

different perspectives about the social reality studied and to reduce the risk of formulating conclusions

reflecting only one point of view. Table 2 shows in details the participants, length and location of the

individualandgroupinterviews.

Typeofindustrialunit

Initialsrespondents

Roleoftheinformant

Dateoftheinterview

Location Lengthoftheinterview

Dyeingunit R.V. Director 26.04.2016 Industrialunit

00:45:16

Dyeing&Printingunit

V.M. ManagingDirector

26.04.2016 Industrialunit

01:08:08

Dyeingunit V.J. Director 27.04.2016 Industrialunit

00:42:56

Dyeingunit B.J. Partner 27.04.2016 Industrialunit

01:22:34

Knittingunit H.J. Director 27.04.2016 Industrialunit

00:46:29

Knitting&Printingunit

A.S. Manager 28.04.2016 Industrialunit

01:18:57

Knittingunit R.G. Director 28.04.2016 Industrialunit

00:51:43

Subcontractingunit

V.K.T. GeneralManager

28.04.2016 Industrialunit

01:23:23

Embroideryunit A.K. Partner 29.04.2016 Shop NotrecordedEmbroideryunit M.K. Owner 29.04.2016 Shop NotrecordedEmbroideryunit S.K. Owner 29.04.2016 Shop Notrecorded

12

Typeoforganization

Initialrespondents

Roleoftheinformant

Dateoftheinterview

Location Lengthoftheinterview

GovernmentInstitution

M.K.&unknown Groupinterview:GeneralManagerandEmployee

25.04.2016 DICOfficeLudhiana

00:47:26(severaltakes)


R.K.R. DirectoroftheregionalofficeLudhiana-IV

25.04.2016 PPCBOfficeLudhiana

Notrecorded


A.P. Assistantdirector

25.04.2016 MSME-DIOfficeLudhiana

Notrecorded

TrainingInstitution

S.S. Headmaster 02.05.2016 ITIWomenLudhiana

00:57:49

TradeUnion S.S. DirectorLudhianaLabourOfficezonen°2

03.05.2016 LabourOfficeZonen°2

01:06:58(severaltakes)

TradeUnion unknown EmployeeattheIndianNationalTradeUnionCongress

03.05.2016 OnthestreetoutsidetheLabourOfficeZonen°2

Notrecorded

Table2:Overviewoftheinterviewedfirmsandotherinstitutions;Source:theauthor

As previously stated, 17 interviews were conducted that also included a group interview with two

governmentofficials,fromDIC.Thischoicewasduetoconveniencereasonsregardingtimingandavailability

oftherespondents.Particularly,agroupinterviewdiffersfromanindividualoneregardingthenumberof

participantsinvolved,andunlikeafocusgroupitisprimarilyinterestedincollectingindividualopinionsabout

the same topic without encouraging group discussion or interaction (Eriksson & Kovalainen, 2008). The

interviewswiththeindustrialunits,wereusuallyfollowedbyatouroftheproductionfacilities.Themain

purposesofthesevisitsweretounderstandtheproductionprocessandhaveanopportunitytoevaluatethe

workingandenvironmentalconditionsoftheMSMEs.Duringthetours,theresearchertooksomepictures,

whichwillbeincludedintheanalysischapter.

Finally,itisimportanttounderlinethatalltheinterviewscarriedonconsistincross-culturalinterviewsand

theycanbequitedifferentfromintra-culturalinterviewingbecauseoftheinvolvementoftranslators(Griffin,

2015). Even if I have conducted individual interviews, they all involveda thirdparty consisting in a local

interpreter.ThepersoninquestionisanemployeeofFMCandhewasknownfrommosttherespondents.

The presence of a third party directly acknowledged from the interviewees did not affect the social

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interaction,however I facedsomelimitationsduetotheuseofatranslatorandtheywillbeexplainedin

greaterdetailinsection1.4.

1.3.5Datacollectionanalysis

Inthefollowingparagraphs,thestrategyusedtoprocessandanalysethedatacollectedwillbepresented.

Datacollectionandanalysisshouldbecarriedconcurrently,allowingtheresearchertocollectnewdatato

fill in gaps or to test new hypothesis that emerge during the analysis (Miles et al, 2013). Following this

recommendation, every day after the interviews had finished, I started to process and transform the

scribbledfieldnotesinwrite-ups,makingtherawmaterialprocessablefortheanalysis.However,duetothe

lack of time during the fieldwork, the transcription of the recorded interviews was done afterwards.

Subsequently, Icodedallthedatafirstly inanExceldocumentandthenintheNVivoprogramandfinally

analysedthem.

Thecodingprocesswasdividedintwocycles.DuringtheFirstCyclecoding,Iassignedcodestopieceofdata-

chunkswithapurposetosummarizesegmentsofdata(Ibid).Mostofthefirstcategoriescreatedwerebased

onaprovisionalstart-listofcodes(deductivecoding)thatwasbuiltonthekeyvariablesthatIbroughttothe

study(e.g.labourinformalisation,MSMEs),whiletheothercodes,stillemergedprogressivelyduringboth

thedatacollectionandtheanalysis.Furthermore,differentapproachesforcreatingthecodeswereusedand

themostresultedindescriptivecoding,whichconsistinawordorshortphrasetosummarizethebasictopic

ofadataportion(e.g.governmentaction,MSMEsissues).Inalessamount,processcodingwasappliedwhich

ischaracterizedbytheuseofgerundstoconnoteactioninthedata(e.g.trainingworkforce,outsourcing,

job-working).Simultaneouscoding,(theapplicationoftwoormorecodestoasingledataportion)andsub

coding, (assignationofa tagafteraprimarycode)werealsoused.The latterwasconsideredparticularly

appropriatewhengeneralcategorieswereinitiallyassignedbutamoreextensivelabellingwasconsidered

asnecessary.Itcanbeconcludedthat,theanalysisfollowedbothadeductiveandinductivecoding,however

thecoding framebuiltmainlymaturated fromthetheoreticalvariablesonwhich Iconstructedthe initial

conceptualframework:MSMEs,cluster,workforce&informalisationandCSR.

TheSecondCycleofcodingworkedwiththeresultingFirstCyclecodesandhadapurposetosummarize

themintoasmallernumberofthemesandcategories,alsocalledpatterncodes(Ibid).Inthisphase,Imainly

tried to find the emergent themes that haveoccurred from thedata,which resulted in cluster,MSMEs,

workforceandCSR,anddevelopedahierarchymapshowingtheinterconnectionsbetweenthecodesfound

14

intheFirstCyclecoding.Oneexampleofthefinaloutcomesoftheprocessisthefollowingtree-mapthat

showthehierarchyofthepatternsinregardoftheclustertheme(Appendix5).

1.4Qualityassessmentapproach:ValidityandReliability

Projectvalidityandreliabilityareimportantcriterionforjudgingthequalityofaresearchdesignand,more

generally, of any empirical social research. Four tests and specific tactics for each standard have been

suggestedbyYin(2014),whendoingacasestudyresearch,andsupervisedbymeduringtheallresearch

process inorderto increasethecredibilityofthestudy.Thesefourtestsare:construct, internal,external

validityandreliability.

Firstly,constructvalidityensuresthatcorrectoperationalmeasureshavebeenidentifiedandchosenforthe

concepts being studied (Ibid). Tomeet the test of construct validity, in this case study research, I used

multiple sources of evidence during data collection. Consequently, this encouraged the development of

converging lines of inquiry (data triangulation) and essentially providedmultiplemeasures, of the same

phenomenonmaking the findingsandconclusionmoreconvincingandaccurate. Secondly, regarding the

externalvalidityortheextenttowhichthestudy’sresultscanbegeneralizedbeyondtheparticularstudy

andtheresearchmethodused,Ididnotmaketheflawtoconsiderstatisticalgeneralizationasthewayto

meet this criterion. Rather than thinking aboutmy case as a sample, I shed some empirical light to the

theoreticalpropositionschosenintotheinitialdesignofthestudy/initialconceptualframework(analytical

generalization).Inthisway,Igeneralizedfromthespecificstudytoatheory,helpinginthedevelopment,

definitionandtestingofthetheoryofĆSRimplementationandperceptioninclusteredMSMEsintheIndian

context´.Thirdly,theconceptofreliabilitydemonstrateswhetherastudyanditsoperationscanbereplicated

withthesameresults.Toovercomethis,acasestudydatabasewasdeveloped.Thisdatabaseconsistsofan

orderlycompilationofallthedataanalysedfortheresearch,whichincludesextensivefieldnotes,interviews

recordingsandtranscriptsandexternaldocumentanalysis.IhavedecidedtoencloseintheUSB(Appendix

6)theelectronicfoldercontainingallthematerialexamined, inordertoallowthereadertoexaminethe

data researched themselves. Lastly, concerning internal validity,which isdefinedas thedegree towhich

causalconclusionscanbederivedfromastudy,thistestwasinapplicablebecausemainly/onlyrelatedfor

explanatoryinvestigations,notdescriptiveones.

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1.5Ethicalconcerns

Ethicsisanimportantelementofresearchandshouldnotbeoverestimated.Indeed,itismyresponsibility,

astheresearcherofthisthesis,tosafeguardtherespondentsandavoidanythingthatwillcreateddoubtand

concern.Iinformedtheparticipantsinregardtothenatureofthestudyandassuredprivacyandanonymity.

Thefirsttwoaspect,wereensuredthroughtheprovisionoftheparticipantinformationsheet(Appendix4),

apagedescribingindetailboththetopicandpurposeoftheresearchandassessingtheparticipantsabout

their rights (for instance, theirpossibility towithdraw from the studywhenever theywant).Moreover, I

always asked permission regarding both the recording of the interviews, the visit of the units and the

possibilitytotakepictures.Thiswasdoneinordertorespectthewishesoftheparticipants(Lichtman,2014).

Finally,regardingtheanonymityandprivacyoftheparticipants,theresearcherorallyagreedwiththefirms

thattheywillnotbementionedinmyresearchinordertoensureprivacyandthefreedomtospeakfreely.

1.6Limitationsencounteredduringthefieldwork

Assustainedbysocial constructivists, the reality is collectivelyconstructedand, in thespecific, collective

entities like language, discourses or objectified institutional structures, are the contexts in which the

individualsrelateandinteract(Berger&Luckmann,1966ascitedinJustesen&Mik-Meyer,2012).Forthis

reason,thespecificlocallanguage(inthiscasePunjabi)hasacrucialroleincreatingrealityandknowledge.

Abiglimitationofthisthesisconsistsinthelanguagebarrierfacedbyme.Eveniftheinterviewsweremainly

taken in English, the level of proficiencyof the respondentswas not ‘sufficient’ and someparts of their

answersweredoneinHindi.Forthisreason,theuseofalocaltranslatorwasnecessaryinordertograbthe

slightest culturalmeaning and values ladenon thewords,which areof crucial importance froma social

constructivismpointofview.However,eventhepresenceofaninterpretercannotbecomparableorhaving

thesameresultsofbeingfluentinthelocallanguage.Anotherlimitationencounteredandalwaysrelatedto

thetranslationprocessconsistedintheincompletenessofthetranslationreceived.Ofcourse,Iperceived

theinterpreterwasclearlygivingmeonlyapartialandsummarizingtranslationofwhattheparticipantswere

actuallysaying.Itseemedimportantformetoacknowledgetheseissuesencountered,becausetheycould

providemisunderstandingsorincompletenessinthedatacollected.

1.7Chaptersóverview

Theresearch isstructuredas follows.The introductionhasbothgivenadescriptionofthefield,research

questionandreasonsthatguidethisthesis.Italsoexplainedthemethodologyusedinordertoanswerthe

researchquestionposedandtomeettheobjectivesfixed.Followingthisoverview,adetaileddescriptionof

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the literature and the debates around the main theoretical variables related to the research will be

presented.Attheendofthesecondchaptertheinitialconceptualframeworkwillbeillustratedhighlighting

the relations, between the theoretical concepts previously introduced. Before the main analysis, the

Ludhiana’s knitwear cluster case will be presented, describing in detail both the composition and the

horizontalandverticaltiesthatareexisting.Inchapter4theanalysiswillbedisclosed,combiningthedata

obtainedfromtheinterviewsandsecondarysourceswiththetheoriesoutlinedintheearlierchapter.Finally,

inchapter5,thethesiswillbeconcludedwiththerestatementoftheresearchquestion,theoutlineofthe

mainfindingsandoftheresearchandpolicyimplications.

2.LiteratureReview ThischapterwillexploretheexistingliteratureregardingthetopicsofclusterandMSMEs,informalisationof

labourandCorporateSocialResponsibility(CSR).Firstly,Iwillinvestigatetheexistingtheoreticalliterature

andthemainempiricalstudiesdoneonthedifferenttopics,then,intheconclusionpartaninitialconceptual

framework will be outlined stressing the interrelations between the different theoretical concepts

introduced. The purpose of this chapter will provide the reader with a broad overview of the existing

researchesonthemainvariablesrelatedtothisthesisandthemaingapsstillpresent.

2.1Clusters

2.1.1Definitionsandcharacteristicsofclusters

Clustershavelongbeenpartoftheeconomiclandscapeandtheconceptofclusteringcanbetracedbackin

Marshall’searlyworkonagglomerationeconomies(1920).Marshall(Ibid),firstintroducedtheconceptof

industrialdistrictdefiningitasa“concentrationoflargenumbersofsmallbusinessesofasimilarkindinthe

samelocality”.Throughthegeographicalproximity,firms,usuallyengagedinthesamefield,areinaposition

toshareknowledge,technology,markets,labourandinfrastructure,whichwouldnotbepossibleifthefirms

wereoperating individually. Theseare localizedexternal economies of scaleand scopeobtained through

cooperationthatlowerthecostsforclusteredunits.Longafterthiscontribution,theItalianscholarGiacomo

Beccatini (1979 inGiuliani,2005)comparedandstressedthesimilaritiesbetweentheproducingareasof

GreatBritaindescribedbyMarshallandcertainzonesofItaly,referringtoMarshall’sindustrialdistrictasa

‘localizedsocialandproductivethickening’.Theindustrialdistrictmodel,wasthenproposedasanalternative

tothelargeFordistfirm,assigninghissuccesstoseveralinterconnectedmeso-levelfactors,suchastheco-

17

existenceofcompetitiveandcooperativebehaviours,ahighdegreeofverticaldivisionof labourandthe

flexibleuseofskilledworkers(Giuliani,2005).

The industrial districtmodel introducedbyMarshall, represents thehistorical conceptualpredecessorof

mostclusterstudies.Muchafter,aseriesoftheoreticalandempiricalstudieswereproduced,bothinthe

developed and developingworlds. Among themost relevant there is Porter (1998),who introduced the

importanceofclustersforcompetitiveness.Indeed,hearguedthatdespitemoreopenglobalmarketsand

faster transportation and communication, location remains fundamental to competition, even if its

traditional role differs from the past. In his work, he defined clusters as “geographic concentrations of

interconnectedcompanies,specializedsuppliers,serviceproviders,firmsinrelatedindustriesandassociated

institutionsinparticularfieldsthatcompetebutalsocooperate”(Ibid).Itappearsclear,thatafundamental

conditionfortheexistenceofaclusteristhepresenceoflinkages,notonlybetweenthefirmsbutalso;and

more importantly, between companies and institutions. These close linkages, particularly influence

productivityandespeciallyproductivitygrowthand,asstatedbyPorter,“contributeimportantlynotonlyto

efficiency but to the rate of improvement and innovation” (Ibid). In thisway, clustering of firms has the

potential topromotecompetition inthreeways:by increasingtheproductivityofthefirmsbasedonthe

area, by stimulating the formation of new business in the field and finally, by enhancing innovation. It

represents a robust (meso) organizational form, that brings advantages like efficiency, effectiveness and

flexibilitytothecompaniesbeenpartofit(Ibid).AccordingtoPorter,whileprimaryimportanceisgivento

thepresenceof close linkages, looser consideration is attributed to the social and cultural aspects. Even

though,hementionedthatthepresenceof“repeated,personalrelationshipsandcommunitytiesfostering

trustfacilitatetheinformationflowwithinclusters”(Ibid).

WhileresearcherslikeMarshallandPorter,havebeenfocusingonlyonclustersindevelopedcountries,a

lineofresearchonindustrialclustersinemergingeconomiestookoffattheendoftheEightiesbutfroma

differenttrajectory:itgrewoutofthesmall-scaleindustrydebate(Schmitz&Nadvi,1999;Lund-Thomsen&

PIllay,2012).Inthecontextofdevelopingcountries,industrialclusterstendtobedominatedbymicro,small

andmedium-sized enterprises (Sachdeva & Panfil, 2008), that see clustering as a strategy to overcome

growthconstraints.Therefore,inordertoanalysetheCSRengagementofMSMEsintheLudhianaclusterin

India, it would seem more consistent to apply developing country literature to my research. A central

assumption in the literature on rising power clusters has been thatMSMEsmay benefit from collective

efficiency (Nadvi,2015).SchmitzandNadvi(1999),defineditas“thecompetitiveadvantagederivedfrom

localexternaleconomiesandjointaction”.Thismodelwasbasedontheideathatstaticefficiencygainswere

18

notsufficienttoallowfirmsinrisingeconomiestocompeteonahighroadofdevelopment.Instead,thiswas

possibleonlywhenfirmsimplementedjointactionsandthereforebothhorizontalandverticalcooperative

attitudeswiththeothercompaniesandwiththelocalinstitutionalbodies(Pykeetal.,1990inGiuliani,2005).

MSMEs,areusuallydescribeddisadvantagedincomparisonwithlargerenterprises.Forinstance,theymay

lackofenoughfinancialandhumanresourcesorsufficienteconomiesofscaleinordertocompeteinnational

orinternationalmarkets(Lund-Thomsen&Pillay,2012).However,throughtheagglomerationinindustrial

clusters,MSMEscanfacetheabove-mentionedchallenges.Indeed,thegeographicalproximitymayenhance

the flow of knowledge between these enterprises, thus facilitating innovation and the sharing of ideas.

Moreover,MSMEsmayalsobenefit inapassivewaythroughtheaccessto important inputs, liketrained

workers,serviceprovidersandsuppliers, reducingthetransactioncostsat the individual firm level (Ibid).

Finally, MSMEs can actively cooperate through business associations or public-private partnerships and

engage incollectiveactions inordertosolve issuesthatthreatenthesurvivalofclusteredfirms.This last

aspect is particularly relevant for small andmedium sized´ clusters,where the collectivebodies need to

assumescale-sensitivefunctions(Porter,1998).Localcollaborationisnotanobviousoutcomeofclustering

anditneedsanactiveintentionfromthelocalactors(Nadvi,2015).Moreover,inordertoensurethesuccess

ofthesecollectiveactions,effectiveformsoflocalgovernance(e.g.sharednorms,localgovernmentagencies

etc.) and strong institutional support are required, if not competition can undermine any co-operative

actions.SchmitzandNadvi’s(1999),simplisticdefinitionofclusteras“sectorialandspatialconcentrationof

firms”seemstoperfectlyfittheanalysisofclustersinadevelopingcountrycontext.Thisdefinitiondoesnot

imply, that in the global south a cluster is nothing more than geographic proximity and productive

specialization, but that which is present (like social linkages or institution bodies) is not subsumed by

definitionandit isamatterforempiricalresearch.Forinstance,Porter’s(1998)moreclassicdefinitionof

clusters,alreadygivenbefore,seemsunsuitableforthisresearchbecauseinmostrisingpowerclustersthe

relationshipsbetween firms, arenot as formal and thepresenceof advanced structures, like specialized

providers,seemtoberare.

2.1.2Classificationsofclusters

Clustersarefarfromhomogenousentities(Nadvi,2015)anddifferentclassificationsexist.Forinstance,in

the contextofdeveloping countries, Sandee (1995 in Lund-Thomsenet al, 2016a)distinguishesbetween

‘dormant clusters’,which tend to servepoor consumers andproduce low-income formsorwork, versus

‘dominant clusters’, characterized by firms closely networked and competing in globalmarkets. Another

classification,basedonthedevelopmentstagereached,istheonegivenbySchmitzandNadvi(1999),which

insteadspeaksabout‘incipient’and‘matureclusters’.Theformer,describesclustersthatareinanearlystage

19

ofindustrialdevelopment,locatedinlow-incomeareasandproducingwiththeuseofsimpletechnologies

andlabourskills.Thisnotion,isalsosimilartotheonegivenbyAltenburgandMeyer-Stamer(1999inNadvi,

2015)of‘survivalclusters’.Incontrasttotheformerones,thematureclustersarerelativelymoreadvanced

intheproductiontechnologiesusedandoftencompetinginglobalmarkets.Forthisreason,theyarealso

characterizedbydifferentpatternsofupgrading respects the incipientonesandbyhigher levelsof joint

action(Nadvi,2015).However,evidencefromclusterstudies(Sachdeva&Panfil,2008)suggeststhateven

inmatureclusters jointaction is far fromuniform(Nadvi,2015).Adifferentkindof taxonomy is theone

suggestedbyParto(2008),whichdistinguishesbetweentwomaintypologiesofclusters:‘verticalintegrated’

and‘horizontalintegrated.’Theformerconsistsofenterpriseslinkedthroughbuyer-sellerrelationswhilethe

latteraremadeoffirmsthatsharethesamemarketandusesimilartechnology, labourforceandinputs.

Anotherinterestingclassificationandpertinentforthisresearch,istheoneprovidedbyGiuliani(2016),which

distinguishes clusters according to their firms’ human rights engagement and explicit CSR adoption. She

stylizedthreetypesofclusters:

1. ‘Low-roadclusters’whoseenterprisesneitherimplementanykindorCSRpracticesnorrespectthe

negativedutynottoinfringeothers’humanrights;

2. ‘Window-dressingclusters’whosefirms’extensiveadoptionofCSRpoliciesismerelysymbolicwhile

regularlyviolatinghumanrightsand

3. ‘Rights-oriented clusters’ which instead are formed by firms respectful of human rights whilst

conductingbusinessoperationsbutdoor donot adopt explicit CSRpolicies (Ibid). In this group

clusters,whosefirmshavenotundertakenexplicitCSRpractices(silentCSR)butactuallyrespectthe

locallaborenvironmentandtheirrights,arealsoincluded.

Finally,clustersarenotonlyinhomogeneousentitiesbutalso‘farfromstaticagglomeration’(Nadvi,2015)

andtheytendtoevolveanddevelopovertimeasfirmstrytoupgrade.Becauseoftheirchangingnature,

theyarealsodynamicwithdifferentwinnersandloserswithinthecluster.AsclearedbyGiuliani(2005),the

dynamicgrowthofaclusterdependsonitsabsorptivecapacity,whichisdefinedas“thecapacityofacluster

toabsorb,diffuseandcreativelyexploitextra-clusterknowledge”.Itdependsboth,ontheknowledgebases

ofitsmemberfirmsandtheintraandextra-clusterknowledgesystem(Ibid).Anothertaxonomy,basedon

the dynamismof a cluster,whichmeans its capacity to growover time, is presented inGiuliani’s paper

“ClusterAbsorptiveCapacity:Whydosomeclusters forgeaheadandothers lagbehind?” (2005),stylizing

threetypologiesofclusters:“static”,“dynamic”and“leadingclusters”.Theformer,ischaracterizedbyno

relevant growthover timewhereasdynamic clusters are theonedistinguishedby a rapidand sustained

growthachievedrecently.Finally,leadingclustershaveconsolidatedgrowthtrajectory.Basedonthecluster

20

absorptivecapacityandtheirdynamism,Giuliani(Ibid)developedaframeworkexplainingthedifferentialsin

clusters’growtharoundtheworld.

2.1.3Relationsbetweenindustrialclusters,economicandsocialupgrading

Industrialclusters,haveoftenbeenportrayedintheinternationalliteraturereviewasabreedinggroundof

local economic development and innovation especially in the global south. Theorigins of thedebateon

industrialclustersandCSRindevelopingcountries,beganwiththisfocusbackintheearly1990s,thanksto

theresearchesofNadviandSchmitz(1994,1999).Theverdictappearedtobe,thatindustrialclusterscould

playanimportantrole,infosteringindustrialandeconomicupgradingespeciallyinthepoorregions,thanks

to the clustering’s ability to open opportunities for economies of scale and scope and by promoting

specializationthrough“small riskablesteps” (Schmitz&Nadvi,1999).Finally, italso facilitates local joint

actionstoaddresscommonproblems(Gereffi&Lee,2016).However,asarguedbyParto(2008),whethera

cluster contribute to local economic growth depends on different factors; like its sectorial and physical

location, the institutional landscapeand theexternalenvironment.Therefore, it isessential to study the

institutionalcontextthroughwhichtheclusterisgovernedfromwithinandwithout;withoutexcludingthe

lessinformalinstitutions,e.g.recognizablesocialhabits,individualandcollectivementalmodelsetc.Recent

contributions,havestressedthatmoreattentionshouldbepaidtotheexternallinkagesandtheroleplayed

bythekeyexternalactors(Giulianietal,2005).Inparticular,Giuliani,PietrobelliandRabellotti(Ibid),intheir

studyofLatinAmericanSMEs,discoveredthatfirms’upgrading,isaffectedbyfirm-specificeffortsandbythe

externalenvironment,which ischaracterizedbytheotherenterprises in theclusterandthe localand/or

globalvaluechainsinwhichtheyoperate.Specificallyforthem,theexternalenvironmentisshapedbythree

characteristics:thecollectiveefficiencyofthecluster,thesectorialspecificitiesinupgradingandinnovation

andthepatternofgovernanceofthevaluechainsinwhichtheyparticipate.Intheirpaper“Economicand

SocialUpgradinginGVCsandIndustrialClusters:Whygovernancematters”,GereffiandLee(2016)mention

thatakeydeterminantforeconomicandsocialupgradinginindustrialdistricts,isthegovernancestructure

present. This last aspect is complex and it involves both public, private and ‘social’ actors as well as

internationalandnationalformsofregulation.Usuallyresearcherswhostudythisphenomenontendtofocus

ondifferentlevelsofanalysis(localorglobalrespectively)andamoreintegratedapproachshouldbeused,

encompassing both vertical (GVC) and horizontal (cluster) linkages. Sometimes, this can be in conflict,

creatingvariouskindsoftensionsattheclusterfirmslevel(Ibid).

Insomepolicycircles,thereisageneralassumptionoftheexistenceofanautomaticcausallinkbetween

economicgrowth;broughtonbythepresenceofindustrialdistrictsandsocialupgrading(Perryetal.,2006

21

in Pyke & Lund-Thomsen,2015) which is referred as “the process of improvement in the rights and

entitlementsofworkers,associalactors,andtheenfacementofthequalityoftheiremployment”(Barrientos

etal,2011inGereffi&Lee,2016).Specifically,socialupgradingnotonly involvesaccesstobetterworks,

which can be a consequence of economic upgrading, but it also includes improvingworking conditions,

protectionandrights,therebyenhancingtheoverallwell-beingofworkersandtheircommunities(Ibid).Even

ifsomeempiricalstudiessupportthisrelation,liketheTorreonbluejeansclusterinMexico,otherevidence

pointsoutthatsignificantproblemsofthepoorconditionsofworkers,insecurityandlowpaycanarisein

smallandmediumsizedclusters(Lund-Thomsenetal,2016b).Nevertheless,labourstrategies,inresponse

tocommercialandcompetitivepressures,canvarybetweena“lowroad”and“highroad”path,depending

onthetypeofeconomicupgradingpursued(Gereffi&Lee,2016;DeOliveira&Fortes,2014).Forinstance,

ifeconomicgrowthreliesmainlyoncuttingof labourcosts,theworkscreatedarelowpaidandinformal,

bringing social downgrading within the community. Pyke and Lund-Thomsen (2015), argued that social

conditionswithinclusters,are influencedbydifferentfactors likestatemacropoliciesandregulations,as

wellasbydynamicprocessesofagencyamongkeyclustergovernanceactorse.g.employers,workersand

community organizations. As stated before, also Gereffi and Lee (2016) stressed the importance of

governance(horizontalandvertical,aswellasprivate,publicand‘social’)inaffectingeconomicandsocial

upgrading.Specifically,theyhighlightedsixpotentialpathwaysofsocialupgradinginindustrialclustersand

GVCsdependingonthekeyactorsinvolvedandthemainmechanismsfollowed.However,theysuggested

thatinordertoadvancetoamorecomprehensiveandsustainableformofeconomicandsocialgrowth,the

presence of a hybrid system of regulation, also called “synergistic governance”, is necessary,where the

differenttypesofgovernancecomplementinsteadofdisplaceeachother.

Theupshotisthatthereisnoautomaticcausallinkbetweeneconomicgrowthandimprovementinsocial

conditionsindevelopingcountryindustrialclusters(Barrientosetal,2011inPyke&Lund-Thomsen,2015;

Gereffi and Lee, 2016). Indeed, as concluded by Pyke and Lund-Thomsen (2015), economic upgrading is

conducivetoimprovingsocialconditionsindevelopingcountry’sclusters,however,social improvementis

notanecessaryconsequencebutamorecomplexfunctiondependingon“thelocalcontextinwhichGVCs

touchdownandonhowsmallclusteredfirmsareinsertedintothesechains”(DeOliveira&Fortes,2014).

2.1.4IndustrialclustersandCSR

Withtheturnofthemillennium,theacademicdebateonindustrialclustersindevelopingcountriesdidnot

movea lot fromthetraditional focusofenhancing localeconomicdevelopment (Lund-Thomsen&Pillay,

2012).Innovationonlycamefrommorepolicy-orientedworks,mainlydrivenbyUNIDO,whichtookplaceon

22

industrial clusters and poverty reduction (Ibid). Only from 2005, a number of studies started to explore

whetherclustershavearoleinpromotingCSRamongsmallandmediumsizedfirms(Accountability,2006in

Lund-Thomsen&Pillay,2012).Itappearedthatbothglobalandlocalfactorsinfluencedthediscussion(Lund-

Thomsen&Pillay,2012);ononeside,globalbuyersincreasinglyrequiredtheirdevelopingcountrysuppliers

theso-called“codesofconduct”tomaintaintheirlicensetooperateintheglobalmarkets.Atthesametime,

local factors like, the thickening of environmental and social regulations, media reports, protests and

activisms,increasedtheawarenessofsocialresponsiblepracticesandputpressureonanumberofthird-

worldclusters(Ibid).Additionally,asarguedbyKnorringaandNadvi(2016),greaterimportancehastobe

givenalsototheconceptoflocalandnational‘socialcontract’withinwhicheachindividualclusterissituated.

With the term social contract it ismeant “the formal and informal institutional arrangements, rules and

norms inasociety,andrefersamongothers tohistoricallyandculturally shapedexpectationsconcerning

acceptable social and environmental behaviour” (Ibid). Particularly relevant for the discussion, is the

theoreticalmodelofCSRadoptionandnon-adoption, indevelopingcountryclusters,developedbyLund-

Thomsenetal (2016b).Afteranalysingtheprevious literatureonCSRand industrialclusters, theauthors

providedanoverviewofthefactorsthatenhancedorchallengedtheinstitutionalizationofCSRnormsinsuch

districts.Twomainfactorscameout:theglobalandlocalvaluechainsinwhichtheclustersparticipateand

thenationalinstitutionalcontext,wherethedistrictsareembedded.Regardingthefirstaspect,itisgenerally

assumed that the incorporation of clusters in GVCs imply their social and environmental responsibility.

However,thisalsodependsonthevisibilityofthevaluechainandonthenatureofthelinksamongclusters

andinternationalbuyers(Ibid).Forinstance,participationinregionalornationalvaluechainsitislikelyto

indicatesocialandenvironmentalirresponsibility.Regardingthesecondfactor,thepresenceofstrongformal

rulesandregulations,aswellasofinformalsocietalnorms,usuallyfacilitatetheadoptionofCSRnorms.This

isparticularlytrueiftheyhavebeennegotiatedandiftheyreflecttheconsensusofgovernment,civilsociety

and firms at the national context (Ibid).Moreover, the implementation of independent CSRmonitoring

systems, done by international or local non-governmental organizations, trade unions ormedia outlets,

usuallyimprovethechancesofCSR’sadoption.Thepresenceofstrongbusinessassociationsthatpromote

social responsible behaviours, enhance the institutionalization of CSR practices as well as the spread of

normative institutions, likebusiness schools,universitiesorother support institutions. Finally, settings in

whichregularandorganizedformsofdialoguebetweenunitsandtheexternalstakeholdersexists,positively

influenceacompany’sbehaviour.TheresultsfromtheoveralldebateonCSRandindustrialclusters,show

the clustered firm’smeeting of environmental and social standards as a complex function of both local

attitudes,institutionsandagenciesaswellasthepressuresonCSRissuesthatpermeatedownthe(global

andregional)valuechains.

23

LiteratureonindustrialclustersandCSRindevelopingcountrieshasbeendevelopedmainlyonthreemajor

themes,respectively;moregenerally,workconditionsmoregenerallyandpovertyreduction(Lund-Thomsen

etal,2016b). StudiesonCSRandenvironmentalmanagement,mostly investigate the roleof clusters, to

addressenvironmentalpollutionproblemsandtheemerginganswerisindicatingthatclusteredMSMEshave

mainlynegativeenvironmentalconsequences,especiallyinlabour-intensiveindustrieslikethetextilesector

(Blackman, 2006 in Ibid).Anotherdebate regards thepreferenceof pre-versus end-of-pipe treatmentof

environmental issues deriving from clustered MSMEs. An emerging consensus, appeared to show the

introductionofcleanertechnologiesandmachineries,whichispreferablebutnotsufficient.Suchsolutions

shouldbecombinedwithend-of-pipetreatmentssuchas,forinstance,effluenttreatmentplantsforleather

tanneriesandtextileunits(Lund-Thomsen,2009inIbid).However,end-of-pipetreatmentsarenotwithout

challenges.Theysometimesnotonlyunderperform,becauseofthe lackofpropertechnicalcapacity,but

also suffer of free-rider problems (Lund-Thomsen, 2009 in Lund-Thomsen et al, 2016b). Beyond

environmentalmanagement,somestudiesexploretheuseofCSRactivitiestoimproveworkingconditions

indevelopingcountryclusters.Majorityof this literature, focusesonchild labourconcernsbutmainly in

export-orientedclusters(Ibid).Generally,thesolutionadvancedinordertoimproveworkingconditionsin

developingcountryclusters, relyontheethicalguidelinesorcorporate“codesofconduct”,developedby

globalbuyersandwhichdirectlyaffectworkers.However,thissolutionisseeninascepticalwayfortwomain

reasons.Firstly,thesecodesareelaboratedasfactory-basedregulations,soonlyprotectingworkersboth

formal and enjoying a permanent status, which counts for only a small portion in developing country

contexts.Secondly,theWesternguidelinesareelaboratedwithlittleornoconsultancyoflocalproducers

andworkers,ignoringsotheirneedsandwaysofdoingthings.Finally,regardingthethirdthematiconwhich

theliteratureonindustrialclustersandCSRindevelopingcountrieshasbeendeveloped,afewauthorshave

investigatedtheroleofCSRinreducingpovertyindevelopingcountryclusters.TheonlyexceptionisNadvi

andBarrientos(2004)(Ibid).However,thisnewliteraturesuffersfromtwomainpoints;thereisaneedofan

in-depth investigation of what ‘poverty’ and ‘development’ means and, the previous literature on the

relationsbetweenbusiness and local social upgrading/poverty reduction shouldbe incorporated (Prieto-

Carrónetal,2006).

To sumup, cluster literature provides important tools to understand the actual functioning of it and to

examineintern-firmrelations.Nevertheless,untilnowlittleworkhasbeendonetoinvestigatethelinkages

between industrial clusters and CSR in developing country contexts (Lund-Thomsen & Pillay, 2012).

Moreover,asstatedbyLund-Thomsen,LindgreenandVanhammeintheir“SpecialIssueonIndustrialClusters

24

and CSR in Developing Countries” (2016a), CSR and developing country cluster literature is excessively

focusedonexport-orientedfirmsandclusters,ignoringtheexistingtiesofindustrialdistrictswithlocalvalue

chains. Hence, furtherwork should be done in order to understand the role that clustersmight play in

fostering economic, socially and environmentally responsible business actions in rising countries. The

purposeofthisresearchistofillinpartthisgapprovidinganempiricalstudyfromanIndianmanufacturing

cluster.

2.2MicroSmallMediumEnterprises(MSMEs)

2.2.1DefinitionsandcharacteristicsofMSMEs

ThereisnouniversaldefinitionofMSMEs,whichiswidelyaccepted,andusuallyitvariesincontextacross

countries,industries,agenciesandscholars(Inyang,2013).MSMEscanbedefinedstatistically,onthebasis

ofquantitativecriteria,andthisisoftenbasedontwomainfactorsacceptedattheinternationallevel:the

numberofemployeesengagedand/orthevalueofthetotalnetassetsoftheorganization(Ibid).Forinstance,

withintheEuropeUnion,anenterpriseiscategorizedasaSMEif“itemploysfewerthan250personsand

which has an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not

exceedingEUR43million”(EURecommendation2003/361).Theceilingsbetweenthedifferentcategories

areillustratedinthetablebelow.

Companycategory StaffHeadcount Turnover or BalanceSheetTotal

Microsized <10 ≤€50mil ≤€43mil

Small <50 ≤€10mil ≤€10mil

Medium <250 ≤€2mil ≤€2mil

Table3:FactorsdeterminingSMEsinEU;Source:Growth,2016

TheforegoingdefinitionshowsthatMSMEsencompassesaveryheterogeneousrangeofenterprisesfrom

establishedtraditionalfamilybusinesseswithover200workerstosurvivalistself-employedpeopleworking

ininformalmicrofirms.Forthisreason,thedefinitionresults‘narrow’andnotapplicableacrosscountries,

sincewhatislabelledSMEinEurope,maybeconsideredalargefirmelsewhere,forexampleinadeveloping

country. In the Indian context, MSMEs are defined by their investment in plant and machinery for

manufacturingenterprises;andonequipmentforfirmsrenderingservices(MSMEDevelopmentAct,2006).

AccordingtotheMSMEDevelopmentAct(2006),amicroenterpriseiswhentheinvestmentinmachinery

25

andplantdoesnotexceedtwenty-fivelakhrupees,whileinasmallonetheinvestmentisincludedbetween

twenty-fivelakhrupeesandfivecrores.Incontrast,inmediumenterprises,theinvestmentismorethanfive

crorerupeesbutdoesnotexceedthetencrores.Thisclassificationregardsonlymanufacturingenterprises.

Evenifsmallandmediumenterprisesaredefinedinseveralways,theircharacteristicsaresimilar.Beyond

thequantitativecriteria,whichvarybetweendifferentcontexts,therearealsoqualitative factorsusedin

definingMSMEsthatdonotchangebetweencountriesorindustriesand,forthisreason,moreappropriate

toadopt.Someexamplesare,servinglimitedcustomerbases,personalmanagementbytheowner,lackofa

formal bureaucratic system and so forth. Spence (1999) notes that MSMEs are companies that are

characterized by a little distinction between the role of management and ownership; mainly oriented

towardssolvingday-to-dayproblemsanddominatedbyinformalrelationsandcommunicationstyle.Enderle

(2004),addsthat,theyarealsocharacterizedbyahighdegreeofinterrelationwiththecommunityandthe

environmentwhich are subject to themarket dynamics and are determined by the large enterprises. It

follows thatMSMEs can be distinguished from large companies by characteristics such as; independent,

owner-managed,multitasking,firefighting,cashlimitedand informality.SoMSMEsarenotsimplysmaller

versionsoftraditionallargecompanies,butdetainmanydifferencesregardingownershipstyle,availability

ofresources,organizationalstructureandmanagementsystem.

Asstatedinthepreviouschapter,MSMEshaveoftenbeendescribedasdisadvantaged,comparedwithlarger

firms,mainlybecauseoftheir limitedfinancialandmanagerial resources,personnelandcapabilities.This

determines that their traditional disadvantages are due to their size limitation. In general,MSMEs have

overcomethebarriersduetotheirlimitsinresourcesthankstotheirastuteuseofalliances(Narula,2004),

andtheirco-locationinindustrialclusters.ItfollowsthatitistheisolationofMSMEsandnottheirsizethat

mayactuallyactasanobstacle intermsofcompetition(Gulati,2012).AnotherlimitationofMSMEs,that

especiallyconcernsthesmallerones, is the lackofaprofessionalmanagementsystemandawidespread

managerialinexperience(İPLİK&KILIÇ,2009).Thisisduemainlytostaffinglimitations(Ibid),deficiencyof

specialized staff and the little distinction between the role of management and ownership. However,

comparedtomultinationalcompanies(MNCs),smallerfirmsareunfetteredbybureaucracyandhierarchical

thinking(Ibid),enablingthemtobemoreflexibleandtohaveaquickerresponsetothechangesinmarket

demands.FlexibilityisarguedtobeoneofthemajorcompetitiveadvantagesofMSMEsbyNarula(2004).

26

2.2.2MSMEsandCSR

Smallandmediumenterprisesareconsideredthebackboneofalleconomiesandtheirpredominanceisseen

inbothdevelopedandemergingeconomies.Theyconstitutemorethanthe90%oftheworldwidebusinesses

andaccountbetween50to60%ofallemployment(Vives,2006).Moreover,Luetkenhorst(2003),notesthat

theyform90%oftheenterprisesandaccountforatleasthalfofemploymentonlyindevelopingcountries,

whichisalsoduetotheirlabour-intensiveproductionprocesses.ThismakesMSMEsasignificantcontributor

tonationaleconomies,notonlyintermsoftheemploymentgenerationbutalsodevelopmentandgrowth

impacts.ForthesereasonsMSMEsengagementinCSRactivitiesiscrucial.ThesameLuetkenhorst(2004),

arguesthatMSMEsarecriticalinsupportingeconomicgrowthandlivelihoodsinrisingeconomiesbecause

they,

• Are involved in more labour-intensive production processes than large firms, thus boosting

employmentandenhancingtomoreequitabledistributionofincomeinsociety;

• Supportentrepreneurship;

• Providelivelihoodopportunities;

• Encouragethebuildingupofsystematicproductivecapacitiesandthecreationofresilienteconomic

systems.

Alltheseaspectshavebeenbroughttoarecentawakeningofinterestamongscholarsandresearchersinthe

MSMEs-CSRdiscourse,especially in thedevelopingworld. In truth, in thepast, the literaturewasmainly

undertakenontheengagementoflargeenterprisesinCSRactivitiesduetothehigher“CSRprofile”(Inyang,

2013).ThiswasdoneeventhoughtheaggregatecontributionofallMSMEscanbeconsiderableinsizeand

resulting into important contribution to national economies (Ibid). This emerging literature on CSR and

MSMEs has shown that MSMEs are not “little big firms” and thus should not be treated like them.

Undoubtedly,theuniquecharacteristicsofMSMEsmakeitessentialforacademicstostudythisspecialform

ofbusinessorganization,insteadofpresentinggeneralizationsbasedonCSRunderstandinginlargefirms.

Specifically,moreattentionisrequiredtounderstandthespecificcontributionsofMSMEsinrelationtoCSR,

especiallyindevelopingcountries,wherethefirm’sfeaturesandstructureoftendifferfromindustrialized

countries (Jamalietal,2015).For instance, inemergingeconomiessmallandmicro firms tendtoexhibit

orientationtowardsbasicsocialandenvironmentalfunctionsandusuallythisbehaviourisconsideredasa

wayoffilling“governmentgaps”(Visser,2008inDemuijnck&Ngnodjom,2013).Becausebasicneedsare

notcoveredbytheweakandsometimescorruptgovernments,MSMEstakeoverthisresponsibility,willing

tocontributetothedevelopmentoftheircommunity(Demuijnck&Ngnodjom,2013).

27

Todate,thediscourseonCSRandMSMEsindevelopingcountrieshasmainlypointedouttothepositive

affinitiesofSMEstoCSR(Jamalietal,2015).Thisismainlyduetothestrongerpositionwheretheowners

have in their firms and their power to imprint their personal ideologies and views throughout the

organizations(Ibid),whichinturnismirroredintheirimplementedCSRagenda.Thisisalsoshowedbythe

empiricalstudyofVives(2006),onCSRimplementationinLatinAmericanSMEsandbytheUNIDO’sstudy

reportonsevengeographicalclusterinthedevelopingworld(Sachdeva,2008).Theybothfoundoutthat

SMEs’levelofsocialresponsibilitymainlydependsonthepersonalvaluesoftheowner-managerandontheir

closenesswiththeworkforceandlocalcommunity(Vives,2006;Sachdeva&Panfil,2008).MSMEstendto

bestronglyembeddedintheirsocietyandgenerallyclosertotheirworkforcethanbiggerfirms(Jamalietal,

2015). However, despite this characteristic, in the literature of MSMEs and CSR there is an over

representationofmanager’sandowners’perspectivesat theexpenseofemployees (Ibid).Researchalso

points out that MSMEs primarily tend to implement informal CSR practices (Ibid; Vives, 2006; Tran &

Jeppesen,2016),andthisisinturn,wasreflectedinanot-systematictranslationoftheseactionsintothe

firms’corporatestrategies(Vives,2006).Intruth,asarguedbythisauthor(Ibid),SMEsinvolvementinCSRis

usuallynotonlyinformalbutalso“gradual,almostimperceptibleandfocusingononeissueatatime”.For

thisreason,possiblestrategiesforfosteringCSRengagementinMSMEsindevelopingcountriesshouldbeas

simpleaspossibleandnotbe imposed(Ibid).Nevertheless,apartfromthistrendofportrayingapositive

affinitybetweenMSMEsandCSRinthedevelopingworld,thereisanotherrecenttendencyintheliterature

which pictures MSMEs as socially and environmentally risk-prone enterprises (Jamali et al, 2015). For

instance,inthisrespect,someauthorsperceivejointactionsCSRinitiativesasanotherformof“SMEgreen

washing”where firms try toportray themselvesas socially responsibleat theeyesof thepublicwithout

knowingiftheseactivitiesmakeapositivecontributiontothelocalwelfare(Ibid;Lund-Thomsen&Pillay,

2012).Intruth,theexplicitCSRadoptionmaysayverylittleabouttheactualresponsibleconductoffirms,

especiallyinadevelopingworldcontext,andthisisalsodemonstratedbythestudyoftheJalandharcluster

in India by Jamali, Lund-Thomsen and Khara (2015) where they discovered that SMEs were behaving

responsiblyandirresponsiblyconcurrently.Particularly,localclusteredfirmsstaycoupledandlegitimatedat

theeyesoftheexternalstakeholdersthroughjoint-actionCSRinitiativesfocusedonhighvisibleissues;for

example,childlabour,whilenotcomplyingwiththedemandforotherhumanandlabourrightissues(Ibid).

This phenomenon is described as “decoupling” or “loose coupling”. Another recent contribution to this

debateonsmallbusinesses’irresponsibilityinthedevelopingworld,isprovidedbytheempiricalresearchof

Soundararajanetal(2016)ontheTirupurclusterinIndia.Intheirpaper,theresearcherswentastepfurther

explainingtheconditionsunderwhichsmallenterprisesevadethe institutionaldemandcomingfromthe

nationalregulationandtheglobalbuyers.This“evasion”ofinstitutionalworks,takethreemainforms:

28

1. “theundermineofvaluesandassumptions”,wherethemanagersdisruptinstitutionaldemandsby

employingavarietyofpracticesthatweakenthecorevaluesandbeliefsofthoseinstitutions;

2. “the dissociating consequences” under which the owners destroy the institutions through the

creationofanegativeimageoftheassociatedactorsorbyemphasizingtheiractions;andfinally

3. “theenhancementoftheirpoliticalautonomyandstrength”,donethroughavarietyofelimination

strategies(Ibid).

The context then seems to be vital in this debate and particularly how the relevant institutional and

contextual factorsmediate CSR expressions. However, as argued by Jamali et al (2015), in a developing

country context the traditional discussion on how institutional constellations have a deterministic

constraininginfluenceintheadoptionofCSRpracticesbyMSMEsneedtoberevisited.

Giventhisscarcityofresearch,wheremoreovertheexistingworkstendtofocuson‘whatMSMEsshoulddo

regardingsocialresponsibleactivities’,followingonwhatlargefirmsimplement,thispapercontributestofill

thegap,examiningMSMEs‘intheirownright’andpointingtotheinformalapproachesofsmallfirmstoCSR

inadevelopingcontext.Furthermore,theresearchwillmovebeyondafirm-centredanalysisincludingon-

the-groundperspectivesoftradeunions,governmentofficialsetc.,henceunderlyingtheimportanceofhow

the institutional constellations, independently from their formality, affectMSMEs’ engagement in social

responsibleactivities.

2.3Informalisationoflabor

2.3.1Definitionsanddebatesoninformality

Nowadaysarenewedinterestonthe informaleconomyhasappearedworldwide,mainlybecausea large

shareoftheglobaleconomyandlabourforceisinformalandbecauseofitsgrowthinmanycontextsandits

appearanceinnewguises(Chen,2012).However,anearlydiscussionofeconomicinformalitystartedback

in the seventies and eighties, where the debate was mainly focused on definitional and conceptual

controversy.ItisbelievedthattheBritishanthropologistHartcoinedthefirstdefinitionof“informalsector”,

during his study of urban labourmarkets in Ghana (Hart, 1973). Even though, one of themost quoted

definitionsistheonegivenbyCastellsandPortes(1989),whichdescribestheinformaleconomyas“aprocess

ofincome-generationcharacterizedbyonecentralfeature:itisunregulatedbytheinstitutionsofsociety,in

a legaland social environment inwhich similaractivitiesare regulated”. Following the ILO (International

LabourOrganization)terminology,instead,economicinformalitycanbedescribedintermsofthreecentral

concepts:

29

1. The“informalsector”,whichreferstoboththeproductionandemploymentinunregisteredfirms;

2. The“Informalemployment”thatfocusesontheemploymentnotprotectedbyregulations,whether

informalorinformalenterprises,and

3. The“informaleconomy”,whichcoversalltheactivities,firmsandworkersthatoperateoutsidethe

legalregulatoryframeworkofagivensociety(Meagher,2013).

Fromthesedefinitions,itappearsclearthattheinformaleconomyishighlyheterogeneous(Chen,2012).Yes,

referringonlytotheworkersemployedintheinformaleconomy,RalfHussmanns(2004)gaveusauseful

framework,dividingthebroadgroupbetween‘personsemployedintheinformalsector’and‘personsinthe

informal employment outside the informal sector’. The first category comprises all employment in

unregulated firms (including owners, employees, self-employed persons etc.), while the latter includes

employeesinregulatedfirmswithoutsocialprotection,workersinhouseholdsnotcoveredbysocialsecurity

schemesandfamilyworkersinformalenterprises.Inthispaper,thefocuswillbeonthissecondcategoryof

theinformalemployment.

Informalemploymentorinformalisationoflabourhascausedworldwiderenaissancefromthebeginningof

the seventies until the end of the nineties (Mezzadri, 2010). The increase of informalworkwas initially

attributedtotheendof theso-called“goldenera”,characterizedbyastablegrowthtrend(Chen,2012).

However,thisexplanationseemsincompatible,becauseitexcludedthepresenceoftheinformaleconomy

duringthetimeofeconomicgrowthwhenboththeformalandinformalsectorswereexpanding.Recently,

two different approaches for the explanation of the growth of the informal employment have been

developed: the “overregulation-centered theory of informalisation” and the “neoliberalism-centered

approach”.Ononehand,thefirstapproach,mainlyassociatedwiththeworkofthePeruvianeconomistDe

Soto(1989,2000inChen,2012)takesintoconsiderationtheinstitutionalcontextanditisbasedontheidea

thatinformalisationisjustareactiontothe“excessivedistortionscausedbygovernmentinterferenceina

marketeconomy”.Inotherwords,informalisationprocessesreflectrepressedentrepreneurshipsthatcannot

operateintheformalsector,duetothehightransactioncostsnecessary.Thismodel,however,presented

some issues. Indeed, it overlooked some major facts regarding the historical conditions in which

informalisation has taken place. For instance, government regulations in rising economies (specifically

regarding labourmarkets)havebeendiminished inthepasttwodecadeswhile informalisationhasrisen.

Consequently,thereasonstoevadegovernment’s lawsshouldhavealsodeclinedandtheinformalisation

practicesaswell.Ontheotherhand,the“neoliberalism-centeredapproach”connectstheriseofinformality

to the spread of neoliberal political practices in the late seventies, which mainly consist in the

implementation of a free-market capitalism and the reduction of government interventions (Mezzadri,

30

2010).Thesepoliciesbroughttoaslowereconomicgrowth,whichinturnreducedeconomicopportunities,

andthepressuretoofferdecentjobs.Inthisway,theprocessofinformalisationisseenasa“viciouscycle”

(Ibid) where informal work arrangements flourish when workers have few alternative economic

opportunities.Indeed,thespreadofinformalisationwillputdownwagesandworkingconditionsofformal

jobs,lettingbecomewhathadoncebeenformaljobsprogressivelyinformalizedovertime.

Indevelopingcountries,theimportanceofsocialregulationoflabourstartedbeingstudiedintheseventies,

when the informal sector was ‘discovered’ (Mezzadri, 2010). Lately, four dominant schools of thought

developed,underlyingdifferentperspectivesregardingtheinformaleconomyintheglobalsouth.ForHart

(1973),andthe“DualisticSchool”,theinformaleconomyiscomprisedofmarginalactivitieswhicharenot

directlyrelatedtotheformalsectorandwhichprovideincomeforthepoor.Inthiscase“informalityisaby-

product of poverty” (Rauch, 1991 in Chien, 2012) and a consequence of the emargination of developing

countriesfromtheprocessofcapitalisttransformation(Hart,1973).Instead,thesupportersofthe“Legalist

School” see the informal economymade up of ‘brave’ firms who choose to operate in an unregulated

environmenttoavoidcosts,timeandeffortofformalregistration(DeSoto,1989inChen,2012).Thisschool

sustainedthe“overregulation-centeredtheoryofinformalisation”,previouslyexplained,highlightinghowthe

presenceofahostileandbureaucratic legalsystemmainlydirectedto“inward lookingdomesticpolicies”

pushedtheeconomytobecome“underground”(Ibid).Boththeseapproacheswerecriticizedbyauthorslike

Castells and Portes (1989), that see the informal enterprises in developing countries as subordinated

economicunitsandinformalworkersasmeanstoreducelabourcostsoflargecapitalisticfirms.Particularly,

thisviewisalsoknownasthe“StructuralisticSchoolofThought”.Finally,thereisthe“VoluntaristSchool”,

whichwasintroducedquiterecentlythankstoMaloney(2004inChen,2012).Likethe“LegalisticSchool”,he

sees the informaleconomyascomprisedof firmswhovoluntarilychoose tooperate informally, toavoid

taxation,however,hedoesnotblamethelegalsystemandthecumbersomeregistrationprocedures(Ibid).

Instead,hesustainsthatinformalityisanintentionalchoiceoftheenterprisesinordertoenjoythebenefits

related(Ibid).Giventheheterogeneityoftheinformaleconomy,itisimportanttogivemerittoeachofthese

schoolsof thought,becauseeachapproachreflectsonepartof the informaleconomy.For this reason,a

“HolisticModel”ofthecompositionandcausesofinformalitywaspresentedbytheLatinAmericandivision

of theWorld Bank in 2007 (Perry et al., 2007 in Chen, 2012). Particularly regarding the composition of

informality,theauthorsidentified“threepairs”ofeconomicagents,whicharelabour,micro-firmsandfirms

(Ibid).Thelaboureconomicagentiscomprisedofthoseinformalworkers,whocannotaffordtogetaformal

jobbecause‘characterized’byinsufficienthumancapitalandbythosewhoquitaformaljobtoenjoythe

benefitsofinformality,suchasavoidtaxation,makemoremoney,enjoyflexibilityetc.Unregulatedmicro-

31

firms, instead,arecharacterizedbythosesmallenterprisesthatarestymiedbyhighentrybarriersorthe

onesthathavenopotentialtogrowhencenointentiontoengagewiththestate.Instead,informalfirms,are

theenterpriseswhoavoidtaxationorotherregulations,andthefirmsthatregister,butonlypartially,their

incomeoremployees.

2.3.2InformalityandCSR

Informal employment has characterized the era of neo-liberal globalization especially in the developing

countries. Indeed, globalization and the increase in international trade have affected the industrial

trajectories of transition countries producing a crescent disconnection between the management of

productionandtheregimesoflabourcontrol(Mezzadri,2010).Whiletheproductionprocesseshavebeen

projected into the global arena, labour regimes seem to have maintained a strong embeddedness to

regulatory frameworks provided by local social structures and gone through an increasing process of

casualization and informalisation (Ibid;Mezzadri, 2012). This process of informalisation, as described by

Mezzadri(Ibid)involvesa“systematicexploitationofinformalmechanismtocontrolthelabourforce,based

ondeeply-rooted inequalitiesand structuraldifferences, likegender,age,geographicalprovenienceetc.”.

Particularly,thisprocessoflabourinformalisationentailstwomainpaths:the‘informalisationoftheformal’

inside global firms and the incorporation of informal production and labour structures into bigger

manufacturingcircuits,throughdecentralizationprocesses(Mezzadri,2016a).Thefirstdynamic,onwhich

thispaperwillfocustheattention,consitsinthechangeofmorestableandformallabourstructuresinto

precariousworkalternatives.Thesetrendsaffectbothdomesticandexport-orientedmanufacturingsectors

(Ibid) and since the garment industry is a labour-intensive sector, it is highly characterized by this

phenomenon.

ConcernsofCSR,especiallyintheformofcodesofconduct,havebeenelaboratedasapotentialwaytoface

this“racetothebottom”forlabourandsetgivengloballabourstandards.However,asshowedindifferent

studies(Mezzadri,2012;DeNeve,2014),thesecodeshadalimitedimpactonimprovingworkingconditions

or even opposing results to those initially expected. Themain reason for this failure is due to the clash

between“codesofconduct”andtheeffective“codesofpractice”imposedbythefirmsandlocalactors.The

“codesofconduct”,taketheformoffactory-basedregulationsandproposetheimpositionofgloballabour

standardsforworkersintheproductionnodesofGVC.Thesestandardsaresignificantlyshapedbythe“codes

of practice” which are elaborated instead by the companies to guarantee labour control and cost

minimization.AssuggestedbyKabeer(2004)themainpitfallofmanyCSRlabournormsrelyontheirfactory

bias(inMezzadri,2014b).Thesecodesareelaboratedasfactory-basedregulationsandsoexcludeallworkers

32

innon-factoryrealmsofproduction.Theyarealsodevelopedtoonlytargetaworkforceenjoyingpermanent

status.Unfortunately,bothformalandpermanentlabourrelationsarerareinthesettingofsmall-medium

sized clusters in developing countries,where the clearmajority ofworkers are temporary and casual or

occupied not in a factory realm base (Barrientos et al, 2010 inMezzadri, 2014b). Looking at the Indian

garmentindustry,whichisthefocusofthisresearch,itischaracterizedbyhighlevelsoffragmentationand

localizationofproductioninindustrialclusters(Ibid).Thisstructureissimplifiedbythecomparisonproposed

byMezzadri (2014b),whoreimaginestheIndiangarment industryasa ‘giantmall’describedbydifferent

floors, each specialized in selling distinctive garment collections. Particularly, each floor represents a

differentregionalproductioncentrewhichischaracterizednotonlybydistinctiveproductandproduction

specializations but also by different local sweatshop regimes of production (Ibid). Here, local sweatshop

regimesaredefinedas“manifestationsofthe‘sweatshop’[…]entailingaspecificsetoflocallabourrelations

andoutcomes” (Mezzadri,2014a). It thenresults thattheproductionofeachgarmentcommodity isalso

linked to specificworking conditions and rhythms, hosting different classes and genders of labour (Ibid;

Mezzadri,2016b).Forinstance,Mezzadri(2014a;2016b),foundoutthatinNorthernIndia,wherenicheand

women’swearisproduced,factory-labourispredominantlycharacterizedbymalemigrants(mainlyfromUP

and Bihar),while different feminised non-factory realms of production are employed for value-addition.

Instead,acrossSouthern India,garmentcentresaredefinedbystrikingdiversesweatshopsystems.Here,

wheremass-basicitemsareproducedandproduct-cyclesarelessfragmented,thesweatshopdeploysmainly

low-paid female factory workers (Ibid). These different local sweatshop regimes, which are strategically

employedbylocalfirmstominimizelabourcostsandrisks(Ibid),inturnmakethe“universalapproach”to

labourstandardsproposedbyCSRnormsas‘useless’(Mezzadri,2014b).Forthisreason,manyIndianclusters

workas‘informalproductionregimes’,whereinformalityandlabour-intensityaresystematicallyreproduced

forattainingflexibilityadvantagesandasuccessfulincorporationinGVCs(Ibid).Inthissense,poorworking

labourconditionsbecomeanoutcomeimposedbycapitalontolabourandnotsimplyby‘global’ontothe

‘local’ (Mezzadri, 2014a). This aspect is successively highlighted by the recent rise of processes of back

shoring, in India(donebyapowerfulgroupofPan-Indianbuyers/exporters),whichfurtherreinforcesthe

regionalizationofproductionandconsequentlytheresilienceoflocalsweatshopregimes,henceadditionally

institutionalizingthelimitationsofCSRnormsonlabourstandards(Ibid).Forthesereasons,studiesonGVCs

and production networks have stressed the need to develop labour rights agendas which take in

consideration local institutions and specificities; and not simply focusing on one-size-fits-all approach

(Mezzadri,2012;Mezzadri,2014b).

33

Anotheraspect,thatisahurdlefortheimplementationofCSRnormsintheglobalproductioncircuits,isthe

useoflabour-intermediaries,alsocalledbyBarrientos(2008)asthe“Achilleshell”ofCSRnorms(inMezzadri,

2016a). Indeed, the mechanisms through which precarious working conditions are reproduced both in

formalizedandinformalizedsettingsaremainlyduetothepresenceofacategoryofactorscalled“labour

contractors”(Barrientos,2013inIbid).Theseactorsshapethelabourchainsina‘cascadesystem’makingso

more complex adirect control, and implementationofCSRnorms (Ibid).While themethodsof informal

workforcerecruitmentinIndiavaryalot,dependingforinstanceonthegeographicallocationorthesector,

thepresenceof labour intermediariesseemsaconstant (Ibid).Themain reason,why firmsprefer touse

labourcontractors,istheflexibilityadvantagetheyreachthroughintermediationpractices,givingthemthe

ability to thrive on aworkforce that can increase and decrease as required (DeNeve, 2014). Twomain

contracting labour dynamics are seen: while the first is operating in factory settings and involve the

recruitmentofworkersinexchangeofacommission,thesecondistakingplaceoutsidefactoryrealmsof

production and consist in the organization of auxiliary economic activities. Castells and Portes (1989),

respectivelydefinethemas“in-contracting”and“out-contracting”practices. In-contractingpractices,still

mediatetherecruitmentprocessesofanimportantpartofIndianworkforce(Srivastava,2005inMezzadri,

2016a) and in-contractors primarily perform a function of “intermediation aimed at disguising thewage

relation” (Mezzadri, 2016a). Contrary, out-contractors’ function is not only of mediation, but also of

organizationofspecificactivitiesoftheproductionprocess.Mezzadri(2016a),inherstudyofout-contracting

practicesinthehome-basedembroideryindustryinBareilly,India,discoveredthatworkers’precariousness

isnotduetothesimpleintermediationprocessbutalsototheinterlockingstrategiesoflabourandcredits

implementedbythecontractors.Inthisway,whilethesimplisticpolicyofcuttingthemiddlemencouldwork

forlabourin-contracting,itresultsaninadequateinrelationtoout-contracting.

Finally,anadditionalconditionshapingthefunctionofCSRnormsintheIndiancontext,isthelabouragency

in the formofworker’s everyday decisions around employment, livelihoods and social reproduction (De

Neve,2014;Carswell&DeNeve,2013).Indeed,evenifCSRinterventionsintheformofcodesofconduct

are developed to reshape production processes and protect workers, labourers’ voices and preferences

regardingemploymentandworkregimesarehardlytookinconsiderationinsuchdebates(DeNeve,2014).

ForinstanceDeNeve(2014),discoveredaworkers’tendencytoavoidemploymentincompanieswhereCSR

policiesareimplemented,duetodeliberatechoicestoworkinmoreflexible,casualandinformalsettings.

Thisismainlyaconsequenceoftwofactorssuchastheirlivelihoodneeds,whicharehighlygenderedand

changealonglifecycleandmigrationstatus,andtheirsenseofindependenceanddignityatwork(Ibid).To

conclude,itappearsclearfromtheoveralldiscussiononinformalityandCSRthat,thelimitedimpactofCSR

34

norms in improvingworkingconditions in the Indiancontext is twofold. Firstly,CSR’suniversal approach

aimedatsolvingissuesinacountrycharacterizedbyagreatdiversityandfragmentationofproductionand

laboursolutions,isineffective.Secondly,theirformulationwithlittleifanyconsultationwithlocalproducers

andworkersisignoresanddevalueslocaltraditionsandwaysofdoingthings,makingthemuseless.

2.4CorporateSocialResponsibility(CSR)

2.4.1Definitions,characteristicsandperspectivesofCSR

LikeMSMEstheconceptofCorporateSocialResponsibility(CSR),isnotamenabletoauniversallyaccepted

definition.CSRhasalonghistoryandtheconcepthasevolvedwiththedevelopmentofbusinessesandthe

emerging needs of the society. CSR, also called corporate citizenship, social performance or sustainable

responsible business consists, generally, of “the responsibility of firms for their impacts on society”

(CommissionoftheEuropeanCommunities,2011).Oneofthemostfrequentlyciteddefinitionsistheone

provided by the European Commission (2001), which explains CSR as “a concept whereby companies

integratesocialandenvironmentalconcernsintheirbusinessoperationsandintheirinteractionwiththeir

stakeholdersonavoluntarybasis”.Theaspectofvoluntarinessseemsblurredespecially ifappliedtothe

developingworldcontext.Thisdefinitionassumestheexistenceandpresenceofstrongnationalsocialand

environmentallegislation.ThismightbethecaseofWesternEuropeorNorthAmerica,butinthecontextof

developing countries it cannot be counted for granted. Moreover, debating if firms operating in rising

economiesshouldgobeyondtheirlegalobligationandimplementvoluntaryinitiatives,whicharenotseen

as having immediate economic returns, makes little or no sense. Indeed, the challenge in developing

countriesseemstogetfirmsmeetingbasiclegalobligations,beforehopingtoimplementvoluntaryactions.

Forinstance,lookingattheIndiancontext,therecentlyformulated‘CompaniesAct,2013’mandatesallfirms

tospend2%oftheirnetprofitinCSRactivities,iftheirnetworthissuperiorof500crorerupeesduringany

ofthepreviousthreefinancialyears.This,forinstance,excludesthe“voluntarybasis”aspectofCSRactions.

Forthesereasons,itseemsmoreappropriateforthecontextofthisresearchthebroaderdefinitiongivenby

Blowfield andFrynas (2005),whichencompass thedifferentperceptionsonCSRactivities fromNorth to

South.TheydefineCSRas“anumbrellatermofvarietyoftheoriesandpracticesallofwhichrecognizethe

following:

a) That companies have a responsibility for their impact on society and the natural environment,

sometimesbeyondlegalcompliance;

b) Thatcompanieshavearesponsibility forthebehaviorofotherswithwhomtheydobusiness (e.g.

withinsupplychains);andthat

35

c) Businessneeds tomanage its relationshipwithwider society,whether for reasonsof commercial

viability,ortoaddvaluetosociety”(Ibid).

Empiricalstudiesdoneindevelopingcountriesshowdifferentkindofclassificationsregardingcategoriesof

CSRactivitiesundertakenbyMSMEs.Thefirstoneconsistsofthedistinctionbetweenformalandinformal

practices(Tran&Jeppesen,2016).Theformerpracticesincludeactionslikeoccupationalsafetyandhealth,

labourstandards,workingandenvironmentalconditions.The latterones, instead,coveramorebroaden

areaand canbe characterizedby themoredisparateactions. Someexamplesare loansprovidedby the

managementtotheworkers,theprovisionofextraholidaysforfamilyorreligiouseventsandphilanthropy

contributionbyMSMEsto localcommunitygroupsorassociations.Thisdistinctionbetweeninformaland

formalCSRpracticessuggeststhemaindriverswithinwhichCSRestablishesitselfinMSMES,whichcanbe

internal versus external factors (Von Weltzien Høivik & Shankar, 2011). For instance, informal kind of

practices are usually driven by internal factors like the ethical and religious values and principles of the

ownersormanagement.Ontheotherside,formalactionsareusuallyimposedbypressurescomingfromthe

external stakeholders, such as global buyers, governments or the civil society and then enforced using

certifications and regulations. Another classification given by the literature, regarding categories of CSR

activities undertaken by cluster-based MSMEs, both in developed and developing world, are: internal,

external and collectiveCSR actions (Sachdeva&Panfil, 2008).With internal activities, it is referred those

actionsconductedwithinthefirmthathaveadirectimpactontheworkingconditions,whileexternalCSR

arethoseactionsbenefitingtheoutsideenvironment.Finally,forcollectiveCSRareintendedthoseactions

conductedjointlywitheitherotherclusterfirmsorsupportingorganizations.Anotherdistinctionistheone

givenbyMattenandMoon(2008),whichdistinguishesbetweenexplicitandimplicitCSR.ByexplicitCSRthey

refer to those responsiblebusinesspolicies,whichareundertaken“for somesocietal interests”and they

normallyconsistinvoluntaryactionsthatrestsoncorporatediscretion(Ibid).WithimplicitCSR,instead,they

refer “to corporations’ role within the wider formal and informal institutions for society’s interests and

concerns”(Ibid).Theseactionsarearesultofcompulsoryrequirements,usuallyalsocodified,imposedtothe

firmtoaddressstakeholder issues.ThepredictingnatureofCSRactionsundertakenreliesonthespecific

institutional framework of the country (Ibid). Indeed, liberal market economies, which encourage

individualism and discretionary agency, will be mainly characterized by explicit CSR practices, while

coordinatedmarketeconomies,whichfor instancecharacterizetheEuropeangovernancesystem,willbe

describedbymoreimplicitCSRactions.

36

NotonlydifferentdefinitionsandclassificationsofCSRexist,butalsodifferentperspectivesonthisargument,

especiallywhenthosepracticesareimplementedinthedevelopingworld.Forexample,emergingliterature

have started to approach amore critical viewpoint of CSR actions undertaken byMSMEs in the South,

consideringtheCSRagendaasawayof‘WesternculturalandeconomicImperialism’imposedbytheglobal

buyers(KhanandLund-Thomsen,2011).Particularly,intheirstudydoneinthesoccerballindustryinSialkot,

theydiscoveredthatlocalmanufacturerswereforcedtoimplementWestern-basedCSRactivitieswithout

sufficient forms of economic assistance by their international customers (Ibid). In this way, local

manufacturersperceivedCSRas “a tool for extracting furthereconomic surplus”,which couldplease the

Westernpublicbutdoesanything to improveeconomicconditionsof local firms (Ibid).Moreover, in the

developmentanddeterminationofthesepractices,localcompanieshavenopowerofdecisionandforthis

reasonCSRinitiativesareperceivedasaformofculturalimperialismwherelocalvaluesandtraditionsare

marginalizedinfavourofWestern‘superior’ideals(Ibid;Dolan,2010inDeNeve,2014).Apossiblesolution

to these CSR challenges in developing world is moving from a “compliance-based approach to a more

commitment-basedapproach”,whereCSRnormsarenotorderedbythebuyers’codeofconductsbutseen

asanoutcomeofinformationexchangebetweenlocalsuppliers,workersandcommunities(Ibid).Another

criticalperspectiveonCSRarguesthatjoint-actionCSRclusterinitiativesareprimarily“SMEs’greenwashing”

(Lund-Thomsen&Pillay,2012).Followingthistendency,MSMEsandclustersattempttoportraythemselves

associallyresponsibleactorsattheeyesoftheexternalstakeholdersandthepublic,withlittleornoevidence

tocontributetolocaleconomic,socialandenvironmentalwelfare(Ibid).Anexampleisgivenbytheempirical

studyofJamalietal(2015),inthefootballmanufacturingindustryofJalandharinIndia,wherethefindings

illustratehowfirmsgainedcreditbyfocusingonhighvisibilityCSRissueswhilecontinuingtooverlooksome

specificdimensionsofCSR.Finally,inthelastdecades,theliteratureoncorporatesocialresponsibilityhas

taken a ‘political turn’ with the birth of the term ‘political CSR’ (PCSR). This political aspect of CSR is

interpreted,ononehand,asacorporateattempttoclosegovernancegapspresentatthenationalorglobal

level; and, on the other hand, it is related with the changing role of state agencies and the following

redistributionofgovernancetasksbetweenpublicandprivateactors(Schereretal,2016).Asamatterof

fact, during the past decades, globalization and the following privatization of governance have brought

business firms to engage in activities traditionally regarded as governmental actions (Scherer& Palazzo,

2011). This aspect is especially true formultinational corporations, but it has been seen thatmainly in

developing countries even smaller firms have begun to assume a “state-like role” as a way to plug

‘governmentgaps’(Ibid;Demuijnck&Ngnodjom,2013).ThispoliticalaspectofCSRconsidersthespecific

contextanditusuallyoccursincaseswherethestatesystemfailsandbasicneedsarenotprovidedbyweak

orcorruptedgovernments (Demuijnck&Ngnodjom,2013).Related to thisphenomenon,severalauthors

37

concludethatthefamousCarroll’spyramidofCorporateSocialResponsibility(1991),whichrankeconomic

obligations as first, followedby legal, ethical andphilanthropic duties, should be reversed in developing

countries(Demuijnck&Ngnodjom,2013).

2.5Initialconceptualframework

Afterhavingintroducedtheliteraturereviewbyme,thepurposeofthissectionistosketchandillustratethe

relationsbetweenthetheoreticalconceptspresentedinthischapter.Aconceptualframeworkisnecessary

andconsideredabettersolutionthanatheoreticalframework.Indeed,inthiscaseI“synthetize”theexisting

viewsintheliterature,bothfromtheoreticalandpreviousempiricalfindings,inregardofagivensituation

orproblemaddressed(Imenda,2014).Onthecontrary,atheoreticalframeworkistheapplicationofone

uniquetheorytoexplainoneprecisephenomenon(Ibid).Inthecaseofsocialsciencesresearch,thereisno

singletheorythatcanshedsomelightonaparticulareventandthatiswhyaconceptualframeworkwas

preferred.Thisabstractframeworkcanthenbemodifiedthroughconcretedatacollectionandanalysis,that

isinlinewiththeabductivemoderatesocialconstructivismapproach,whichhasalsobeenusedingathering

and analysing the data. Figure 1 below shows the initial conceptual framework that I elaborated to

conceptualizethelinksbetweenCSR,clusteredMSMEsandinformalisationoflabourandwhichwillenable

metoanalysehowCSRimplementationandperceptionisshapedintheLudhianaknitwearcluster.

38

In developing countries, MSMEs tend to be clustered in order to overcome growth constraints and to

competebothinlocalandglobalmarkets.Insidetheindustrialclusters,MSMEsnotonlyinteractbetween

themselves but they also interact with external stakeholders like business associations, government

institutions or suppliers. These different local institutions, affect MSMEs and their practices and

consequently, they also affect their involvement in CSR practices. The principal local social institutions

directlyrelatedtotheimplementationofCSRpracticesbyMSMEsare;thegovernmentwiththeirlawand

regulations,theindustryassociationswiththeirsetofstandardsandcodesofconductandlastly,thecivil

society,NGOsandtradeunions,whichaffecttheirinvolvementinCSRdependingontheir´powerandvoice´.

Apartfromlocalclusterdynamics,therearealsoglobalpressuresthattendtoaffectMSMEsandthatdrive

theimplementationandinstitutionalizationofCSRinclusteredmicro,smallandmediumenterprises.GVCs

andtheglobalbuyers,whittheir increasingrequesttotheirsuppliersto implementeconomic,socialand

environmentalguidelinesintheformofcodesofconduct,arepartofthem.However,therearealsostrong

internalfactorsthatinfluencecompaniestopursueCSR.InthecaseofMSMEs,thesearemostlylinkedwith

themotivesandvaluesrepresentedbytheowner/manager.Thecluster,isthencharacterizedbyhistorical,

political,economicandsocialpeculiarities,whichinfluencethewaytheCSRagendawillbeimplemented.

Figure1:Initialconceptualframework.Source:theauthor

Industrial Cluster

MSME

MSME

LOCAL SOCIAL INSTITUTIONS • Government• Industry

associations• Community• NGOs• TradeUnions

MSME

MANAGER VALUES & MOTIVES

CSR practices implemented

C O N T E X T

GVCs & Global Buyers

Codesofconduct

39

Onesocialpeculiarity,characterizinginspecificdevelopingcountries,isthehighleveloflabourinformality.

This peculiarity, not only affects the production but it also seems to entail different processes of

informalisationofsocialresponsibility,especiallyoverhealthandsafetyconcerns.

3.Casepresentation Beforeexaminingtheempiricaldata,inrelationtotheresearchquestionposed,Ihavedecidedtoexamine

theLudhiana’sknitwearcluster,investigatingindetailitscharacteristics,compositionandthehorizontaland

verticallinkages,presentinordertoprovidethereaderswithabriefoverviewofthecasestudy.

3.1BriefoverviewoftheLudhiana’sknitwearcluster

Ludhiana,isanimportanttextile-manufacturingclusterlocatedinPunjab,India,anditisconsideredthemost

significantatthenationallevelfortheacrylic/woollenknitwearproduction(ACDS,2014).Itisestimatedto

cornernearly90percentofthenationalmarketforwoollenknitwearproducts(Sachdeva&Panfil,2008),

andthatiswhy,itisalsocalled“theManchesterofIndia”(28.04ThirdInterview,2016;reference10).Even

ifLudhianaismainlyknownforwoollenknitwear,theclusterproducesalsosummerclothing.Thischange

happened in thepost eightieswhen the eruptionof a newgenerationof entrepreneurs also decided to

expandtheirproductmixtosummerwears(ACDS,2014).However,asstatedbymostoftherespondents,

theproductionisstillseasonaland,whileduringwintertimetheunitsusuallyprocess“summerfabrics”,in

summertheproductionworksoppositelytotheproductioninwinter.Asexplainedbytheownerofadyeing

unit “December to April it'smostly summer production […]while around June to October/Novemberwe

processwinterfabrics”(27.04FirstInterview,2016;2).

Regardingtheproducts,theyrangefromhigh-fashiongarments,mainlydestinedtointernationalmarkets,

tolowerqualityandcheaperclothes.ComparedtotheTiruppur’scluster,themostfamousoneinIndiafor

thecottonknitwearproduction,theLudhiana’soneismostlycateringtothenationalmarketand,asstated

byUchikawa (2012), nowadays itmostlymonopolizes thewinter production for the Indianmarket. Few

export-orientedunitsarepresent,andtheirsharerespectsthetotalturnoverinLudhianaamountstoonly

the 25 per cent (Ibid). This is also pointed out by the outcomes of the interviews. Between all the

respondents,onlytwounitsarealsoexportersandthemainmarketsresultedintheMiddleEastcountries

(27.04Third Interview,2016;2) andEurope,USA,Australia,Canada (28.04First Interview,2016;1). The

product portfolio of the units varies a lot. Apart from clothing and accessories, like “saari, anarkali suit,

40

lehanga,ghagra,kurtas, skirtsandgilet” (29.04Third Interview,2016;1),“scarfandshawls” (28.04First

Interview, 2016; 1) and “t-shirts, sweatshirts, lower parts, track-suits” (28.04 Third Interview, 2016; 1),

beddingandcurtainsarealsomanufactured.Thesearedifferentiatedbymarketsegments,which inturn

exert distinctive pressures to the enterprises. As stated byMeenu Tewari (1999) and confirmed by the

researcher’sfieldinterviews,fivekeymarketsegmentscanbeidentified:

• thegovernmentprocurement(alowcostandhighvolumemarketsegment);

• thelow-endmassmarket,characterizedbylowqualityandprices;

• themiddlemassmarket,withcompetitivepricesandaconcernforquality;

• thepremium“highfashion”domesticmarket(whichusuallysupplydomesticupper-endbrands)and

• theexportsegment.

Obviously,thecustomerrequestsvaryandtheexporterunitsaremorefocusedon“qualityanddeliverytime”

(28.04FirstInterview,2016;2)and,asforthedomesticproducerspricingisalsorelevant.

Regardingthedirectandindirectemploymentofthecluster,itisestimatedthatintheyear2009/2010the

industrywasgivingworktoaround400.000people(MSMEDI,2010).However,therecanbealargevariation

inthisfigurebecausealotofthemicroandsmallunits,arenotregistered(ACDS,2014)andsothenumber

doesnottakeaccountofallthepeopleworkingintheinformalsector.Approximately,microunitsarethe

mostspreadintheclusterandtheyprovideemploymentforupto54%oftheworkforce(Ibid).However,

smallandmediumenterprisesofferworkrespectivelyto22%and14%ofthetotallabour(Ibid).

Onthegeographicalspreadofthecluster,themainhosieryknittingcentresarelocatedwithinLudhianacity

onlyandtheclustercanbedividedinfourmainblocks(ACDS,2014;FMC,2016):

1. TheFocalPoint;

2. TajpurRoad;

3. IndustrialAreaand

4. BahadurKeRoad.

The three major areas of concentration for the dyeing units, as stated by one respondent (26.04 First

Interview,2016)andconfirmedby theDiagnosticStudyReportprovidedbyFMC(2016),areFocalPoint,

TajpurRoadandBahadurKeRoad.Themaindifferences,asexplainedbythesameinterviewee,regardthe

marketsegmentsthattheyaddress;“…whileFocalPointisfocusingonthebrandandithasalittlehigher[…]

segment,Tajpurmostly[…]aredoingverycheap,lowerquality.[…]InsteadBahadurisdoingboth”(26.04

FirstInterview,2016;1).

41

Around14.000registeredMSMEsformthecluster(Anon,2016;ACDS,2014)ofwhich9800(around70per

cent) are micro units, 2800 are small and 1400 are medium size firms (Sameeeksha, 2011). Ludhiana’s

knitwearclusterisahighlydiversifiedindustrialbaseandeveniftheknitwearmanufacturersareatthecore

ofthevaluechain,otherkindofunitsalsogivesignificantcontributiontowardtheclusteractivities.Thecore

clusteractorsdirectlyinvolvedinthegarment(knitwear)manufacturingprocessare:

1. Thedyeingandprocessingunitsthatareabout200/250innumber;

2. Theprintingunits,around100/125firms;

3. Theknittingunits,whichconsistofaround8000enterprises;

4. Thesub-contractinggarmentunits,whichareengagedmainlyinstitchingandtailoringtasksandare

countedabout3000innumberand

5. Theembroideryunits,moreorlessaround1250firms(ACDS,2014).

Besides the ‘real’manufacturing firms, there are also independent jobworkers that knit or process the

garmentsforotherfirmsininformalsettings;thisgroupingincludesalsohundredsoffemalehome-based

workerswhodoembroideryandrelatedworks(Gulati&Dhanda,1997inTewari,1999).Finally,thecluster

hasanetworkofdistributors,traders,exportersandancillaryunitsaswellasseveralsupport institutions

(Tewari,1999).Whentherespondentswereaskedtolistthemajororganisationspresentinthecluster,apart

from the industrial units, different type of answers cameout. I noticedmost of the firmswhen directly

inquiredonthecompositionoftheclusterandthenatureoftheorganizationspresent,declaredthat“No

NGOs,nogovernmentalofficials,nobusinessassociations”(26.04SecondInterview,2016;2)exist.Aswell,

the owner of amicro embroidery unit stated: “No relations […] with government offices and NGOs are

present.Notradeunionsexistforus”(29.04FirstInterview,2016;1),underlingthatevenifaninstitutional

set-upisthere,isperceivedasnotactive.However,throughindirectquestions,like“Doyou,asaMSME,get

supportfromanyinstitution?“or“DoyouworkwithanyotherenterprisesorinstitutionsinacollectiveCSR

initiative?”,IwasabletogetageneralprofileoftheLudhiana’scluster.Itcameupthatthemajor‘actors’

existent and excluded in the value chain can be categorized in three main groups, that are industry

associations, training institutesand thegovernmental set-up.Also,NGOs, financial institutionsand trade

unionsarepresentbuttoalesserextent.Whatseemsrelevanttohighlight,frommypointofview,itisthat

evenifa‘flourished’ institutionalset-upispresent, it isperceivedabsent/notactivebymostoftheunits,

especiallywhensupportingthem.Apartfromthepreviousquotations,otheronesexplicitlydeclared:“The

attitudeofgovernmentisnotgoodtowardsSMEsintheindustry”(28.04ThirdInterview,2016;1)or“No

governmentschemestosupportus[microenterprises]arepresent.”(29.04FirstInterview,2016;1)andfinally

“We would like to have more protection from the government!” (29.04 Third Interview, 2016; 1). The

institutionalactors,whichIaccessedtobethemostrelevantforthestudy,are:

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• MSME-DevelopmentInstitute(MSME-DI);

• DistrictIndustryCentre(DIC);

• PunjabPollutionControlBoard(PPCB);

• IndustrialTrainingInstituteforWomen(ITIWomen)and

• ApparelExportPromotionCouncil(AEPC).

Belowabriefdescriptionofeachorganizationandtheiraimswillbegiven.

MSME-DI

MSME-DI isagovernmentof India institution,which isdedicated to thesupportof thesmall sector.The

institute, apart from providing “30 schemes of development for industries and firms in this area […]

Technologicalandcommercialkindofschemes”(25.04ThirdInterview,2016;2),alsooffertrainingsupport

to the industry and conduct entrepreneurship development programs (ACDS, 2014). As stated by one

employeeinterviewed,“notdirectedrelated[schemes]toCSRarepresent[…]butregardingenvironmental

concerns,wehaveISO14001,whichisaglobalstandardsystem”(25.04ThirdInterview,2016;3).TheISO

14001standardshelporganizationstominimizetheirenvironmentalimpact.Anotherimportantschemeis

theTechnology andQualityUpgradation support toMSMEs (TEQUP): “SMEsare encouraged toupgrade

technology,useofpollutioncontrolsystem.Inthiscase,the15%ofthetotalinvestmentdoneisrefundedto

them”(25.04ThirdInterview,2016;4).

DIC

DIC is a district level office of the Department of Industries and Commerce under the Punjab (State)

government.Theinstitutionworksforthedevelopmentofthesmallandmediumindustriesinthedistrict

andtheirpurposes includethe implementationofGovernmentSchemes,understandingandmeetingthe

needsofthefirmsandassistingself-employment(ACDS,2014).AsstatedbyoneemployeeoftheLudhiana’s

DICoffice,“weguidethem[referringtotheMSMEs][…]andwealsohaveawebsite,www. dcmsemi.gov.in.

ThisisasiteofwelfarecommissionerofmicroandsmallbusinessenterprisesofGovernmentofPunjaband

fromthatsitetheentrepreneurisaccessorizedaboutsomanypromotionalschemes,promotionalprograms,

clusterprogramsandmanymore.Andtheymayhavehelplinealsoonthat,ifheisinneedbecauseofany

kindofimpedimentthroughthecentralgovernmentdepartment.”(25.04FirstInterview,2016;3).

PPCB

ThePPCBwasconstitutedin1975underthePunjabGovernmentandithasbeenentrustedtoimplement

environmental lawsallovertheStateofPunjab(Ppcb.gov.in,2016).Themainobjectivesoftheboard,as

statedbythewebsite,aretocontrolandrestorethelevelofpollutionofwaterandair(Ibid).

43

ITI(Women)

TwoGovernmentalIndustrialTrainingInstitutesarepresentinLudhiana.Oneisformenandtheotherfor

women.TheITI(women),providestrainingprogramsonknitting,embroideryandgarmenting(ACDS,2014).

The main courses offered are: WET Processing Technician, Fashion Technology and Design, Swing

Technology,SurfaceOrnamentalTechniqueandArchitectureAssistanceTechnician(02.05First Interview,

2016;2).Thecourseslastusually1yearapart,fromtheTextilecourse,whichis2yearslong.

AEPC

AEPC,istheofficialbodyofapparelexportersinIndiaanditofferssupportandassistancetoIndianexporters

andimporters,aswellas internationalbuyerswhoselectIndiaastheirsourcingdestinationforgarments

(Aepcindia.com, 2016). As stated by one shawls’ exporter who was interviewed “this association is a

governmentsupportingassociation.Theyaresupportingusinthetextilesector[…]Timelytheygiveussome

notificationsregarding[…]thesebenefitsyougetifyouexporttoUSortospecificcountries[…]andtheyalso

supportusforparticipatingininternationalshows.”(28.04FirstInterview,2016;1).Moreover“theymade

someworkshopsforthedevelopmentofworkers[…]buttheworkshopsareusuallyinDelhiorinotherbig

cities,notinLudhiana”(28.04FirstInterview,2016,2).

Toconclude,thecollectiveefficiencyintheLudhiana’sclusterisconsideredasfunctioningwell(Uchikawa,

2012;Tewari,1999).Theclusterdoesnotonlygeneratelocalizedexternaleconomies,likeaflowofshared

knowledgeoninputs,productionprocess,marketsandtheaccesstoacommonlabourpool,inputproviders

and distributional network (Uchikawa, 2012); but there is also an evidence of local joint action and

cooperation especially at the vertical level (Tewari, 1999). Yet there are several local associations

representingvariousinterestgroupslikedyers,knitters,spinnersetc.Inthefollowingsections,Iwilldescribe

indetailthecompositionofthecluster,analysingboththeverticalandhorizontaltiesexisting.

3.1.1Horizontalties

Regardingthehorizontalties,thatconsistintherelationsbetweenlocalfirmswithinthecluster,jointaction

throughlocalmultilateralinstitutionsseemstobethemostimportantaspect.Indeed,whatcomeoutfrom

thefieldwork,itseemsthatnoactualstrongrelationsarepresentatthehorizontallevelandthattheone

existing aremainly personal or friendship kind of connections. For example, the owner of a dyeing and

printingunit stated,“Wehavepersonal relations [with theotherunits]andweattendbirthdaysorother

functions.Butonlypersonal,noworkkindofrelationships.”(26.04SecondInterview,2016;2).Particularly,

wheninquiredifanypartnershipsexistwithotherunits,todividecustomer’sordersmajoroftheunit’sactual

44

capacity,aroundalltheparticipantspreferto“ignoretheorder”(29.04FirstInterview,2016;1)and“produce

whatwe [they] can do” (28.04 Second Interview, 2016; 1) or “managewith the customers” (28.04 First

Interview,2016;1).

Atthehorizontallevel,thebusinessrelationspresentmainlyappearattheassociationlevel.Theownerofa

knittingunithighlightsthispoint:“[Wehavebusinessrelationswiththeotherunits]mainlyattheassociation

level. In putting up fights against government and to protect our industry [or] in guiding each other in

purchasingrawmaterials”(27.04SecondInterview,2016;3).Indeed,around70associationsarerunningin

thecluster(ACDS,2014)defendingdifferentinterestgroupssuchasdyers,knittersetc.,however,onlyfew

of them are active and take initiatives as stated by the interviewees. The recurrent names during the

conversationsandtheonesthatappearedtobemostactiveinrespecttotherespondent’spointofviews

are:

• Bahadur-KeTextileandKnitwearAssociation(BKTK)(28.04FirstandSecondInterview,2016);

• LudhianaKnittingAssociation(LKA)(27.04SecondInterview,2016);

• ChamberofIndustrialandCommercialUndertaking(CICU)(25.04FirstInterview,2016;26.04Second

Interview,2016);

• PunjabDyeingAssociation(PDA)(25.04FirstandSecondInterview,2016;26.04SecondInterview,

2016;27.04FirstandSecondInterview;2016);

• Ludhiana Dyeing Industries Association (LDA) (26.04 Second Interview, 2016; 27.04 Second

Interview,2016);

• FederationofIndustrial&CommercialOrganization(FICO)(26.04SecondInterview,2016)and

• TheKnitwearClub(28.04ThirdInterview,2016).

Abriefdescriptionofthemaincharacteristicsofthebusinessassociationspreviouslylistedisgiveninthe

tablebelow.

BKTK Established in 1985 (Bktkindia.com, 2016), this association is for “allmanufacturers in the

area” (28.04First Interview,2016), referring to theBahadurKeRoadblock, andhavingas

member’sbasemorethan100unitsworkinginthedyeing,knitting/weaving,packagingand

garmentingarea(Ibid).Themainaimoftheorganizationistoprovidesupportandpossibility

ofupgrading toall theMSMEspresent in themicro-cluster,offering, for instance, training

programsorcommonfacilities(likethepossibilitytoparticipateininternationalexhibitions).

45

CICU Founded in 1968, the Chamber is registered as a non-profit making society and is an

autonomous and regional organization (Cicuindia.org, 2016). The main mission of the

institution istodevelopactionsforthedevelopmentofall theMSMEsector inPunjaband

someexamplesoftheactivitiesimplementedare:“skilldevelopmentseminars[fortheunit’s

workers], quality seminars, even some lean manufacturing seminars and ISO related

[seminars]...awarenessprogramsarealsobeingconducted”(25.04FirstInterview,2016;3).

PDA PDAistheumbrellaorganizationregardingthedyeingindustryinallPunjab.Itsmainaimsare

to improve the dyeing industry and collectively solve the principal issues they face, for

instancetheconstructionofaCommonEffluentTreatmentPlant(CETP).Theyhavealready

initiatedworkfor“setting-up3CETPinLudhiana”(25.04FirstInterview,2016;1).

LDA LDAisaramificationofthePDAanditisconsideredtheapexassociationforclustereddyeing

firms in Ludhiana (FMC, 2016). It is an active organization of progressive dyerswho keep

upgradingthemselvesmainlyregardingenvironmentalissues(TheEconomicTimes,2016)and

itisconstitutedofaround240members(FMC,2016).Theownerofadyeingandprintingunit

explainedtheworkdonebytheLDAwiththisself-explanatorysentence:“Whateverproblem

comestothedyeingpeople,wedomeetanddiscusslikecustomersatisfaction,paymentson

the people, the quality parameters to be followed, and problems of increase in cost of

productionorenvironmentalissues”(26.04SecondInterview,2016;3).

Knitwear

Club

Established in 1984, the KC is the biggest and the most operating association of hosiery

manufacturersinLudhianaanditcountsaround418members(TheEconomicTimes,2016).

It’sanot-profitmakingbodycontributingtotheimprovementoftheknitwearsectorandan

exampleoftheactivitiesimplementedconsistsin“trainingcamps,whereallthe‘raw’workers

comeandwetrainthem”(28.04ThirdInterview,2016;1).

ItisalsooneofthefoundermembersofFEKTAA(FederationofKnitwear,TextileandAllied

IndustriesAssociation),whichwasformedbackin2001underthesupportofUNIDO,withthe

mainobjectivetotakeaunifiedviewoftheknitwearindustry(ACDS,2014).

Table4:PrincipalindustryassociationsinLudhiana.Source:theauthor

Regardingtherestoftheindustryassociations,mostofthemaresimplyengagedonfiscalandlegalmatters

with the government and they rarely promote linkages with other support organizations or technical

institutionsortakeactionstoimprovebusinesspractices(FMC,2016).

46

3.1.2Verticalties

WhilehorizontallinkagesbetweenLudhiana’sknitwearfirmsmaybeweak,verticalcooperationamongthe

enterprisesintheclusterisstrong(Tewari,1999).Indeed,thecoreclusterunitsofallsizeshavestrongties

withinputproviders,machineryproducers,sub-contractorsanddistributionnetworks.Asexplainedbyone

respondent“Normally,it'sareallynormalpracticethattheunitsbuyfromthelocalsuppliers...thisisavery

big cluster” (28.04 First Interview, 2016; 2). Particularly, these vertical ties have grown closer and have

becomemorecalibratedintheprocessofovercomingthedualcrisisthatLudhiana’sclusterhasfacedin1991

(the collapse of the ex-Soviet Union, Ludhiana’s former primary exportmarket, and the opening of the

domesticmarkettofreertrade)(Ibid).

3.1.2.1Backwardties

Asstatedbefore,whileknitwearmanufacturersareatthecoreofthevaluechain,alsobackwardlinkages

havebeencreatedbackinthedays(Tewari,1999).Indeed,inthe1940’sand1950’s,someoftheknitwear

manufacturers,whichhadaccumulatedcapitals,setupspinningmillsinordertoproducewoollenyarnlocally

(Ibid).Later,theyspecializedthemselvesondifferentfabricslikecottonandacrylics(Uchikawa,2012).One

respondent,forinstance,declared“Ipurchasegreymaterialsfromlocalsuppliers”(28.04ThirdInterview,

2016; 1), another one said “We are normally buying all the rawmaterials from our local suppliers, but

sometimestheyarnsarenotavailablefromthelocalsuppliersandsowebuythemfrombigenterprisesin

otherstatesorinothercities,butthisisnotthepraxis”(28.04FirstInterview,2016;2).

Theclusterisalsolinkedbackwardintheregion’smachineryproductionsector(Tewari,1999)andnowadays

thisbrought to thepresenceofmachinerymanufacturersandsuppliers (ACDS,2014). In fact,before the

economicliberalizationin1991,allthemachineryandtoolsusedintheIndianknitwearindustrycamefrom

thisregion(Tewari,1999).AsstatedbytheDiagnosticReportdonebyFMC(2016),stillaround90%ofthe

machineryemployedbytheunitsisprocuredbyLudhianaonly.Finally,alsoanancillarydyeingsectorhas

beensetupandnowadays itcounts foraround250unitsalloverLudhiana (Ibid).Not to forget thesub-

contracting knitting firms, which contribute majorly to the cluster value chain and that are part of the

backwardprocesssupport.Theyhelpthoseknittingunitsthataremainlyengagedinbulkordersorinexports

andareinshortageoftimetofulfiltheorders.Aunit’sownerthatdetainsalltheproductionstepsin-house

andwhichrepresentsoneoftheonlyexceptionsinLudhiana,stated,“Normally[MSMEs]buytheyarnfrom

spinningunits,thentheysenditforthedyeingoutside,aftertheysenditforfinishinginotherfactoriesand

47

thisisalldoneinLudhianaonly.”(28.04FirstInterview,2016;2).Hisstatementdemonstratesquitewellthe

existenceofgoodverticalcooperationbetweentheunits,particularlyonthebackwardside.

3.1.2.2Forwardties

Theend-product,ismarketedinvariouspartsofthecountryandexportedoutsideIndia.Onthedomestic

front,intermediateagents,wholesalersandretailersprovideforwardlinkages.Moreover,severalclothing

brandsarealsoflourishedintheclusterwiththepurposetoprovideforwardtiestothemanufacturingunits

(ACDS,2014).For instance,betweenthe11units interviewed2areproducingalsotheirownlabel(28.04

FirstInterview,2016;28.04SecondInterview,2016).Instead,exportsarebeingaffecteddirectlyorthrough

merchantexportersandbuyingagent/houses(ACDS,2014).Figure2depictsthecompositionoftheLudhiana

cluster,showingindetailthebackwardsandforwardstiespresent.

48

Index:

:Coreclusteractors(directlyinvolvedintheknitwearmanufacturingprocess)

:One-waylinkage

:Two-waylinkage

Backward linkages Forward linkages

KNITTING units

Embroidery units

Printing units Dyeing units

Spinning units

Sub contracting garment units

Machinery Suppliers

Machinery Manufacturers

Input providers

Buying agents or houses

Merchant exporters

Domestic market

Export market

Figure2:Majoractorsandbackwards/forwardtiesofLudhiana’sKnitwearcluster.Source:theauthor

49

4.Analysis In this chapter the empirical findings obtained through the interviews will be presented and analysed.

Moreover, all thismaterialwill be supplementedwith secondarydatawhen consideredappropriate and

necessary.Thechapter isdivided intofourmainsections, followingthestructureof the literaturereview

previously examined. Firstly, I will classify the Ludhiana’s cluster and list the CSR activities undertaken

collectivelyattheclusterlevel.Inthesecondsection,theMSMEsinterviewedwillbedescribed,underlying

the main characteristics shared and the differences encountered. The section will conclude with the

presentationof the individualCSRactivities implemented.Following, the informalisationof labour in the

Ludhiana’scontextwillbedescribedandtherepercussionsthisphenomenonhasontheimplementationof

CSRpractices. In the lastsection, theconceptofCSRasexplainedby therespondents, the impactof the

activitiesimplemented(bothattheindividualandthecollectivelevel),thedrivers,thebarriersfacedandthe

benefitsobtainedwillbedescribed.

BecauseIhaveexplicitlyadoptedanabductivereasoning,theempiricalfindingswillnotjustbe“showed”

butjuxtaposedwiththetheoreticalliteraturepreviouslyreviewedinordertooutlinethemainfindingsof

theresearch.

4.1Ludhiana’sknitwearcluster

4.1.1Classificationofthecluster

The literature provides different classifications of cluster, for instance, based on the development stage

reached(Schmitz&Nadvi,1999;Sandee,1995),onthedynamismorcapacityoftheclustertogrowover

time(Giuliani,2005)orontheclusteredfirms’humanrightsengagementandexplicitCSRadoption(Giuliani,

2016).I,throughthecollectionofprimarydata,theanalysisofthemandofsupplementarysecondarydata,

willclassifytheLudhiana’sclusteronthebasisofsometaxonomiesgavefromtheliteratureandformerly

elucidated.

In respect to thedistinction givenby Sandee (1995)of ‘dormant’ vs. ‘dominant’ clusters in adeveloping

countrycontext,theLudhiana’sknitwearcanbementionedasadominantcluster.Indeed,theunits,asstated

intheprevioussection,arecloselylinkedespeciallyattheverticallevel:bothbackwardandforwardlinkages

aregrowncloserandhavebecomemorecalibratedafterthedualcrisisof1991(Tewari,1999).Asstatedby

themajorityoftheinterviewees,theyallsupplytherawmaterialsfromlocalspinningmillsandonlyincase

50

ofshortage,theyfurnishfrombigenterprisesinotherstates(28.04FirstInterview,2016;2).Stronglinkages

existalsowiththeancillarydyeingfirmsandthesub-contractingknittingunits.Theoverallresultisthatthe

entireproductionprocesstypicallyremainsinLudhianaonly(Ibid).Moreover,theclustercompetesatthe

internationallevel,exportingespeciallyinUS,EuropeandAsiancountries(FMC,2016).Eveniftheportionof

exportisconsiderablyfewerthanthedomesticshare(indeed,aspreviouslydeclared,itcountsonlythe25%

ofthetotalturnover),itisestimatedthatduring2006/2007thevalueofexportsofhosieryandreadymade

garmentswereoftheorderof1306crorerupees,whichmakesLudhianaanimportantgarmentspotatthe

globallevel(NCAER,2009).

AnothersimilarclassificationistheoneprovidedbySchimtzandNadvi(1999),whichdistinguishbetween

‘incipient’ and ‘mature clusters’. Ludhiana’s knitwear district is characterized by the use of advanced

machineries,asdeclaredbythegeneralmanagerofDICLudhiana(25.04FirstInterview,2016;1),whichare

suppliednotonlylocallybutallovertheworld(e.g.JapanorGermany)(28.04SecondInterview,2016;1;

28.04ThirdInterview,2016;1).Thiswasalsoperceivedbymewhenvisitingtheunits,withtheonlyexception

ofthemicro-firms,whichinsteadarecharacterizedbynouseoftechnologies,onlyhand-work(29.04First,

Second&ThirdInterview,2016).However,thisisduetothetypologyofjobdonethatrequiresonlyhigh

labour skills. Finally, Ludhiana’s knitwear cluster is characterized by a good level of joint action and

cooperativeattitudes,alsodemonstratedbyanintensivespreadofbusinessassociations.Thesereasonsand

thepresenceofLudhiana’sknitwearclusterintheglobalmarketsclassifyLudhianaasamaturecluster.

Finally,basedonthetaxonomygivenbyGiuliani(2005),Ludhianacanbestylizedasadynamiccluster.Indeed,

itcanbearguedthatLudhianaischaracterizedbyanintermediateabsorptivecapacity.Thisisdemonstrated

byfirm’sgeneralupgradingrespectthetechnologicalfrontier(25.04FirstInterview,2016;1),butwithoutan

active participation to its enhancement. Indeed, research and development is not practiced within the

industry(ACDS,2014)andthusLudhianaresultsaknowledge-usingenvironmentratherthanaknowledge-

producingone.

4.1.2CollectiveCSRinLudhiana

Afterprovidingthereaderwithadescriptionoftheclustercompositionandaclassificationofit,regarding

boththedevelopmentstagereachedandthedynamismoftheclustertodevelopovertime,itisnowcrucial,

inorder toanswer theresearchquestion, to list theCSRactivities implementedonacollective leveland

explorewhetherjointaction,regardingCSRimplementation,isspreadbetweenLudhiana’sMSMEs.

51

CollectiveCSRactionsareconsideredthoseactivitiesconductedjointlywitheitherotherclusteredfirmsor

supportorganizations (Sachdeva&Panfil,2008).The literaturemainlydividedthediscussiononCSRand

industrialclustersinthreemaintopics,respectivelyregardingenvironmentalmanagement,workconditions

more generally and poverty reduction (Lund-Thomsen et al, 2016b). The interviewees have givenmany

differentexamplesofcollectiveCSRbutIhavenoticedapredominanceofthefirstthemeintheLudhiana’s

industrialdistrict.Forthisreason,Ihavecategorizedthemintwomaingroups:collectiveenvironmentalCSR

andothercollectiveCSRactivities.Themaindifferencebetweenthetwoisthat,whiletheenvironmentalCSR

actionsaremandatoryfortheunitsinvolved,thesecondgroupischaracterizedbyvoluntaryactivities.Inthe

nextsection,theywillbedescribedindetails.

4.1.2.1CollectiveEnvironmentalCSR

From the data gathered through the interviews, it appeared that themajority and themost important

collectiveCSRactionsundertaken inLudhianaregardenvironmental issues, inparticular theconstruction

andimplementationofCETPs(CommonEffluentTreatmentPlants).Indeed,thedyeingunitsresultthemost

pollutedfirmsbetweenthecoreclusteractorsdirectly involved inthegarment (knitwear)manufacturing

process.However,asdeclaredbytheinterviewees,theconstructionofend-pipetreatmentsintheformof

CETPsisso‘popular’duetotherecentspreadofnationalstrongenvironmentalrulesandregulations(26.04

SecondInterview,2016;3)andsobecauseofitsmandatoryaspect.

Dyeingisacombinedprocessofbleachingandcolouring,whichproducehugeamountofwastewaterand

consequently cause environmental degradation (FMC, 2016). After the dyeing process, the effluents are

characterizedbyhighconcentrationof“dyestuff,biochemicaloxygendemand,totaldissolvedsolids,sodium,

chloride, sulphate, hardness, heavy metals and carcinogenic dye ingredients” (Tchobanoglous & Burton,

1995). This characterizes thewater that becomeunusable for anyother purpose andposes also serious

environmentalproblems.However,asstatedbyoneemployeeofthePPCB,evenifpollutionisabigproblem

inLudhiana,thegarmentindustryisnotthemaincause.Theothersectorthatcharacterizestheindustrial

districtistheironandsteelindustry,whichisthemosttoxic(25.04SecondInterview,2016;1).Untilnowthe

onlyCETPcompletedandinfunctioninLudhianaistheonebuiltbythemetalfinishingunits,withthesupport

oftheAssociationLudhianaEffluentTreatmentSociety,and,sofar,thedyeingunitswithoutanindividual

ETPhave reused its treatedwater (25.04 Second Interview, 2016; 2).However, this is not the definitive

solutionalsobecauseonlyaminorityofthedyeingunitsareeffectivelyadjoiningthisCETP.Therefore,the

garmentindustryisinchargetoprovideinthenearfuturenumber3ofCETPswherealltheeffluentswillbe

treated(25.04SecondInterview,2016;3).Indeed,itismandatoryforallthedyeingunitsinLudhianatobe

52

providedofaneffluenttreatmentplant,commonor individual (26.04SecondInterview,2016;3). It then

cameout from the findings that the thickeningofnational environmental regulations isone reason that

increasedtheadoptionofsocialresponsiblepracticesinLudhiana(Ibid).Thissupportsthepreviousliterature

on the debate industrial clusters and CSR, which arguments that one main driver influencing the

enhancementofCSRpracticesisthethicknessofthenationalpolicyframeworkregardingenvironmentaland

socialaspects(Lund-Thomsenetal,2016b;Lund-Thomsen&Pillay,2012).

These3CETPs,whichareintheprocessofconstruction,asdeclaredbythegeneralmanagerofLudhiana’s

DIC,havebeenorganizedinsuchawaythateachCETPisscatteringtoaspecificarea(25.04FirstInterview,

2016;2). Lookingat thegeographicaldislocationof themajorareasof concentrationof thedyeingunits

(Figure3)itappearsclearthatsincethedistanceismorethan10km,establishingasingleCETPwillnotbe

feasible or too costly and thus building satellite CETPs, one respectively in Focal Point, Tajpur Road and

BahadurKeRoad,maybeabetterproposition(FMC,2016).

Majorareasofconcentrationdyeingunits

BahadurKeRoad

Figure3:MajorpointsofdislocationdyeingunitsinLudhiana.Source:theauthor

53

Thechoiceofcommonplantshasbeenpreferredbythemajorityoftheunitsmainlyduetotheireconomic

impossibility to establish individual end-pipe treatments (Ibid; 26.04 Second Interview, 2016; 3). This

supportstheliteraturethatusuallydescribeMSMEsasdisadvantagedincomparisonwithlargerenterprises,

mainly due to their lack of financial resources (Lund-Thomsen & Pillay, 2012). However, through the

agglomeration in industrial clusters, MSMEs can face the above-mentioned issues and benefit of the

competitiveadvantagederivingfromjointactionpractices(Schmitz&Nadvi,1999).TheCETPsareaperfect

example of competitive advantage deriving from collective actions. Another reason, listed by the

respondents,thatbroughttothepreferenceofcollectiveCSRpracticesrespectindividualeffortstosolvethe

issue of pollutedwater has been perceived in the “government’s barriers”. Concerning this aspect, one

intervieweehighlightedthepositiveoutcomeofbeinginjointactions:

“Nowweareinagroup[Hindispeaking]...whenwewerealoneatthebeginningtherewerelotsof

barriers…financial,administrativeandbureaucratic…andgovernmentwasaproblem.Now,throughthe

PunjabDyeingAssociation(PDA)wehavealotmorepowerandlessbarriersandgovernmentiswithus”.

(27.04SecondInterview,2016;4)

The owner of this dyeing and knitting unit, which is part of the Tajpur Road block, lately explained the

situationoftheLudhiana’scluster.BeforethestartoftheconstructionoftheCETPfortheTajpurRoadblock,

onlyasewagetreatmentplant(STP)waspresent(27.04SecondInterview,2016,5).Thissystemiscleaning

thedirtywatercomingfromallthedyeingunitslackingofindividualtreatmentplantswhichareinthisarea,

even though the STP is meant to clean only the domestic waters (Ibid). With the enforcement of the

environmentalregulations,thePDAtookthecontroltobuildaseparateCETPforallthewaterusedbythe

dyeingfirmsinTajpurRoad(Ibid).However,theplanexplainedseemsquiteambitiousfortwomainreasons.

First,forthenewintroductionoftheZeroLiquidDischarge(ZLD)technology,whichimpliesthatthewater

usedbythedyeingunits,afterbeingprocessedbytheCETP,willnotbedischargedintheriverbutreusedby

the firms, at least for its 90% (27.04 Second Interview, 2016; 7). Second, because it is supposed to be

completed in a short amount of time, between one year or two because already half completed (27.04

SecondInterview,2016;4;26.04FirstInterview,2016;4).However,regardingthisaspect,secondarydata

foretellssomethingdifferent.JournalarticlesfromtheHindustantimesandtheTimesofindiatracebackthe

discussion of CETP in Tajpur Road in 2009 and the start of theworks already in 2013, which had been

predictedtofinishtheyearafter(hindustantimes.com,2016;timesofindia.indiatimes.com,2016).However,

stillin2016theCETPisnotcompleted.AsexplainedbyoneemployeeofthePPCB,CETPsarenotwithout

54

challengesandoneofthemainreasonsofthedelayconsistsinthenotpaymentofmembers’share(25.04

SecondInterview,2016;3).Thisaspectisalsopointedoutbytheliteratureasamainissueincompleting

CETPsanddefinedasfree-riderproblems(Lund-Thomsen,2009inLund-Thomsenetal,2016b).Finally,other

tworespondents, instead, foundthemaincauseof thedelay in theCETP’scompletion in theabsenceof

stronginstitutionalsupport.Oneparticularly,declared:

“[…]Butgovernmentisalwaysaproblem!Andwefaceotherissues…forinstance,wedon’thavealotof

financialsupport[fortheconstructionoftheCETP]andwelackhelpfromlocalinstitutionsregardingthe

technicalaspectnecessary”.(27.04Interview,2016;4)

ThissupportsNadvi’sargumenthighlightingthenecessityofastronginstitutionalsupportenvironmentfor

theimplementationofsuccessfulcollectiveactions(Nadvi,2005).

4.1.2.2OthercollectiveCSRactivities

Many other collective CSR activities are undertaken by MSMEs in Ludhiana apart from environmental

collectiveCSR.Theirscopevariesalot,frommedicalcampslikeblooddonationoreye-checkcampsforthe

community,tocharitycontributionsforreligiousinstitutions,untilactivitiesfortheworkforce,liketraining

workshopsortheconstructionofhousingfacilitiesforthemandtheirfamilies.Theseareonlyfewexamples.

Idecidedtocategorizetheseactivitiesinregardoftherecipientstowardswhichtheseactionsaredirected:

the workforce, the community and religious institutions.While the first ones are themost spread, few

examplesdirectedtothebettermentofthecommunityortoreligiousorganizationsexist.Finally,aseparate

discussionwillbedoneregardingthechoiceofthepartnersforthesecollectiveCSRactivities.

Regardingtheemployees,quitealotofexamplesofcollectiveCSRengagementarepresentintheLudhiana’s

knitwear cluster.Majority of these actions are directed to improve their skills andupgrade them. These

activities consist in training camps done at the association level: for instance, for the knitting units this

happenswiththesupportoftheKnitwearClub(28.04ThirdInterview,2016;1),anassociationofhosiery

manufacturers in Ludhiana. Other units speak about health camps (27.04 Second Interview, 2016; 1) or

recreationalactivitieslikecricketmatches(25.04FirstInterview,2016;1&2).Finally,oneMSMEisplanning

to build two fully furnished hostels for theworkingwomenwith the support of Bahadur-Ke Textile and

KnitwearAssociation(BKTK)andwiththefundingofagovernmentscheme(28.04ThirdInterview,2016;4&

5).Instead,regardingthejointeffortdonebytheLudhiana’sunitsforthecommunity,thisconcernsmainly

healthcare.Theonlyexamplegivencomesfromtheownerofaknittingfirm,whichdeclaredtheprovision

55

offreeofcostseye-testingcampsandblooddonationcampsdonequarterlytoallthelocalpublic(28.04

SecondInterview,2016;1).ThisisdonewiththecooperationofaNGOcalled“RaghunathSewaDa”(Ibid).

Finally, also donations to religious institutions has appeared. These are related with aMuslim religious

festival,theRamzanEid(29.04FirstInterview,2016;1),andconsistinmonetarydonationsordistributionof

freestufftothelocalmosque(Ibid).Particularly,theseactivitiesareimplementedbysomemicro-embroidery

unitswithoutthesupportofanyexternallocalinstitutions.

Ithastobehighlightedthatthemajorityoftheseactivitiesundertakencollectivelyaredonewiththesupport

of local institutions;mostly business associations of various kind and in fewer cases NGOs. Only in one

example the collective social responsible activity is conducted between cluster firms and without the

cooperationofexternalinstitutions.Thisappearsincontradictiontowhatansweredbythemajorityofthe

respondentswhendirectlyaskedhowistheleveloftrustwiththeotherunitsinthecluster.Butassustained

bytheliterature,theleveloftrustbetweenenterprisesisjustafacilitatorintheimplementationofcollective

CSRactivities,notthe‘warranty’ofaneffectiveexecution(Sachdeva&Panfil,2008).Thisisthecaseofthe

Ludhiana’scluster.Particularly,IperceivetwomainreasonswhycollectiveCSRengagement(excludingthe

mandatoryactivities)issolowrespecttheindividualactions.Firstly,itisthelackofinterestinjointactions

regarding the implementation of responsible business practices. For instance, one interviewee explicitly

declared:

“No,wehaveneverbeenapproachedbyotherunitsfordoingcollectiveCSRandnotintheotherway

around[…]wedon’tfeelthenecessity”(29.04SecondInterview,2016;3).

Alsopreviousempirical studiesondeveloping country’s clusters, like theonedonebySachdeva&Panfil

(2008)orVives(2006),showthistendencyandthisismainlyduetoentrepreneurs’inwardlookingattitude.

Secondly,anotherreasondiscoveredisthescarcityofinstitutionsororganizationsinsupportingsocialand

environmentalresponsibilities.Insupportofthis,onerespondentstated:

“No,wedon'tdo[referringtotheimplementationofcollectiveCSRactivities].Thishappensmainlybecause

therearenoassociationsinvolvedinthatrightnow”(27.04FirstInterview,2016;1&2).

Fromthissentenceemergedthelackofastronginstitutionalsupport,whichisseenbytheliteratureasa

necessaryelementinensuringthesuccessofcollectiveCSRactions(Nadvi,2015).Interestingly,fromnone

of the answers the pressure from GVCs and global buyers appeared to be a factor enhancing the

56

institutionalizationofCSRnormsattheclusterlevel,whileseenasadominantaspectintheliterature(Lund-

Thomsen et al, 2016b; Lund-Thomsen & Pillay, 2012). This may be due to the mainly presence of the

Ludhiana’s MSMEs in local or national value chains and to the few existence of export-oriented units

(Uchikawa,2012),ormaybetotheparticipationinlessvisibleGVCs(Lund-Thomsenetal,2016b).

4.1.2.3SummarycollectiveCSRinLudhiana

Inconclusion,IobservethatregardingallthecollectiveCSRactivitiesundertaken,thefocusispredominantly

on the environmental aspect and specifically on the implementation of CETPs for the dyeing units. This

happens because of its mandatory aspect, which in turn is due to the recent thickening of national

environmental laws. Moreover, while the implementation of CETPs has been preferred by the units to

individualplants,thechoice isnotwithoutchallenges. Indeed,thecompletionhasdelayofyearsandthe

mainobstacleperceivedbytherespondentsistheabsenceofastronginstitutionalsupportenvironment.

Thesecondmost implementedcollectiveCSRactionregardthe labourwelfare inthewayoftrainingand

developmentofworker’sskills.Finally,fewexamplesdirectedtothecommunityarepresent.Apartfrom

these initiatives collective CSR is rare and negligible compared to the individual actions, which will be

described in detail in the next section. Concerning the selection of the partners,MSMEs predominantly

chooseindustryassociationsorinfewcasesNGOsrespectpartnershipswithlocalunits.Themainreasons

observedfornotgettinginvolvedwithsupportagenciesorotherunitsincollectiveCSRengagementseems

tobemainlytheabsenceofastronginstitutionalsupportenvironment.Alsothelackofinterestincollective

CSR actions is anothermotive, while the level of trust is perceived good and it does not seem directly

influencingtheenhancementofcollectiveresponsibleactivitiesfortheLudhiana’sMSMEsinterviewed.

4.2Ludhiana’sMSMEs

4.2.1CharacteristicsanddifferencesoftheMSMEsinterviewed

InthissectionIwilldescribeindetailstheMSMEsinterviewedintheLudhiana’sknitwearcluster,underlying

themaincharacteristicssharedandthedifferencesencountered.

Aspreviouslyunderlined inthe literaturereview,nouniversaldefinitionofMSMEsbasedonquantitative

criteria exists (Inyang, 2013). I have preferred to use qualitative characteristics, which have been seen

recurrent inallMSMEs,todefineanddistinguishmicro,smallandmediumenterprisesfrombiggerunits.

Firstly, personal management by the owner and a little distinction between the role of ownership and

57

direction/administrationusuallycharacterizeMSMEs(Spence&Lozano,2000).Thisisperfectlyexplainedby

thegeneralmanageroftheLudhiana’sDICwhichstated:

“SMEs[…]Basicallytheyareimmature.Sameisthemanager,sameheislookingaftersales,sameheisalso

lookingafterthetechnicalaspects,heisalsolookingatthefinancialpart...Basicallyheislookingafterall

theaspectsofitsunit!”(25.04FirstInterview,2016;1).

ThisquotationalsounderlinesthemultitaskingfeaturethatdistinguishesMSME’sownersfromtheonesof

largeenterprises.Anotherrespondentstressedthesamepoint,onlyaddingtheaspectofbeinghelpedby

hisson(27.04FirstInterview,2016;2).ThisspringstoanotherqualitativecriterioncharacterizingMSMEs:

thefamily-managementandfamily-ownership.Inoted,indeed,thatbetweenthe11unitsinterviewed,8are

family-owned, which then appeared another common feature describing the MSMEs in the Ludhiana’s

cluster. An additional peculiarity of small andmedium firms is the informal style of leadership and the

dominationofinformalrelationsandcommunicationstyle(Spence&Lozano,2000).Theownerofaknitting

unitstressedthispointwhileexplaininghisrelationshipwiththeworkforce:

“EverySaturdaysItakemymealwithmyworkers...andthemealissponsoredbythefactory[…]Weare

usedtosittogether...wetalkandtheysharetheirproblemsandviews.Whenwemeet,theyareveryfreeto

talk...ifthereareanyproblemstheytellmewithconfidence...wehaveafriendrelationandIdon’twantto

feelthemdistantfromme.”(28.04ThirdInterview,2016;1).

Thispassage, in turn,highlights thehighdegreeof interrelationofMSMEswith theirworkforce,which is

anotherqualitativecharacteristicof smallenterprises,asarguedbyEnderle (2004).Additionally, “feeling

closetotheemployees”(28.04FirstInterview,2016;1)andthecomparisonoftheunitasabigfamily(26.04

FirstInterview,2016;3)seemfrequentandnotablefeaturesbetweentherespondents.Finally,anothertrait

ofMSMEsisthefinancialconstraint(Lund-Thomsen&Pillay,2012),whichhasbeenenlistedbysomeofthe

enterprisesinterviewedastheirmainissue(29.04SecondInterview,2016;10;29.04FirstInterview;6).A

part from limited financial resources,MSMEs are also typified by awidespreadmanagerial inexperience

(İPLİK&KILIÇ, 2009) or limitation ofmanagerial resources (Lund-Thomsen&Pillay, 2012). This aspect is

underlined by the DIC’s manager which labels MSMEs as “businesses without professional style of

management”(25.04FirstInterview,2016;14).

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BecausethecategorizationofMSMEsisquitevast,Ihaveencounterednotonlysharedcharacteristicsbut

alsosomedifferencesbetweentheunitsexamined.Apartfromthefinancialaspect,whichwashighlighted

severaltimesbydifferentrespondents,onespeakerunderlinedthewidenessoftherangebetweenmicro,

smallandmediumenterprisesinregardtotheimplementationofCSRactivities.Specifically,hesaid:

“No,they[referringtothemicroandsmallunits]arenotinterestediftheyhaveturnover.Onlyinthe

mediumandlargesectortheyactuallyimplementCSRactions.Inthemicrosector,youhavetomotivatea

lotbecausetheyarenotreallyinterested.Forinstance,thebuyersgiveinternationalstandards.”(25.04

ThirdInterview,2016;3)

To conclude, this passage also emphasizes a factor that the literature see as an enhancer of the

institutionalizationofCSRactivitiesindevelopingcountry’sunits:theglobalbuyersandglobalvaluechains

inwhichdevelopingcountriesclusteredMSMEsareembedded(Lund-Thomsenetal,2016b).However,as

previously explained, it does not seem a relevant driver for the majority of the Ludhiana’s MSMEs

interviewed.

4.2.2IndividualCSRinLudhiana

InthefollowingsectionIwillintroducetheindividualCSRactionsimplementedbytheMSMEsinterviewed.

Adistinctionbetween‘individualinternalCSR’and‘individualexternalCSR’hasbeenprovidedbasedonthe

destinationof theactivitiesundertaken (Sachdeva&Panfil,2008).While the formeronesareconducted

internallywithintheunit,thelatterhaveafunctiontobenefittheoutsideenvironment(Ibid).

4.2.2.1IndividualinternalCSR

ThisareaofCorporateSocialResponsibilityhasbeenseenasthemostbroadly implementedbytheunits

interviewedintheLudhiana’sknitwearcluster.Iexpectedthishigherlevelofinvolvementmainlybecause

unitsarenaturallyconcernedaboutmattersinternaltothefirm(Sachdeva&Panfil,2008;Vives,2006).The

respondentshaveprovideddifferentexamples falling inthiscategory: fromtheprovisionofcanteenand

housing facilities to their workforce, to provident fund (PF) and employees’ state insurance (ESI), until

trainingandsafetyworkshops.Apartmoreformalkindofpractices,liketheonesjustenlisted,alsoinformal

internalresponsibleactionshasbeenencountered.Inspecific,informalCSRpracticescoveramorebroaden

areaandarecharacterizedbythemoredisparateactions(Tran&Jeppesen,2016).Someexamplesfacedin

theLudhiana’sknitwearclusterare:thepaymentofimportantworker’sfamilyevents,theorganizationsof

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religioustrips fortheworkforceorsimplytheprovisionof freeteaandsnacks.All theseactivitieswillbe

describedindetailinthenextparagraphs.

Betweenthe individual internalCSRactivitiesundertakenbytheunits, theonesthathavebeenseenthe

most spread are the payment of PF and ESI for the workforce and this is most probably due to their

mandatoryaspect.NormallyalltheunitsprovidePFandESIbutthisisdoneonlyforthefixed/regularworkers

(28.04Third Interview,2016;1).Themicro-unitsaretheonlyexceptionregardingthe implementationof

theseformsofinsurance.Indeed,itappearsthattheydonotcovertheiremployeeswithPFandESI(29.04

FirstInterview,2016;29.04SecondInterview,2016)andwhenaskedwhythishappensoneaffirmedthat

thisisduetotheworker’schoicenottogettheirsalarycutoff(29.04SecondInterview,2016;2).Thissupport

theliteraturewhichsustainthatamajorconditionshapingtheimplementationandfunctionofCSRnorms

in the Indian context is the labour agency, considered at the individual worker’s level (De Neve, 2014;

Carswell&DeNeve,2013).Particularly,workerstendtoavoidemploymentincompanieswhereCSRpolicies

areimplementedduetoadeliberatechoicetoworkinmoreflexible,casualandinformalsettings(DeNeve,

2014).TheownerofamediumfirmexplainedindetailshowdoPFandESIratesofcontributionworkand

whicharethemainissuestheyfaceinforcingtheworkforcetoreceivesocialsecurityandhealthinsurance:

“ESIisforthemedicalfacilities,PFisfortheretirement.InIndia,peopledon'tunderstandtheimportanceof

theseactivities...ortheydon'twantto.WhenwestartedprovidingESI,10yearsago...around15daysafter,

everydayworkerswerecominginourfloorasking"CutthePF"....Theydon'tunderstandthattheyarenot

theonlyoneswhopaid...Ialsodeposit20%.Wecutlet'ssay12rupeesfromtheirsalaryandIalsoputthe

sameamountforthemintheirfunds,buttheydon'twanttheirsalariestobecutdownandtheydon'twant

tounderstand.”(28.04FirstInterview,2016;1).

Thisproblemhasbeen listedbymostoftheunit’sowners.Though, foranemployeeofthe INTUC,trade

unionwingoftheNationalCongressparty,therealreasonwhysomeemployeesdonotwanttocuttheir

salariesforgettinghealthinsuranceandsocialsecurityisthattheydonotreceivetheminimumwageallowed

bylaw(03.05SecondInterview,2016;1).Regardingthisaspect,morethanoneMSME’sownerdeniedthis

accusationandexplicitlydeclaredtheirrespectofthelawregardingboththepaymentoftheminimumwages

andtheprovisionofthesalariesontime(27.04ThirdInterview,2016;25.04FirstInterview,2016).Finally,

regardinganotherformal internalCSRaction,morethanonerespondentsdeclaredtheirbanningofchild

labourintheirunits(28.04ThirdInterview,2016;1;27.04ThirdInterview,2016;1). Ifwhatsaidfromthe

employeeof the tradeunion is true,MSMEswill bebehaving responsiblyand irresponsibly concurrently

60

actuatingadecouplingattitude(Lund-Thomsen&Khara,2015).Indeed,whilestayinglegitimatedattheeyes

oftheexternalstakeholdersthroughthefocusonhigh-visibleissues(e.g.banningchildlabour),theywillstill

keepnotcomplyingotherhumanandlabourrightissueslikethenon-paymentofPFandESI(Ibid).Finally,

workshopsandtrainingcampsarenotonlycollectiveCSRactivitiesbuttheyareimplementedalsoatthe

individuallevel.Differentkindsofworkshopsarearranged,fromsafetytraining(28.04FirstInterview,2016;

26.04 Second Interview, 2016; 27.04 First & Third Interview, 2016) and First Aidworkshops (28.04 First

Interview,2016;27.04First Interview,2016) toproper skill trainingones (26.04Second Interview,2016;

27.04ThirdInterview,2016),evenifinalessamount.Technicaltrainingoftheworkforce,ifgiven,isusually

doneonlyatthebeginningwhenanewemployeeisrecruitedanditlastsbetweenacoupleofweekstoa

maximumof 6months (27.04 Third Interview, 2016; 2). Finally, trainings toworkers on how to use the

PersonalProtectiveEquipment’s(PPE)arealsomade(28.04FirstInterview,2016;2).

Other activities which fall in the category of individual internal responsibility, but are informal kind of

practices,aretheprovisionofteatoworkers,drinkingfacilitiesintheunitandcanteenfacilities.Usually,the

majorityofthefirmsprovidewatercoolerstotheworkers(28.04FirstInterview,2016;1),teatwiceaday

(28.04FirstInterview,2016;1)andsometimesalsofood.Onthe11unitsexamined,4unitsfurnishfoodto

theworkforceandwhileonefirmoutsourcesit(27.04FirstInterview,2016;1),theother3detainacanteen,

whichcanbefreeofcost(Ibid)orpayableataverylowprice(26.04SecondInterview,2016;4).Onespecial

caseregardsahosieryandembroideryunit,where:

“Onceaweek...everySaturdaysI[referringtothefirm’sowner]takemymealwithmyworkers...andthe

mealissponsoredbythefactory[…]Weareusedtosittogether...wetalkandtheysharetheirproblemsand

views.”(28.04ThirdInterview,2016;1).

Thisquotationperfectlysupporttheliteratureargumentregardingthepresenceofacloserrelationbetween

MSMEsandtheirworkforcerespectbiggerfirms(Jamalietal,2015).ThisinturnisthereasonwhyMSMEs

primarilytendtoimplementinformalCSRpractices,especiallydirectedtowardtheirworkforceandthelocal

community(Ibid;Vives,2006;Tran&Jeppesen,2016).Someunitsalsoofferhousingfacilities.Betweenthe

firmsinterrogated,onlyoneactuallydetainsadormitoryfreeofchargefortheworkersandtheirfamilies,

buttheseaccommodationsarereservedonlytotheregularworkforcenottheseasonalones(26.04First

Interview,2016;1,2).Anotherfirmprovidesresidencetoitsworkforce,alwaysonlytothefixedemployees,

butinthiscasethedormitoryquarteristheunititself(28.04SecondInterview,2016;1).Thereasongiven

forlettingtheemployeessleepingintheunitwiththeirfamilyismainlysafetypurpose:“Livinghere,they

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willlookafterattheunit[…]andwewillhaveworkersontime”(28.04SecondInterview,2016;2).Finally,

othertwoMSMEsareintheprocesstobuildhostels(26.04SecondInterview,2016;1;28.04ThirdInterview,

2016;1).

Additionalinformalkindsofindividualinternalresponsibilityhavebeenencountered,andthreeexamples

are: the provision of loans to workers, the celebration of festival inside the industrial unit and the

arrangementofreligioustripsfortheworkforce.Regardingthemonetaryassistance,thisisusuallydoneto

helpthemwhentheyneedsomeassistanceforemergencysituations(e.g.familyproblems,healthissues)

(27.04First Interview,2016;1;27.04Third Interview,2016;1)or for thepaymentof importantworkers’

familyevent(e.g.paymentofweddings)(27.04SecondInterview,2016;2).However,thesekindsofbenefit

aregivenonlytoregularworkersandeachcase isscrutinizedindetail.SomeMSMEsimprovethelabour

welfarealsothroughtheprovisionofrecreationalactivitiestotheiremployees.Forinstance,afirmallows

theworkerstocelebrateinsidetheunitsomeofthebiggestfestivals,religiousornot,likeNewYear,Baisakhi,

Lohri(26.04SecondInterview,2016;1),whileanotherunit’sownerarrangesyearlyreligioustrips(28.04First

Interview,2016;1).Tothemostpart,alltheseactivitiesridemoreontheinformalrelationshipsbetweenthe

ownerandthelabourforcethananypoliciesorsystems(Sachdeva&Panfil,2008)andaredrivenbyinternal

factors, like theprinciplesof themanagersand theirethical and religiousvalues (VonWeltzienHøivik&

Shankar,2011).Asstressedbefore,thisunderlinestheinformalaspectdistinguishingMSMEs,whichinturn

is reflectedon their tendency tomajorly implement informalkindofCSR (Vives,2006;Tran& Jeppesen,

2016).Finally,Iwanttohighlightthatalsoforthesecases,micro-unitsaretheoneswhodonotprovidetheir

unitswithanyofthesefacilitiesandactivitiesandthis ismainlydue,asstatedfromthem,tothe limited

financialresourcesdetained(29.04FirstInterview2016;29.04SecondInterview2016).

4.2.2.2IndividualexternalCSR

ExternalCSRactivitiesarerealisedalsoattheunitlevelandthesearedominatedbycharitydonationsand

by the improvement of the cluster environment. Specifically, environment welfare is achieved through

private ETPs, the implementation of rainwater harvesting systems, plantation and traffic management

activities.

Thecharitydonationsincludecontributionstoreligiousorganizations(29.04ThirdInterview,2016;1)and

informalkindofassistanceforthecommunity,liketheprovisionoffreefoodorclothestopoorpeople(27.04

SecondInterview,2016;1;29.04SecondInterview,2016;1).Particularly,ithasbeennotedthatthemicro-

units,whileuntilnowdidnotshowalmostanykindofCSRexecution,aretheoneswhomostlyimplement

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individual external CSR practices, on the form of charity actions. Particularly, they usually opt for non-

monetarycontributionslikefoodorclothing.Ifmonetarydonationsaregiven,thenareusuallyaddressedto

religiousinstitutions,likemosques(29.04SecondInterview,2016;1).Thisisinlinewithpreviousempirical

researchesindevelopingcountry’sclusters(Sachdeva&Panfil,2008)whichwereshowingapredominance,

forthemicrounits,ofresponsiblepracticesdirectedtothe‘communitywelfare’.Thisisduetotheircloseness

tothelocalcommunitymorethantothelabourforce,becauseofthesmallpooltomaintain(Ibid).

Regardingtheenvironmentwelfare,themostdiffusedindividualactionsundertakenareplantationactivities

(26.04First&SecondInterview,2016;27.04SecondInterview,2016;28.04ThirdInterview2016)andthe

developmentofparks(27.04SecondInterview,2016;1).Fourenterprisesdothatandasdeclaredbyoneof

them “This has been done forcibly by us” (26.04 Second Interview, 2016; 2) sowithout the government

permission.Whendirectlyaskedthereasonbehindtheirchoiceofvoluntaryplantationactivities,anowner

states:

“Beforethelandwasusedforpark,itwasusedtobefilledwithgarbage.Andwearedoingthisnotforour

self![…]Wefellthatthegovernmentwasnottakingcareofourneighbourhood,thatiswhywedidthisand

paidforeverythingfromourpockets.”(26.04SecondInterview,2016;1&2)

This quotation supports Visser’s (2008 in Demuijnck & Ngnodjom, 2013) argument regarding MSMEs

orientationtowardsbasicresponsiblefunctionsasawaytofill“governmentgaps”.Indeed,MSMEstakeover

thisresponsibilityinordertocontributeforthedevelopmentoftheircommunitywhentheyperceiveaction

asneeded.Furthermore,betweenthefourdyeingunitsinterviewed,onlyonedetainsitsownETPbasedon

aZLDtechnology(28.04FirstInterview,2016;1)anditalsoholdsarainwaterharvestingsystem(Ibid).Ithas

tobehighlightedthatthisSMEregularlyexports itsproductanditsmainmarket istheexport.Asusually

seeninthepreviousliterature,exportersarecharacterizedbyhigherlevelofcommitmenttoCSRpractices

due to the pressure given by the global buyers (Vives, 2006). As expected, this unit shows a major

involvementinresponsiblepractices,particularlyformalones,beinginlinewiththispath.Finally,another

activitywhichcanbecategorizedasexternalresponsibilityistrafficmanagement(26.04FirstInterview,2016;

2). This activity has been seen only once and when directly asked the reason behind this choice, the

respondentanswered:“I lostmymotherandshecouldn'treachthehospitalduetotraffic.So, that ismy

reason.”(26.04FirstInterview,2016;5).Ontheoverall,itcanbenotedthatfirstlythelevelofcommitment

toindividualexternalactivitiesisratherlowrespecttheinternalones,indicatingtheirnon-essentialnature

asperceivedbysmallerfirms(Vives,2006).Secondlyitappearsclearthatentrepreneurs’motivationsand

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valuesarethemaindriversinthechoiceoftheCSRagenda(Vives,2006;Sachdeva&Panfil,2008),whichin

turnisreflectedinanetpredominanceofinformalCSRpractices.

4.2.2.3SummaryindividualCSRinLudhiana

Overall,Iobservedthatregardingallthe‘individualCSRactivities’undertaken,thefocusispredominantlyon

the internal aspect, so actions conducted within the unit only, and especially directed towards the

improvementof the labourwelfare. This ismainlydue to entrepreneurs’ natural concern aboutmatters

internaltothefirm(Sachdeva&Panfil,2008;Vives,2006)andalsoduetotheclosenessofMSMEstotheir

labourforce(Jamalietal,2015).Furthermore,aprevalenceofinformalindividualresponsiblepracticeshas

beenseen,supportingthegeneraltheoreticalargumentthatMSMEsprimarilytendtoimplementinformal

CSRpractices(Ibid;Vives,2006;Tran&Jeppesen,2016),withoutreflectingthemintothefirms’corporate

strategies(Vives,2006).Thismakesclearthatentrepreneurs’motivationsandvaluesarethemaindrivers

fortheCSRagenda,whilepressurefromglobalbuyersisseenrelevantonlyfortheexportingunits,whichin

turnisreflectedinahighercommitmenttoCSRformalactivities.However,acrossalltheMSMEsinterviewed

ithastobenotedthatthisengagementvariesonthebasisofthefirm’ssize;forinstance,whilesmalland

mediumenterprisesaremoreinclinedtoinvestintakingcareoflabour(frommandatoryCSRactivitieslike

thepaymentofPFandESItillmoreinformalones,liketheprovisionofloanstotheworkersforimportant

family’sevent),themicrounitsaremoreconcernedaboutcommunitywelfareandcharity.Thesefindings

reflect previous empirical researches done in small and medium enterprises in developing countries

(Sachdeva&Panfil,2008;Vives,2006).Apossiblereasonofthiscouldbethat,whilesmallandmediumunits

havealargerpoolofworkerstomaintain,makingobligatoryforthemtospendonbenefits,forthemicro

firms this doesnotwork (Sachdeva&Panfil, 2008). Instead,when it comes to the aspect of community

welfareandcharity, the inclination shifts to themicroenterprisesmainlybecause theyare closer to the

beneficiarycommunities(Ibid).Furthermore,theinformalCSRpracticesusuallyimplementedbythemicro

unitsarelessmonetaryconsuming,reflectingtheliteratureargumentdefiningMSMEsascashlimited.

4.3InformalityinLudhiana

4.3.1WorkforcecompositionandcharacteristicsinLudhiana

Beforeexplaininghowtheprocessoflabour’sinformalisationworksintheLudhiana’scontext,Iwanttogive

tothereaderabriefdescriptionoftheworkforceintheMSMEsinterviewed.Thekeyfindingsregardingthe

labourforcewillbepresentedinthenextparagraphs.

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• Mostoftheworkersintheunits,independentlyfromthetaskcarriedout,aremales.Particularly,in

themicro-embroideryunits,theworkforceischaracterizedonlybymales(29.04First,Second&Third

Interview,2016),whilefortheotherMSMEsthepercentageofmenswingsbetween70and95%.

• Theaverageageoftheemployeesisbetween20to45/50yearsoldandithasbeenunderlinedby

morethanoneintervieweethatnooneunder18yearsoldishired(28.04FirstInterview;27.04Third

Interview,2016).Onlyinthemicro-embroideryunitsthereischildlabourandpeopleusuallystart

workingattheageof10/11years,becauseofpoverty(29.04SecondInterview,2016;2).Particularly,

thetrainingprogrammelastsforaperiodofaround3/4years(29.04FirstInterview,2016;4).

• Regardingthegeographicalprovenience,mosttheworkerscomefromoutofPunjab(28.04Second

Interview,2016;2)andmainly fromUttarPradesh (UP),Biharand insomepart,alsoOdishaand

HimachalPradesh.

• Theskillslevelvariesfromseasonalandregularworkers.Indeed,whiletheformeronesareusually

unskilled and confined to the simplest jobs, the regular ones are defined as “themaster of the

machines […] the professional in the field” (27.04 Second Interview, 2016; 6). Regarding the

educational level,mostoftheemployees(excludingthestaff)areuneducatedandasdeclaredby

onerespondent,“itisjustessentialthattheycanreadbutitisnotrequiredanyspecificeducational

qualifications”(28.04FirstInterview,2016;1).

• Aboutthemodeofrecruitment,ithasbeenseenthatmostoftheSMEsusecontractlabours(28.04

First,Second&ThirdInterview,2016;26.04First&SecondInterview,2016;27.04Second&Third

Interview,2016).Onlythemicrounitsdonotpresentthisfeatureandtheprocessofrecruitmentis

basedthroughpersonalrelationsorreference(29.04First,Second&ThirdInterview,2016).

• RegardingthecompositionoftheworkforceintheLudhiana’sMSMEs,ithasbeennotedthatallthe

unitstakeadvantageofseasonalworkersevenifnotdirectlystated.Theyareusuallyintheposition

ofhelpersorlowlevelstaff(28.04FirstInterview,2016;1)andaccountforhalfofthefirm’slabour

force.Home-basedworkers, instead, areusedonlyby themicro-embroidery firms (29.04First&

ThirdInterview,2016).

• Duetothemassiveusageofseasonalworkers,theturnoveroftheemployeesishigh.Forinstance,

oneunit’sownerdeclaredthatusuallymorethan50%oftheworkforceisshuffledeveryyear(28.04

First Interview,2016;1).Though itappeared thatnotonly seasonalworkerschangebutalso the

regular ones,which usually stay in the same industrial premise for a period of 4/5 years (27.04

Second Interview, 2016; 1). It works differently for the micro-embroidery units where, instead,

excludingtheseasonalemployees,theregularlabourforceworksinthesamefirmforatleast10to

15years(29.04First,Second&ThirdInterview,2016).

65

ThefindingsreflectsomepreviousempiricalresearchesdonebyMezzadri(2014a;2016b),aboutinformality

and the Indian garment industry. Thesewere showing the IndianMSMEs characterized by a systematic

exploitation of societal inequalities, like gender, age and geographical provenience, in order to attain

flexibilityadvantages(Mezzadri,2014b).Theconsequencestheworkforcecompositionandcharacteristics

have on informality andCSR implementation in the Ludhiana’s contextwill be described in detail in the

followingsection.

4.3.2Informalisationoflabourinfactory-realmsofproductioninLudhianaandtheconsequent

repercussiononCSRimplementation

As previously stated in the literature review, the process of informalisation involves a “systematic

exploitation of informalmechanism to control the labour force, based on deeply-rooted inequalities and

structural differences, like gender, age, geographical provenience etc.” (Mezzadri, 2012). During my

fieldwork,ithasbeenevidencedthatinthefactory-realmsofproductionintheLudhiana’sknitwearcluster,

migration’spatternsarethedominantmodalityoflabourinformalisation.Thisandtherecruitmentprocess,

mainlybasedonlabour-contractors,madetheimplementationofCSRnormscomplexandineffective.

InLudhiana,factory-basedlabourisprimarilymaleandmigratory,comingfromdifferentNorthIndianstates,

inparticularUPandBihar.Accordingtothefieldfindings,malemigrants’workerscanbecategorizedintwo

differentblocks: the skilledones that stay longer in the sameMSMEandusually gobackhomeonly for

holidaysandfestivals(27.04SecondInterview,2016;3)andtheunskilledones,whichinsteadareengaged

inmultipleprocessesof labourcirculation.Particularly,threepatternsofcirculationseemtoexistforthe

latterones.ThefirstoneisayearlyprocesscharacterizedbyworkersgoingbackandforthbetweenLudhiana

and their place of origin (25.04 First Interview 2016; 1; 26.04 Second Interview, 2016; 3; 27.04 Second

Interview,2016;28.04ThirdInterview,2016;3&4).Thesecondpattern,instead,indicatethepacethrough

whichtheyswitchbetweenunits intheLudhiana’scontext (28.04SecondInterview,2016;3;28.04Third

Interview,2016;1).Specifically,thishappensbecauseoftheminimalvariationinwagesbetweentheunits.

Finally,thethirdandlasttypeofcirculationentailsworkersmatchingoutofthesweatshopsystemoncetheir

workinglifeisfinished,aroundtheageof45/50.Theempiricalfindingsobtainedreflectpreviousresearches

doneintheIndiangarmentindustrybyMezzadri(2016b),whichexperiencedthesameprocessesoflabour

circulation in the National Capital Region (NCR). Particularly, the recruitment process of this

‘unstable’/seasonal workforce ismostly based on labour contractors (25.04 First Interview, 2016; 28.04

SecondInterview,3),asdeclaredbytheinterviewees.Boththepresenceofcontractorsshapingthelabour

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chainandtheexistenceofalocalsweatshopsystembasedontheexploitationofmalemigrantworkersmake

CSRnormsinefficient.

Furthermore,thesecircularmigrationsprocessesimplyahighlabourturnoverinthecluster.Whiletheunits’

ownersarguedthatthishighrenewalrateisduetothemigrant’workerchoicestomove,Iperceivedthat

thisworkingarrangementbenefits tremendously the firms,as itoffersa flexiblepoolof labouratavery

cheapcostlettingthemtobeflexible.However,alsoaspointedoutbyanemployeeoftheINTUC,Indian

tradelabour,themigrationprocessesarealsoachoiceoftheworkers,whichprefertobemoreflexibleand

enjoy ‘freedom’(2.05 Second Interview, 2016; 3). This statement support De Neve’s (2014) argument

regarding individual labour agency decisions as an influencer in CSR adoption in developing countries’

MSMEs.Finally,theinformalisationoflabourseemsalsotoinvolveanindirectprocessof“informalisationof

CSRpractices”overhealthandsafetyconcerns(Mezzadri,2014a).Indeed,whilefortheskilledemployees

(whicharetheregularones)thefirmspayPFandESIcontributionsrates,theseasonalworkersarelackingof

this.

4.4 CSRperceptionsinLudhiana

4.4.1DefinitionsandperceptionsofCSRforLudhiana’sMSMEs

In the following section I will present the different definitions and perceptions of Corporate Social

Responsibilitygivenbytheinterviewees.Therespondentshavegivennouniversalexplanationoftheterm

CSRbut Ihave identifiedtwopredominantanswers:“takingcareofthe labour”(26.04SecondInterview;

27.04First&ThirdInterview;28.04FirstandThirdInterview,2016)and“improvementoftheenvironment”

(26.04SecondInterview;27.04FirstInterview,2016).Indeed,whendirectlyrequestingapersonaldefinition

ofCSR,firmsacrosstheclusteracknowledgedlabourwelfareasthemostpredominantanswer,thenfollowed

byenvironmentalwelfare. Ithas tobeunderlined that thedyeingunitsare theonlyoneswhogave this

seconddefinitionofCSRandthisisduetotheir‘pollutingtrait’.Inalessamount(actuallyonlyoneindustrial

unit)hasperceivedCSRalsoasbeinginvolvedin“communitywelfare”(28.04ThirdInterview,2016).These

findings reflect previous empirical researchers, like the one of Sachdeva and Panfil (2008). Indeed, their

projectfoundthattherewasnouniformunderstandingordefinitionofCSRamongstIndianMSMEsandthat

thepredominantanswerencounteredwas“employeewelfare”.

Clearly, as stated by the respondents, CSR actions are company driven and so perceived as “voluntary

implementedactivities”(27.04FirstInterview,2016;2),excludingthemandatoryones:likePF,ESIandETPs

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forthedyeingunits.Indeed,theyareusuallynotrecognizedas‘monitoringsystems’imposedbyoutsiders,

butinsteadtheyseeCSRactionsassupportactivitiesimplementedbythemonavoluntarybasiswhenthere

is a lack of government action (26.04 Second Interview, 2016; 1). The aspect of voluntariness is also

underlined by the absence of a dedicated budget for CSR: a characteristic, whichwas shared by all the

respondents. An exception regards the exporters, which are usually exposed to interactions with larger

sphere’sactors (e.g.globalbuyers,exportersetc.). For instance,oneexporter interviewedhaveacritical

perceptionofCSRactivities,declaring:

“Isayonethingfrankly...CSRimplementation,nobodycandobyheart!Theydoonlyiftheyarepushed,

otherwiseinnormalfactories...80-90%industries,theydon'timplementCSR.Smallscaleindustriesthey

don'twanttoimplementCSRbecauseitcosts...fortheCSRimplementationthereareverybigcosts,they

don'twanttospendmoneyinCSRbuttheywanttospendthemonproduction![…]Thisisafranklyanswer,

usuallyinthenormalindustryfactoriesitworkslikethis[...]weareexporters,weworkforbigbrands,big

companiessothat'swhywemainlyimplementthesethings.Before,Isay15yearsback,normallywewere

implementingnormaltechniques...thenbuyerswherecomingheretocheck,withinspectorsandtheywere

tellingus"ImplementCSR,implementCSR!"...andthenwedidCSR.”(28.04FirstInterview,2016;1)

Onlyinthiscase,CSRisperceivedasanimpositionfromexternalactors.ThissupporttheargumentofKhan

andLund-Thomsen(2011)whichconsiderCSRnormsimplementedbydevelopingcountry’sMSMEs,asaway

of‘WesternculturalandeconomicImperialism’imposedbytheglobalbuyers(Ibid).

4.4.1.1DriversandrecipientsforCSRinvolvement

Asjustsaid,theinterviewedMSMEs,apartforoneanswer,rarelydeclaredthattheimplementationofCSR

was imposed by remote business or institutional environments. Therefore, I continued to look for the

motivatingfactorsthatinducetheirimplementation.So,whyaretheunitscarryingouttheseactivities?It

has been seen that the implementation of CSR actions is mostly driven by the personal values of the

owner/managerandespeciallyontheclosenessorresponsibilitytheyfeelfortheirworkforceandthelocal

community.

Indeed,whendirectlyaskedwhoare the recipientsof the responsibleactivities taken,mostof theunits

mentionedtheemployees(26.04First&SecondInterview;27.04SecondInterview;28.04Second&Third

Interview,2016),thecommunity(26.04FirstandSecondInterview;27.04SecondInterview;28.04Second&

Third Interview, 2016) and the enterprise’s owner itself (27.04 Second Interview; 28.04 Third Interview,

68

2016). Only one MSME stated the buyers (28.04 First Interview, 2016; 2), while no one quoted the

government,whichisseenasamotivatingfactoronlyforbiggerfirms:

“RegardingthegovernmentIwassayingthatcompanies,whichearnmorethan200crorestheyhaveto

spend2%forCSR…ifnottheydon'tforceustotakeCSR.”(26.04FirstInterview,2016;2)

Themost consistent reason, accordingly, given for engaging in CSR actions are ethics and humanitarian

reasons.Indeed,themajorityoftheowner’sunitsperceivedCSRastheirmoralduty(26.04First&Second

Interview,27.04Second&ThirdInterview,28.04ThirdInterview;2016)“towardsboththeenvironmentand

thesocialworld”(27.04SecondInterview,2016;2).Themicro-unitsinterviewed,whichfocustheiractivity

ondonationsandcharitytobothreligiousassociationsandtothecommunity,gaveastheengagingreason

religious values/duty (29.04 First, Second & Third Interview, 2016). As declared by one of them: “Our

community[Muslim]isreallyreligiousandfollowingtheKoran,ourreligiousbook,itsaysthatwehavetodo

charityandthat'swhywedothat.”(29.04ThirdInterview,2016;1).Onlyoneexceptionisrepresentedbya

shawlexporterforwhomthemainreasoninimplementingCSRactivitiesresultinthedesiretohavebetter

relationswiththeclients(28.04FirstInterview,2016;1&2).Toconclude,itcanbestatedthatthedriving

factors for the selection and implementation of CSR activities remain in the hands of the entrepreneur

despitethepresenceandgrowthofexternalinfluences.

4.4.1.2CommunicationofCSR

RegardingthecommunicationoftheCSRactivitiesundertaken,theMSMEsinterviewedmainlyprefernotto

advertise their actions to gain any recognition (27.04 First Interview; 27.04 Third Interview; 28.04 First

Interview;28.04ThirdInterview,2016).Fewcasesstatedthatthereisanexternalcommunicationbutmainly

throughtheuseofword-of-mouth(26.04SecondInterview,2016;1)orthroughWhatsAppgroups(26.04

First Interview, 2016; 1). For this reason, most of the actions taken by the interviewedMSMEs can be

consideredas“silentCSR”,definedbySachdevaandPanfil(2008)as“thoseactionsundertakenwithoutany

publicityorexpectationoffinancialreturnuponthesocialinvestment”.Indeed,suchactionsareconsidered

common/basicbusinesspractices,for instance,somerespondentsstated:”IconsidermyCSRexpensesas

partoftheproductioncosts…whyshouldIremovethem?”(28.04FirstInterview,2016;1)or“Theseareall

activitiesneededinthefactory”(28.04SecondInterview,2016;1).

69

4.4.1.3ObstaclesandbenefitsofCSR

Themain obstacles and barriers pointed out by theMSMEs interviewed for amore participation in CSR

practices are: the lack of government permissions or government cooperation (26.04 First & Second

Interview;27.04SecondInterview,2016)andtheworkers’notwillingness,bothregardingthepaymentof

theirPFandESI’scontributionratesoruseofthePPEs(28.04First&ThirdInterview;27.04ThirdInterview,

2016).Regardingthefirstreason,governmentwasperceivedasanobstacleonlyfortheimplementationof

externalorcollectiveCSRactions,liketheconstructionoftheCETPsortheplantationactivities.Surprisingly

limitationsinmonetaryresourceswerenotdirectlymentionedasbarriersforamoreactiveinvolvementin

CSRpractices.

Instead,themajorbenefitsofengaginginCSRactivities,aslistedbytheMSMEs’interviewed,aregettinga

goodworking environment (26.04 Second Interview; 27.04 Third Interview; 28.04 First Interview, 2016),

providingbenefits/welfaresforthecommunityandtheexternalsurrounding(26.04First&SecondInterview;

27.04SecondInterview;28.04FirstInterview,2016).Inalessamountalsoaneconomicreturn(26.04First

Interview;27.04First&SecondInterview,2016).Itseemsobvioustome,thatmostlytheunitshaveseen

CSRasapotentialadvantagetoestablisha“goodandhealthyworkingenvironment”(27.04ThirdInterview,

2016;1)duetothepredominanceofindividualinternalCSRactivities.Environmentalwelfareandbenefits

forthecommunityare,instead,linkedtotheconstructionofparks,plantationactivitiesandtotheCETPs’

creation.

Economicreturnandbenefitsforthecompanyitselfareseenbysomeunits,butmainlyinthelongtermand

theyareusuallyassociatedwithaparticularCSRactivity:theCETPs’construction.Finally,acoupleofMSMEs

indirectly perceived an economic return,without frankly listing it, through the growth of trust between

ownerandemployees,whichinturnbroughtanincreaseintheproductivity:“Onebenefitcanbetheincrease

oftrustbetweenmeandtheemployeesandthereforeanincreaseintheproductivity.”(28.04ThirdInterview,

2016;1).

5.Conclusion Themain objective ofmy researchwas to investigate and exhibit how CSR practices are perceived and

implementedbyMSMEsintheLudhianaknitwearclusterinIndia.Inordertoanswertheresearchquestion

posed,“HowdotheMSMEsintheLudhiana’sknitwearcluster inIndiaperceiveandimplementCorporate

70

SocialResponsibilitiesactions?”,Iundertookseventeensemi-structuredinterviewswithmanagersofMSMEs

andexternalstakeholders(likegovernmentofficialsortradeunionsinLudhiana),inadditiontosecondary

data.Ihavealsoexploredtheliteraturepreviouslydevelopedregardingfourmaintopicsconsideredrelevant

inaspecttotheresearchquestion,whichareindustrialclusters,MSMEs,informalisationoflabourandCSR.

Regardingindustrialclusters,thediscussionconcernedmainlytheaspectofcollectiveefficiency,definedas

thecompetitiveadvantagederived from localexternaleconomiesand jointactionsbetweenbothmicro,

smallandmediumenterprisesandlocalinstitutionbodies.Concerningthesecondtopic,MSMEs,Ifocused

theattentionon thequalitative factorsdefininganddifferentiatingmicro, small andmedium firms from

larger enterprises. Some examples of these qualitative criteria are small distinction between the role of

managementandownership;primaryorientationtowardsday-to-dayproblems;highdegreeofinterrelation

with the community and the environment and limited financial and managerial resources. Informality,

instead,wasmainlydiscussedregardinginformalemploymentandhowcodesofconduct,elaboratedasa

potentialwaytofacethisissue,hadalimitedimpactinimprovingworkingconditionsduetotheirfactory

basednature.Finally,CSRwasanalysedbetweenthedifferentperspectivesemergedfromtheliterature,and

themaindrivers,benefitsandobstaclesencounteredbyfirmslocatedinadevelopingcountrycontextwere

presented.Ithereforedevelopedaninitialconceptualframeworkdescribingthelinksbetweentheprevious

mentionedtopicsandwhichdrovemeintheanalysisofhowCSRimplementationandperceptionisshaped

intheLudhianaknitwearcluster.

Thedata,insum,revealedthatMSMEsdidnothaveaproperanduniversaldefinitionofCorporateSocial

Responsibilitybuttheymainlyreferredthetermaslabourandenvironmentalwelfare.Thisisalsoinlinewith

thetypologiesofCSRactionsthat theyusually implement in theiragendasandthatwillbesubsequently

summarized.Moreover,theyperceiveCSRactionsasprimarysupportactivitiesimplementedbythemona

voluntarybasisandnotas´monitoringsystemsímposedbyoutsiders.Theonlyexceptionwascharacterized

bytheonlymediumexporterinterviewed,whichinsteadhasamorecriticalviewofCSR.Onlyinthiscase,

socialandenvironmentalactivitiesareidentifiedasawesternculturalandeconomicimperialismimposed

by the global buyers, which is also reflected in a major involvement in CSR practices. More generally,

regarding theCSRactivities implemented, it hasbeen seen that theactionsundertaken couldmainlybe

groupedintwocategories:individualandcollective.ThefocusoftheindividualCSRactionsisprimarilyon

theinternalaspectandespeciallytowardstheimprovementofworker’sconditions.Thesekindsofactivity

varyfromformalactions(likethepaymentofPFandESI)tomoreinformalones,liketheprovisionofloans

toworkersortheplanningofreligioustrips.Aprevalenceof informal individualresponsiblepracticeshas

beenseen,makingclearthat,theowner’smotivationsandvaluesarethemaindriversfortheCSRagendain

71

theseMSMEs.Ithasalsobeendiscoveredthat,thefactoryproductioninLudhianaischaracterizedbyahighly

usage of informal labour in the formofmigrantworkers. This informalisation of labour also involves an

indirectprocessof“informalisationofCSRpractices”overhealthandsafetyconcernstowardsemployees.

Forinstance,whileforregularworkerstheunitspayPFandESIcontributionsrates,theseasonal/migratory

ones are lacking of this protection. Regarding collective CSR actions, the data revealed that the focus is

predominantlyontheenvironmentalaspectandparticularlyontheconstructionofCETPs(forthedyeing

unitsonly).ThishappensbecauseitismandatoryforthedyeingfirmstohaveETPs,duetoarecentthickening

ofnationalenvironmental laws.Furthermore,thechoiceofCETPshasusuallybeenpreferredbythelocal

dyeingunitsbecauseoftheir impossibilitytoaffordindividualplants,whichinturnisduetotheir limited

financialresources.However,theconstructionofCETPsisnotwithoutchallenges,indeed,apartfree-rider

problemsalsotheabsenceofastronginstitutionalsupportenvironmentseemtodelaythecompletion.The

secondmostimplementedcollectiveCSRactivityconcernslabourwelfare,inparticular,thewayoftraining

anddevelopmentofworker’sskills.Regardingthemicro-units,thedatashowedthatbetweenthethreefirms

interviewednoneofthemimplementrelevantcollectiveCSRapartcharityactionstowardthecommunity

andreligiousinstitutions,duringholyfestivals.Thisisalsotheonlycaseshowed,whereafirmactuallyworks

jointlywithotherunitswithoutthecooperationofexternal institutions.FortherestofthecollectiveCSR

actions,theunitsusuallychooseaspartnersindustryassociationsor,infewexamples,NGOs.Apartfrom

these,collectiveCSRarerareandnegligiblecomparedtotheindividualones,andthisismainlyduetothe

absenceofastronginstitutionalsupportenvironmentandalackofinterestfromtheunitsinundertaking

socialresponsiblejointactions.Instead,theleveloftrustisperceivedgoodanditdoesnotseemtodirectly

influencethistypeoflowengagement.

In conclusion, my suggestions regarding policy implications in the Ludhiana’s knitwear cluster, mainly

concernapromotion/enhancementofthesupportinstitutionalenvironment.Whilethelevelofindividual

CSRengagementseemedsatisfactory,collectiveCSRwasalmostnegligibleandithasbeennotedthatthe

lowengagementreliesinthisissue.Regardingtheprocessof“informalisationofCSRpractices”overhealth

andsafetyconcernsduetotheexploitationfromthelocalunitsofinformalworkers,aCSRapproachcovering

also temporaryworkers couldbeapossible solution. In thisway, theworker’s choiceof generally being

employed in more casual and informalized settings, will be accomplished without let them being

‘unprotected’.Moreover,theIndianlaw,whichisnowadaysmainlydirectedtoprotectworkersenjoyinga

permanentstatus(Mezzadri,2014a),shouldandisexpectedtointervene.

72

Regardingresearchimplications,itcanbeconcludedthatfurtherresearchesarenecessarybecausethisstudy

is only a first attempt of exploring an unattended terrain of research.Moreover, complete information

regarding informalisation of labour were not reached throughmy fieldworks and thus further research

shouldfocusonthese‘empirical’gaps.Moreover,consideringwhatisknownnow,itwouldbeinterestingto

dofurtherintensivestudiesandamoreextensiveanalysis,lookingatwhetherthesefindingscanbetruealso

foralargerpopulation.

73

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7.Appendices

Appendix1:InterviewGuideforMSMEs’owners

InterviewGuideforMSMEs’owners

Durationinterview:ca.1,5/2hours BasicRespondentinformation

1. Nameoftheenterprise:2. Nameoftherespondent(s)andrespectiveposition(s)inthecompany:3. Whatisyourbackground?Education,workexperience…

EnterpriseHistory4. Canyouprovidemewithabriefdescriptionofyourenterprise?

• Whenwasitfounded?• Isthisafamilyenterprise?• What type of business form do you have? (E.g. partnership, solo

proprietorship,corporation)• How did it evolve/change during these years? (Regarding the product

portfolio,thecustomerbase,productionprocess…)CompanyProfileCustomer base

5. Whoareyourcustomers?6. Andyourmainmarkets?(Domesticmarket:Local,regional;Exportmarket)7. Which kind of request do your customers have? (E.g. pricing, delivery time, quality,

design…)Products and production process

8. Couldyoudescribemeyourproductportfolio?9. Howdoestheproductionprocesswork?Whicharethemainsteps?10. Whichkindofmachineryandtechnologydoyouemploy?11. Istheproductionseasonal?Ifyes,couldyoutellmethetimeframeofyourproduction

period?(E.g.fromwhichmonthtowhichmonth)12. Iftheproductionquantityaskedbyacustomerismorethanyouractualcapacity,how

do you handle the situation? (E.g. do you refuse the order? find partners btw thecluster?)

Management of the workforce 13. Howmanyworkersdoyouhave?14. Couldyoudescribemeyourworkforce?(Compositioninage,sex,caste,geographical

provenience)• Doyouuseseasonalworkers?Ifyes,whichisthepercentageonthetotal?• Doyouemploy“externalworkers”?Ifyes,aretheydedicatedtospecifictasks

oftheproductionprocess?Whichones?• Doyoualsoemployhome-basedworkers?Ifyes,whichisthepercentageon

thetotal?15. Howdoyourecruit/hireandfireyourworkforce?Doyouusecontractors?16. Whicharetheirskillsandeducationallevel?

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17. Howdoyoutrainandupgradetheskillsofyourworkforce?18. Doyouusealinesystemordoesaworkerproduceasingleunit/productallbyhimself?19. Howmanyproductunitsdoaworkerproduceonaverageinaday?20. Whichistheannualattritionrate(turnover)oftheworkforce?

Cluster

21. Canyoubrieflydescribethecompositionofthecluster?(E.g.numberandtypologyoftheenterprises)

22. Dothecompanyhavesomekindofrelationswiththeotherenterpriseinthecluster?Ifyes,whichones?

23. Whichkindofotherorganizationsarepresentinthecluster?(E.g.NGOs,Governmentsupportorganization,Businessassociations,Traininginstitutions…)

24. Do thecompanyhaveany links/relationswithsomeof them? Ifyes,brieflydescribethem.

25. The“FoundationforMSMEsClusters”(FMC)ispresentintheLudhianacluster.WhatsupportdoesitprovidetotheSMEs?

26. Whichkindofactivitiesdoestheypromote/do?CSRperception

27. In general, do you think that a company has a responsibility for social issues? (E.g.human rights, environment, charities, training and development, health careinitiatives…)

28. WhatdoesSocialResponsibilitymeantoyouandyourbusiness?Couldyougivemeabriefdefinition?(E.g.Takingcareoflabour,MonitoringSystemimposedbyyourclients,Guidelineforenvironmentalandsocialissues,Involvingincommunitywelfare,Followcertificationsystem…)

29. Doyouperceiveyourcompanytobesociallyresponsible?WhataspectsofCSRdoyourcompanygivethemostimportance?(btweconomic,social&environmentalaspect)

CSRactivities&communicationofthem30. WhatkindofactivitiesconcerningCSRdoyouhave?Givesomeexamples.31. Forexamples,whydoyouprovide(EXAMPLEGIVENBYTHERESPONDENT)toyour

workers?Whyisitimportantforyou(orisnot)?Whydoyouthinkisone(ornot)ofyourissues?

32. Whicharethemainreasonsyouareengagedinthesetypesofactivities?33. WhichkindsofCorporateSocialResponsibilityissuesexistinyourindustryorcluster?34. Whois(orare)themaindriver(s)ofyoursocialresponsibleactivities?E.g.

• Employees• Enterpriseowner• Community• Globalcustomers• Government

35. AreyourCSRactivitiestargetedatanyparticularstakeholders?36. Does any external agency forced/motivated you to implement social responsible

activities? Ifyes,whichwerethearguments intheirmotivation?(E.g.Supportbytheexternalagency,Preferredsupplier,Largercontractvolumeorlongerduration,Positiveattractiveimageinthemedia,Governmentfunding…)

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37. WouldyouorDoyouworkwithanyotherenterprisesorinstitutionsinacollectiveCSRinitiative? (E.g. enterprise innetwork, enterprise in cluster,NGOs, local government,religiousorganization…)

38. Ifyes,inwhichactivitieshaveyoubeenengagedin?39. Doyoupreferindividualorcollectivesocialresponsibleactivities?Why?40. WhatimpactdidyourCSRactivitieshaveonthecluster?Regarding:

• Enterprisescooperation,• Healthandenvironmentalissues,• Improvement(socialandeconomical),• Attractivenessofthecluster(investments,visibility…).

41. IsthereadedicatedbudgetforCSR?(E.g.2%ofthenetprofit?)42. Haveyoueverundertakenanyof theactivitiesgivenbeforeevenwhenthe firmwas

runningaloss?Ifyes,whichones?Ifno,whywerenotimplemented?(E.g.Nopressuretodoit,Notimportantforbusinessperformance,Lackofsocialinstitutionstoassist,Tooexpensivetoimplement,Novisiblegain…)

43. GenerallydoyoucommunicateyourCSRactivitiesundertaken?Ifyes,how?BarriersandopportunitiesofCSR

44. WhichbarriersdidyoufacewhenimplementinganyCSRactivity?Examples.45. Whatarethebenefits(bothshortandlongterm)ofengaginginCSRactivities?

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Appendix2:InterviewguideforGovernmentofficials

InterviewGuideforGovernmentOfficials

Durationinterview:ca.1hourDIC

1. Nameoftheorganization/association:2. Nameoftherespondent(s)andrespectiveposition(s): 3. Whendiditstartyourwork?4. Inwhatdoesitconsistyouractivity?5. Couldyougivemesomeexamplesoftheschemesyouimplementedespeciallyregarding

CSRactivities?6. DothesekindsofschemesalsoinvolveMSMEsoronlylargefirms?7. WhicharethemajorissuesthattheLudhiana’sSMEsarefacingupnowadays?8. Regarding MSMEs in the Ludhiana knitwear cluster, how do they perceive social

responsibleactivities?DotheyimplementanykindofCSRactions?9. Apartyourinitiatives,whichotherorganization(gov.andnot)helpSMEsinupgrading?

• Andinbecomingsustainable?(Regardingsocialresponsibleactions) MSME-DI

1. Nameoftheorganization/association:2. Nameoftherespondent(s)andrespectiveposition(s): 3. WhenandhowdidtherealityofindustrialclusterordistrictemergeinIndia?Andin

Ludhiana?4. Whendiditstartyourwork?5. Inwhatdoesitconsistyouractivity?6. Couldyougivemesomeexamplesoftheschemesyouimplementedespeciallyregarding

CSRactivities/socialresponsibleactions?7. HowisyourrelationshipwithSMEs?

• Aretheyfavorabletocollaborate?• Dotheyusuallyfollowyourschemes?

8. WhicharethemajorissuesthattheLudhiana’sSMEsarefacingupnowadays?9. Regarding SMEs in the Ludhiana knitwear cluster, how do they perceive social


• Andinbecomingsustainable?(Regardingsocialresponsibleactions) PPCBLudhiana

1. Nameoftheorganization/association:2. Nameoftherespondent(s)andrespectiveposition(s):

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3. Whendiditstartyourwork?4. Inwhatdoesitconsistyouractivity?5. Could you giveme some examples of the schemes/acts you implemented especially

regardingCSRactivities/socialresponsibleactions?6. HowisyourrelationshipwithMSMEs?

• Aretheyfavorabletocollaborate?• Dotheyusuallyfollowyourschemes?

7. WhicharethemajorissuesthattheLudhiana’sSMEsarefacingupnowadays?• Regarding SMEs in the Ludhiana knitwear cluster, which are their main

environmentalissuestheyface?8. Regarding SMEs in the Ludhiana knitwear cluster, how do they perceive social


• Andinbecomingsustainable?(Regardingsocialresponsibleactions)

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Appendix3:Interviewguideforotherstakeholders

InterviewGuideforotherstakeholders(TrainInstitutions&TradeLabors)

Durationinterview:ca.1hour BasicRespondentinformation

1. Nameoftheinstitution/association:2. Nameoftherespondent(s)andrespectiveposition(s):

3. Whendiditstartyourwork?Whenwasitfoundedtheinstitution?4. Inwhatdoesitconsistyouractivity?5. Howdoesitrunthisassociation?(e.g.Howisitfounded?Howmanyworker/peopleare

involved?Isitmandatoryforworkertobepartofthetradelabour?)6. Whichhavebeenthemajorgoalsyouachievedregardingtheimprovementofworkers’

condition?(TRADELABOUR) Workforce involved in the Trade Labour & Train Institutions

7. Howmanyworkersarepartoftheassociation/institution?(TL)• Areworkerswillingtobepartoftheassociation?

8. Couldyoudescribemethecompositionoftheworkers/peopleinvolved?(Compositioninage,caste,geographicalprovenience,industryofemployment…)(BOTH)

9. Which kind of industrial units mainly contact you for employ your trainers? (E.g.dimensionoftheunit,industry…)(TI)

10. Apart your initiatives, which other organization (gov. and not) help workers inimprovingtheircondition?(BOTH)

SMEs relations

11. Doyouhaveanykindorrelationship/linkwithMSMEsoftheLudhiana’sknitwearcluster?Ifyes,brieflydescribethem.

12. Regarding MSMEs in the Ludhiana knitwear cluster, how do they perceive socialresponsibleactivities?DotheyimplementanykindofCSRactions?

13. Apart your initiatives, which other organization (gov. and not) help MSMEs inupgrading?(Notonlyregardingworkerconditionbutalsoothersocialissues)(TL)

• Andinbecomingsustainable?14. WhicharethemajorissuesthattheLudhiana’sSMEsarefacingupnowadays?15. WhicharethemainSocialResponsibleissuesSMEsarefacingupnowadays?

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Appendix4:ParticipantInformationSheet

CorporateSocialResponsibilityintheLudhianaknitwearcluster:anexplorationthroughtheMSMEsperspective

ParticipantInformationSheet

Thepurposeofthisresearchismultiple.FirstistounderstandtheconceptofCSRandhowsocialresponsibleactivitiesareperceivedbyMSMEs.Second, itwantstoanalyzetheCSRpracticesundertakenintheIndianmanufacturingoperationsandtheirimpactandbenefitstowardsboththeenvironmentandcommunitybutprimarilyforthebusinessesitself.Third,the study will investigate the challenges faced by the enterprises in executing socialresponsibleactionsandlastwilltrytofindpossiblesolutionsorrecommendationstosolvetheissuesfaced.

Takingpartinthisstudyisentirelyvoluntaryanditisuptoyoutodecidewhetherornottotakepart.Bychoosingtoeithertakepartornottakepartinthestudywillhavenoimpacton you and your work. You do not have to answer any questions that make youuncomfortable. If youdecide to takepart, youarestill free towithdrawatany timeandwithoutgivingareason.

Theresearcherwillaskforyourpermissiontorecordtheinterview.Thisisdoneinordertoguaranteethebestpossiblequalityof thedatacomingoutof thestudy.Youcanasktheresearchernottorecordtheintervieworstoptherecordingatanytimewithoutgivinganyreason.

Ifyoutakeupoftheinterviewyouwillbeinvitedinaone-to-oneinterview.Thedurationforthis one-to-one interview will be approximately 1 hour and 30 minutes. Timing of theinterviewwillbearrangedasperyourconvenience.

TheresearcherhassignedaconfidentialityagreementwithCopenhagenBusinessSchool.Thismeansthatallinformationcollectedwillbekeptstrictlyconfidential,andyourdatawillbede-identifiedusingsimplecoding.

Thankyoufortakingpartinthisstudy.

Giuditta

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Appendix5:ClusterTree-MapfromNvivo

Cluster

Clustercomposition

Linkages &Ties

BusinessAssociations

NGOs

Government

Trade Unions

TrainingInstitutions

PDA

BKTK

CICU

LDA

FICO

LKA

The KnitwearClub

FMC

RaghunathSewa Dal

GovernmentAction

GovernmentSchemes

DIC

MSME-DI

PPCB

AEPC

MSME-DIactivity

MSME-DIdescription

LO2

INTUC

LO2 activity

LO2description

LO2 issues

INTUC activity

INTUCdescription

INTUC issues

ITI

ITI activity

ITI description

ITI issues

inter-firmlinkages

level of trust

linkages atthe

association’slevel

firm’spartnerships

subcontracting

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Appendix6:EnclosedUSB

Documents

Analysis of the CSR policies implemented in the Ludhiana