Work Organization and Nonstandard Workers: A Case Study of a Multi-Layer Subcontracting System in Taiwan

There is a large and detailed literature on the use of nonstandard workers in different parts of the world, but few attempts have been made to understand the relationship between nonstandard workers and the kinds of organizations that use them most frequently. The primary focus of this paper was clarifying how a common organizational form in East Asian countries, particularly in Taiwan—multi-layer subcontracting system —serves as a motivating factor for using nonstandard workers, with the China Steel Corporation multi-layer cooperative subcontracting network serving as an example of such a system and the economic and social mechanisms that support it.

According to my analysis of the economic and social mechanisms that support this system, China Steel and its subcontractors operate according to a “flexible firm model” (Atkinson 1984, 1987; Kalleberg 2001) that requires supportive social mechanisms in order to achieve optimum economic benefits. The data used in this study confirm that truth. Flexible labor deployment—especially demand for subcontracted and temporary labor—explains how multiple levels in the China Steel Corporation cooperative subcontracting system work, and how nonstandard work arrangements are generated. In the process, I found that the more one moves toward the outer layers of subcontractors, the more one finds weaker connections between those layers and increasingly significant trust and control problems. China Steel and its subcontractors are required to use the various social mechanisms in their arsenals to resolve communication, coordination, and control problems, and to generate institutional trust and supportive social networks.