THE JOURNAL OF ENTREPRENEURSHIP

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January-

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Internationalisation and Entrepreneurial Response on the European Periphery: The Experience of North-Eastern Greece CHRISTOS KALANTARIDIS and LOIS LABRIANIDIS Expansion of trade and intensification of global competition have transformed the structure and pattern ofthe industrial sector in many developing and industrialising countries. Facilitated amply by the advances in communications and information technologies, and under the pervasive influence of large corporations, many regions have become integrated into the international production networks. Drawing upon the experience of the clothing industry in Eastern Macedonia and Thrace, one of the poorest regions of the European Union, the authors argue that industrial growth in this region was initiated by the decision of large scale enterprises catering to the international markets to move into the area. This relocation was induced by the incentives preferred in the regional development policy and the prevalence of under-employment. The paper takes a close look at the process of internationalisation in the region during the late 1980s, the decade which witnessed gradual relaxation of the restrictions governing the world clothing trade and changes in Central and Eastern Europe, and examines the strategic entrepreneurial responses to it. Christos Kalantaridis is a Senior Lecturer in Luton Business School, UK and Lois Labrianidis is an Associate Professor at the University of Macedonia, Greece. During the 1980s and early 1990s economists, geographers as well as scholars in the discipline of business studies reported a trend towards increased internalisation/globalisation of production.1 In a num­ ber of labour-intensive manufacturing industries, such as clothing and electronics, this took the form of a shift of production and employment away from advanced industrialised countries to those in possession of the cheapest and most adaptable sources of labour. Taking advantage of their The Journal of Enlrepreneurship,!, 1 (1998) Sage Publications New Delhi/ Thousand Oaks/ London

2/Christos Kalantaridis and Lois Labrianidis competitive advantage, and prompted by easy entry and exit conditions, a number of newly industrialising and less developed countries located mainly in South and South-East Asia began to pose a serious threat to levels of employment in industrialised economies.2 In order to cope with this challenge, manufacturers in the developed world implemented a number of new strategies. These included making full use of internal reserves of cheap labour, particularly females, from ethnic minorities; moving into up-market segments where competition is based on new product development and quality enhancement rather than prices and costs of production;3 and decentralisation of production in a number of low-wage economies located in the immediate periphery of industrialised countries.4 As a result, parts of the southern European countryside (alongside Mexico and the Caribbean) experienced an explosion of new enterprises and jobs that initiated a process of economic growth and structural transformation.5 Unlike the pattern of industrialisation that had occurred in the 1950s and 1960s in the privileged, urban parts of southern Europe (a modified version of the Fordist-Taylor paradigm) these regions wit­ nessed the emergence of small and even micro enterprises characterised by a considerable degree of adaptability with respect to both factor and product markets. However, there are serious concerns about the long-term viability of industrial growth in the European periphery. More specifically, some scholars argue that industrial development in hitherto peripheral regions was largely determined exogenously.6 They pointed to a regime of lower unit costs as a result of long hours of work, poor remuneration and modest capital and running cost of premises.7 Therefore, they suggested that the future of these new industrial enterprises was uncertain. Moreover, radical changes in the institutional framework governing world trade provide further grounds for scepticism. Specifically, increasing market integration associated with the completion of the single market, and the establishment of a customs union between the European Union (EU) and other Mediter­ ranean countries and the successful completion of the Uruguay Round and the phasing out of the Multi-Fibre Agreement (MFA), combined with the effects of the transformation that has been taking place in the former socialist bloc expanded the scope for greater cooperation and/or intensi­ fication of competition. Within this context, we will explore how enterprises located in penpheral areas are integrated in international production networks. Our paramount aim « t o examine the enterprise strategies implemented by the

Internationalisation and Entrepreneurial Response/3 small business sector during the 1990s and evaluate their prospects for the long-term survival and growth of the sector in southern Europe. In doing so, we intend to examine two hypotheses: 1. Unfavourable developments in the institutional framework governing world trade during the past ten years or so has undermined the com­ petitive position of the clothing industry. As a result, a decline in employment levels recorded in the industry is anticipated. 2. The deteriorating competitiveness of the industry would be more apparent amongst those enterprises that are 'dependent' upon buyers or parent enterprises in advanced industrialised countries. With this in view, we focussed our enquiry upon the northern Greek region of eastern Macedonia and Thrace, an area which enjoyed rapid industrial growth during the 1970s and 1980s. The bulk ofthe paper draws upon the results of extensive fieldwork carried out in the area during summer 1995 and spring 1996. Our investigation centres on the ex­ perience of the clothing industry partly because this industry acted as the engine of growth in the region during the past quarter of a century or so, and partly due to the fact that this industry is currently at the forefront of a trend towards increased liberalisation of world trade. We argue that the experience of eastern Macedonia and Thrace is not typical either of Greece as a whole or of the southern European periphery. The area did not enjoy the advantage of location and convenient access, did not have any modern infrastructure, and possessed a potentially explosive ethnic mix. Within this rather unfavourable socio-economic milieu, industrial growth was initiated by the decision of large-scale enterprises to move into the area. This relocation was induced by the incentives involved in the regional development policy and the availability of a small army of underemployed males and house-bound females. More or less, from the outset these enterprises were catering to the international market. Our paper is organised in the following manner. In Section 1, we explore changes in the international clothing trade over the 1980s and 1990s. In Section 2, we introduce the study area. Section 3 considers the pattern of manufacturing growth in the region. In Section 4, we devise a typology ofthe modes of internationalisation and the enterprise strategies deployed in the clothing industry during the 1990s, and in Section 5 we examine their effectiveness in enhancing competitiveness. Finally, we offer some conclusions about the viability of this pattern of growth.

4/Christos Kalantaridis and Lois Labrianidis Changes in the Global Clothing Industry during the 1 9 7 0 s and 1 9 8 0 s During the 1970s and 1980s, LDCs and NICs, taking advantage of their favoured competitive position, began to pose a serious threat to the survival of the clothing industry in core economies.8 By concentrating their efforts upon that segment of the market characterised by massproduced items, and a relatively limited degree of product differentiation, they were able to ensure that competition occurs primarily on a cost basis. As a result, rapid rates of growth in both production and exports were achieved in economies such as Hong Kong, South Korea, Taiwan, and more recently China, Brazil and Turkey. As far as the level of employment and production in the clothing industry is concerned, official data lends support to the idea that a dramatic change occurred during the past twenty years or so. The number of persons engaged in the industry in LDCs and NICs increased almost three times— from 668,000 persons in 1972 to 1,983,000 in 1989.9 In turn their share of employment increased from 9 per cent to 27 per cent. Given that worldwide employment remained virtually unchanged (an overall growth of 1 per cent over the period), such an advantage seems to have eluded the advanced industrialised countries where nearly 1 million jobs (ap­ proximately 30 per cent of the total) were lost.10 An analogous trend is evident with regard to the average annual growth of production. LDCs and NICs registered rapid rates of growth—in excess of 4 per cent per annum throughout the period from 1953-1987." The growth in employment and output level has been associated with a reversal of the world trade patterns between 1973 and 1991. Since then LDCs and NICs recorded remarkable rates of export growth. During a period of nineteen years, although admittedly starting from a low point, exports increased from just over 8 billion dollars to more than 60 billion, in constant prices.12 As a result, their share in the world's export doubled. These developments were reflected in the balance of clothing trade. The surplus ofjust over 6 billion dollars in 1973 reached an extraordinary level of forty-five billion dollars in 1991. Such a robust performance took place at the expense of advanced industrialised countries. Over the 1973-1991 period, their imports grew fourfold, while their trade deficit rose to approximately forty-three billion dollars (in constant prices). Such success meant that clothing manufacturers in advanced in­ dustrialised countries found their competitive position deteriorating rap.dly. In order to survive, they were forced to implement a number of

Internationalisation and Entrepreneurial Response/5 adjustment strategies. These included the establishment of a set of controls to regulate world trade,13 the application of new micro-electronic techno­ logy to the pre-assembly stage of the production process,14 a shift into high fashion,15 an expansion into retail trade,16 and the use of international subcontracting arrangement in their immediate periphery. Eastern Macedonia and Thrace: An Introduction Given the competition between 'peripheral' regions to supply firms and industries in core countries, the role of local physical and socio-economic factors which may induce investment is believed to be of considerable importance. However, the region of Eastern Macedonia and Thrace appears to be relatively disadvantaged in comparison to other parts of the mainland. It occupies an area of about 14,155 square kilometres (approximately a tenth of the total for Greece) and its population (as in 1991) was 570,261) just over 5 per cent of that for the country as a whole." One significant feature of the population in the region is the existence of a sizeable Muslim minority, the single largest religious group of non-eth­ nic Greek origin in the country. Overall, there are around 105,000 Mus­ lims in Eastern Macedonia and Thrace, approximately a fifth of the country's population.18 The existence of a large non-ethnic Greek popula­ tion has significant implications for the development prospects in the region.1'' Specifically, the alienation of the minority from the public sector, the single largest employer of graduates in the country, combined with limited employment opportunities elsewhere, led to the formation of a pool of underemployed workers in agriculture.2" This exerted downward pressure on the level of labour costs in the region. Indeed, hourly wages in manufacturing in the region are among the lowest in the country—88 per cent of the national average and only three quarters of those prevailing in Greater Athens.21 Moreover, the availability of a reservoir of female labour enclosed within the confines of the family house for reasons of custom and tradition offers opportunities for the spread of homeworking practices. However, the existence of a Muslim minority in a region that borders with Turkey constitutes a potential source of ethnic tension and international conflict. Given the recent experience of Bosnia, this could act as a major deterrent to potential investors in the region. Prior to the recent changes in the former socialist economies of central and Eastern Europe, the area was not well placed, in terms of location and accessibility, to take advantage of market opportunities. It is located between Bulgaria to the north and Turkey to the east. These economies

6/Christos Kalantaridis and Lois Labrianidis for different reasons offered very little opportunities for trade and cooperation till the early 1990s. The Aegean sea lies relatively unexploited to the south due to the lack of a major port, and only to the west is there the relatively prosperous Greek region of central Macedonia. Eastern Macedonia and Thrace not only lack an urban area that could act as a locomotive of economic growth and structural transformation, but are also relatively distant from main urban conurbations. The closest urban areas are the cities of Thessaloniki to the west, Istanbul to the east and Sofia to the north, all 200 kilometres or more away from the boundaries of the region. Geographical remoteness from the main markets and administrative centres is compounded by inadequate road infrastructure and a more or less antiquated rail network.22 However, the introduction of market reforms in Bulgaria has increased opportunities for trade and cooperation with neighbouring economies. These changes had significant implications for enterprise strategies in specific industries such as textiles and clothing. However, they failed to alter the position of the region as one of the poorest in the European Union. Indeed, as late as in 1991, Eastern Macedonia and Thrace displayed one of the lowest per capita incomes, which stood at only 43.3 per cent of the average for the EU as a whole. This was the twelfth lowest among all regions; and if the transition economy of the former East Germany is excluded, it drops to the bottom six. The relatively underdeveloped and 'backward' structures of the region are also apparent in the survival of a sizeable agricultural sector, characterised by small peasant households practising traditional farming methods and periodic bouts of outmigration. Being the most important source of employment and income, agricul­ ture engages nearly 34 per cent of the economically active population and contributes about a third of the Gross Domestic Product.23 The prevalence of peasant proprietorship has significant implications for the supply of labour for manufacturing in the region, the levels of pecuniary remunera­ tion and extra-industry support for the viability of local enterprises. This is because this type of agrarian structure precluded the emergence of a class of big landlords on the one hand, and of significant numbers of landless agricultural labourers on the other. Thus, the family household remained the basic unit of production and social reproduction, which provided an additional source of income to potential entrepreneurs and workers in manufacturing. The small size of the agricultural proprietorships and the low incomes prevailing in farming, combined with the limited employment

Internationalisation and Entrepreneurial Response/7 opportunities in the secondary and tertiary sectors during the 1950s and 1960s instigated a rural exodus from the region. Out-migration to urban destinations both within Greece and overseas caused a substantial reduc­ tion of the total population (by more than 12 per cent) between 1961 and 1971 2" When the opportunities for emigration and internal migration dried up in the mid-1970s, the need to secure an alternative source of employment and income generation became acute. This combined with the problems associated with rapid economic growth in the major urban concentrations of Greece (Athens, and, more recently, Thessaloniki) prompted the Greek state to encourage industrial development in rural areas and small towns. The regional development policy, established in 1949 and streng­ thened in 1976 and 1978, attempted, with some degree of success to alter the spatial distribution of industrial production. Thus, during the late 1970s and early 1980s, Eastern Macedonia and Thrace were defined either as 'non-industrial areas' or 'border zones' and enjoyed a generous pack­ age of taxation and financial incentives.25 These included reduction in turnover tax between 50 and 75 per cent for new enterprises or units that have been relocated, elimination of import duties for machinery com­ ponents and spare parts, 40-50 per cent deduction of social security contributions, grants covering 25-40 per cent of the expenses for the erection of buildings, and interest free loans up to 50 per cent of the cost of relocating units away from old industrial centres.26 More recently, in 1994, manufacturers located in Thrace secured a 20 per cent subsidy of total labour cost. Small, medium, and several large-scale manufacturers, along with a group of f irr" > · that operated within a network of political patronage and clientalism, benefited from the incentives of the regional development policy.27 The Growth and Structure of Manufacturing in the Region The present structure of manufacturing in Eastern Macedonia and Thrace is the result of a process of rapid growth and structural change that occurred during the post-1970 period. Up until that time the sector employed 17,697 persons, a mere 10 per cent of the total economically active population, a figure well below the average for Greece as a whole (see T a b | e 1). Moreover, the sector comprised predominantly of micro ^nits that were mvolved in traditional pursuits. Indeed, 55 per cent of the a manufacturing employment was provided by enterprises that

Internationalisation and Entrepreneurial Response/9

8/Christos Kalantaridis and Lois Labrianidis

employed up to five workers (see Table 2). In contrast, large-scale units, defined as those that employ more than 100 persons, were only of marginal importance. In the region as a whole, they accounted for less than a tenth of manufacturing employment. As a result of the pre­ dominance of micro units that are not included in the calculation of the official production figures, the region was responsible for only 2.5 per cent of the Greek manufacturing production.28 TABLE 1 Comparison of Change in Manufacturing Employment in Eastern Macedonia and Thrace, and Greece, 1969-1988 Year

Eastern Macedonia and Thrace (*)

1969 1973 1978 1984 1988

Greece (*)

17,697(10.4) 16,679(9.3) 25,451(12.5) 32,549(16.2) 37,462(17.2)

501,522(15.9) 604,127(18.7) 671,496(19.6) 698,650(20.2) 706,500(19.3)

Source: National Statistical Service of Greece, relevant years. *Note: Manufacturing employment as a percentage of the economically active population.

us A , nf the manufacturing growth in the region, and by 1988 their : ta m n X t u r i n g employment was more than two-fifths. The ρ 6 Γ Γ ε η Ϊ of the total manufacturing production generated «, the reg.on

Γ

had

T£eCrS^

H Thrace was associated with significant changes in its sectoral cornit on In 1969 food processing constituted the largest component of manu'cturing in the region, accounting for one-fifth of the total employ™ e Table 3). By 1988, the employment provided by enterprises in A industry nearly doubled, whereas its share in the workforce m the sector as a whole dropped to 18 per cent. During the same penod, wood processing, the second most important component of the sector m 1969 Tner enced a decline both in absolute and relative terms. The growth of manufacturing was due primarily to the rise of the clothing industry, which alone accounted for half of the overall absolute raise. Indeed, between 1969 and 1988 the employment provided in this industry rose five-fold, from just over 2,000 to 11,500. Its contribution in the sector's employment increased from just over a tenth to nearly a third. TABLE 3

TABLE 2 Change in the Size Composition of Manufacturing in Eastern Macedonia and Thrace No. of Employees 1-5 6-50 51-100 >100

Change in the Sectoral Composition of Manufacturing in Eastern Macedonia and Thrace: 1969 and 1988

1969

1978

1988

9,765 (55.2) 5,523(31.3) 660(3.7) 1,640(9.3)

9,248 (36.3) 7,373 (29.0) 2,828(11.1) 6,002(23.6)

9,468(25.3) 9,564(25.5) 3,660(9.8) 14,770(39.4)

Source: National Statistical Service of Greece, relevant years.

By 1988, the employment provided by manufacturing enterprises in Eastern Macedonia and Thrace had increased to 37,462, the annual rate of growth being 6 per cent (see Table 1). The contribution of the sector in the total 'economically active' population had grown significantly to 17.2 per cent, which was marginally above the national average. Between 1973-1991, the contribution of micro enterprises had dropped to just over a quarter of the total, although the absolute number of workers remained virtually unchanged (see Table 2). During this period several medium and large-scale manufacturers decided to relocate away from urban conurba­ tions to take advantage of the incentives provided by the regional develop­ ment policy. As a result, large-scale enterprises came to account for

Manufacturing Sector

1969

1988

Food Wood processing Clothing Non-metallic minerals Transport Textiles Other

3,502(19.8) 2,179(12.3) 2,169(12.3) 1,369(7.7) 1.264(7.1) 686(3.9) 6,528 (36.9)

6,725(17.0) 2,001 (5.0) 11,523(29.1) 2,188(5.5) 2,155(5.4) 1,451(3.7) 13,574(34.3)

Total

17,697(100)

39,617(100)

Note: Bracketed figures are percentages to column total. Source: National Statistical Service of Greece, relevant years.

During the 1970s and 1980s, clothing manufacturers were among the major beneficiaries of the incentives provided by the regional develop­ ment policy. The clothing industry in the study region had experienced dramatic changes in its size composition of employment. In 1969, 1,343 micro enterprises employed 1,800 persons, i.e., 84 per cent of total employment in this industry was generated in these enterprises. There was no large-scale enterprise, and factory production was confined to two

Internationalisation and Entrepreneurial Response/11

10/Christos Kalantaridis and Lois Labrianidis medium- scale units (employing between fifty to ninety-nine persons) that engaged 135 persons. By 1988, the structure of the industry had been transformed totally. The number of micro enterprises had been halved and their contribution, in terms of employment, had dropped to less than a tenth. By this time there were thirty-four large-scale units in the area, employing more than 56 per cent of the total workforce (see Table 4). TABLE4 Changes in the Size Composition of the Clothing Industry in Eastern Macedonia and Thrace: 1969 and 1988 1969 No. t>J Employees 1-5 6-50 51-100 >100

1988

/

2

3

1

1,343 24 2 0

1,807 220 135 0

83.6 10.1 6.2 0.0

639 115 30 34

2 905 2,069 2,102 6,447

3 7.9 17.9 18.2 55.9

1 = No. of units 2 = No. of workers 3 = Percentage of total employment Source: National Statistical Service of Greece, relevant years.

The success of the enterprises involved in clothing manufacture, and particularly of those units that employ more than 100 workers, during the 1970s and 1980s, could be attributed to their ability to benefit from international subcontracting linkages emanating from advanced in­ dustrialised countries in general, and the Federal Republic of Germany in particular.29 Indeed, eight out of the ten enterprises in the panel derived at least half of their sales turnover through this arrangement (see Table 5). In contrast, only one of the micro enterprises surveyed could derive less than a quarter of its sales turnover from international markets. TABLE 5 Export Orientation of the Enterprises included in the Panel by Size Group, 1995 Percentage of Sales No. o] Employees 1-5 6-50 51-100 100> Total Source: Survey Data.

25%

26-50%

51-75%

>76%

1

1 2

1 2

1 2

1 4

9 12

1

1

Internationalisation and Enterprise Strategies during the 1 9 9 0 s The significance of international markets in the growth of the clothing industry and manufacturing as a whole, combined with the changes that took place in the institutional framework governing trade during the 1990s prompted us to explore the mosaic of modes of internationalisation evident in Eastern Macedonia and Thrace. These changes place serious doubts over the long-term survival of the clothing industry in the region. In order to be able to examine systematically the modes of inter­ nationalisation and the ensuing entrepreneurial responses in the region, we developed a typology based on three main criteria: direct involvement of enterprises from advanced industrialised countries in general, and the FRG in particular, in the ownership and control of clothing units in the region; the existence of long-term, formal or informal contractual relationships with parent enterprises abroad; and the significance of foreign (German) markets in total sales turnover. Moreover, the impor­ tance of market segmentation in the restructuring of the clothing trade the world over1" compelled us to consider the characteristics of the final product as another set of criteria for the categorisation of the enterprises surveyed. For this purpose we deployed the 'mass-produced/ differentiated' divide and evaluated the significance of 'finishing' in the competitiveness of the business. As a result, we were able to classify eighteen out of the nineteen enterprises in the panel in four categories. Companies under Foreign Ownership Enterprises included in this category were integrated in international production networks through close relationships of ownership and con­ trol, and long-term contractual obligations. Five of the enterprises sur­ veyed were under foreign ownership, in 1995. They were a very significant source of employmentfor the local economy as they accounted tor 42per cent of the total workforce in the panel. Most of these companies were large-scale units with an average employment of 218 persons. they were originally set up and owned by returned migrants from k n o w l e d e of TΙΤΊ7 g the language and contacts that they have

rela, S

"If, ^

^ 0 * 1 °f WOrk a b r ° a d

enabled them l

°

establisi

h

enterpr· n ^ « " ^ t i n g relationships with a single parent German rt· ,Τ*' l o n g " t e r m l i n k s between Greek manufacturers and ■stnbutors, and specifically wholesalers or department stores,

12/Christos Kalantaridis and Lois Labrianidis was one of the reasons that prompted the latter to acquire a controlling interest upon the former. Another incentive is the characteristics of the final product. All of the manufacturers included in this category produce differentiated items, that cater to the fashion segment of the market. They manufacture, on an average, 200 designs per year. In such a situation, competitiveness depends heavily upon the development of rigorous quality control systems at the point of manufacture. Therefore, by 1995, parent enterprises had acquired at least 50 per cent (and in some cases up to 100 per cent) of the capital of their former subcontractors in Eastern Macedonia and Thrace. They exercise their control over dependents through the former management. Indeed, in none of the foreign-owned companies change in ownership was accompanied by replacement of the previous owner/manager. Relationships of ownership were comple­ mented by contractual arrangements that obliged the manufacturer to produce almost exclusively for the parent enterprise. These agreements were formal, legally binding contracts that usually span over a five-year period. Thus, 100 per cent of their sales turnover was derived from one buyer in the Federal Republic of Germany. The close attachment of firms to a parent enterprise abroad had significant implications for their structure and the strategies during the 1990s. Their long-term relationship with a single distributor prevented them from acquiring direct access to the marketplace. Thus, these enterprises did not possess marketing departments, and did not have links with intermediating agents11 that could provide them with information about changes in the clothing trade. The two main channels of information flows included the formal communications with the parent enterprise, and informal, personalised contacts of the managers in the locality. More importantly though, these enterprises did not have design departments or contracts with independent designers that would provide them informa­ tion about the rapidly changing tastes in the fashion segment of the market that they service. These limitations prevented companies under foreign ownership from changing their subsumed position in the subcontracting networks. However, close links of ownership with a parent enterprise abroad provided the Greek firms with the financial support and tech­ nological knowhow for the internalisation of the entire manufacturing process. During the 1990s companies under foreign ownership were at the forefront of technological and organisational change in the region, as they were able to combine investment in Computer Aided Design and Corn' puter Aided Manufacture with the implementation of Quick Respond

Internationalisation and Entrepreneurial Response/13 (ORS) Capital expenditure of this kind was accompanied by hlUvTnvestment in human capital. The companies used both 'off-the• b' training (by sending workers abroad for a period of up to two years J ° order to familiarise themselves with the use of the new machinery) and 'on-the-job' training (through the employment of international consul­ tancy agencies). As a result, those companies were able to reduce their lead times drastically from six months to four weeks and avoid direct competition from lower wage countries in the Far East or central and Eastern Europe.32 However, because of the emphasis on quality control, enterprises ot this kind were unable to decentralise parts of the manufacturing process to any considerable extent, particularly the labour-intensive assembly operations. At the time of the survey, all the companies included in this category subcontracted out work to fifteen enterprises. Together, the secondary subcontractors employed 235 persons (which could vary ac­ cording to season). This meant dependent workers of approximately 20 per cent of the direct employment at the time of the survey. Moreover, most of the secondary subcontractors were located near the main factory so as to accommodate regular monitoring of the production process. The need to maintain rigorous quality control prevented these companies from putting-out parts of the production process to lower wage areas elsewhere in the Balkans. Indeed, only one company manufactured specific items in one subsidiary in Bulgaria that employed 25 workers, a mere 2 per cent of the total employment in this kind of enterprises. Quasi-independent

Enterprises

This category included enterprises whose integration in international production networks was based upon a stable, long-term, relationship with a single buyer abroad. However, these units were formally independent, in the sense that there were no linkages of ownership and control with the parent enterprise. Two enterprises of the panel fell within this category. In 1995, they employed 133 persons, constituting 5 per cent of the )rkforce of all the companies surveyed. Both the enterprises were medium-scale units that were established during the late 1970s. then- founders were local inhabitants who migrated to the Federal thatih h G e r m a n y d u r i n g t h e 1 % 0 s . They were able, through contacts relatio? w a C q m r e d d u r i n § i h ™ migration, to establish subcontracting of wrktenr W G e r m a n d i s t r i b u t o r s - T hese relationships took the form ■ tive-year long contracts that were invariably renewed more

14/Christos Kalantaridis and Lois Labrianidis than once. In fact, one of the enterprises surveyed has been producing exclusively for a German wholesaler for the past seventeen years. How­ ever, quasi-independent enterprises, unlike companies under foreign ownership, were involved in the manufacture of mass-produced items, where competition occurs primarily on a cost basis. Thus, their production was typically based on twelve designs per year. Long production runs combined with longer time leads (when compared to those in the first category) meant that quality control at the point of manufacture was not a major consideration that would prompt foreign ownership and control. Nevertheless, the quality of finishing was very important. This was because their products were aiming at middle-aged, relatively affluent, consumers in industrialised countries. Contractual obligations to their buyers had significant bearing on the structure and the strategies implemented by these enterprises during the 1990s. Like their counterparts under foreign ownership, quasiindependent manufacturers did not have access to the marketplace direct­ ly or through intermediaries. They did not have design departments. Moreover, these enterprises were not vertically integrated and depended heavily upon a single buyer for the supply of the cut cloth, and all the auxiliary material (buttons, zips and, in some cases, even thread) for the manufacturing process. These enterprises did not have sourcing depart­ ments and their only direct link with the market revolved around the supply of labour. Their dependence upon a single buyer for the supply of designs and raw material as well as for the marketing of the final product poses questions about the ability of quasi-independent enterprises to survive an abrupt termination of the contract. Past evidence suggests that enterprises of this kind were unable to adapt to changes in their trading conditions.33 Unlike the companies under foreign ownership, where links with a parent enterprise abroad facilitated changes in the strategies implemented during the 1990s, quasi-independent enterprises found themselves in a rather unfavourable position. The specificity of the long-term contracts, combined with the fact that the buyer did not have a vested interest in the survival of the manufacturer means that enterprises of this kind did not have much room for manoeuvre. Involvement in production for mass markets meant that QRS was of no interest for these enterprises, while the fact that the cloth was received cut from the buyer prevented them from investing in CAD/CAM systems. The significance of quality finishing prevented these enterprises from decentralising the labour-intensive part of manufacturing to homeworkers within Greece, or to subcontractors

Intern at ionalisat ion and Entrepreneurial Response/15 1 here i n t h e Balkans. Subcontracting out was an unknown practice among quasi-independent enterprises. Therefore, at least in the short term, survival relied exclusively upon their expertise in the manufacture of standardised items. This afforded them a 'premium' over manufacturers in lower wage countries in central and Eastern Europe and South-East Asia. However, owners recognised that eventually they would have to go through a transition towards spontaneous contracting with more than one buyer. No concrete plans existed about this transition at the time of the follow-up interviews in March 1996. Independent

Exporters

Enterprises included in this category were defined by the fact that they directed 100 per cent of their total production to international markets in general, and the German one in particular. However, unlike foreignowned and quasi-independent enterprises, there were neither long-term contractual arrangements, nor relationships of ownership between exportoriented units and the buyer. Enterprises of this kind were of various sizes, and were set up and owned by persons with rather different backgrounds. Overall, there were five independent exporters in the panel, that employed 360 persons, nearly a sixth of the total. More importantly, there was considerable differentiation in the segments of the market that they catered to. Therefore, they could be further subdivided into two groups— those aiming at the fashion segment of the market, and those producing exclusively price competitive items. Two enterprises in the survey belonged to the former subcategory (hereafter 'fashion exporters'). They were founded by younger and rela­ tively better educated persons. They were new enterprises that were established in 1985, and produced differentiated items. Specifically, they manufactured on the basis of some 500 designs per year and the average size per order was 400 pieces. They maintained a relatively stable, though not formal, relationship with a small core of buyers for two to three years, and established new subcontracting linkages with others through parti­ cipation in international trade fairs. On an average, they received orders from five to six companies per year. One consequence of the lack of long-term agreements was that these enterprises were very well informed about development in the international markets and changing fashion trends. In fact, they produced a small collection of their own either through internal design departments or through the employment of professional designers in Germany.

Internationalisation and Entrepreneurial R e s p o n s e / 1 7

16/Christos Kalantaridis and Lois Labrianidis As a result of the availability of information and their position in the market, fashion exporters were very active in adjusting their strategies during the 1990s. They had invested in the purchase of CAD and were very quick to implement QRS. Indeed, their average delivery time was around four weeks, although in some cases they could deliver within a week from the date they received an order. However, unlike companies under foreign ownership, fashion exporters did not have the financial muscle to undertake large-scale investment in human capital. Poaching of workers already trained by other manufacturers locally and on-the-job training were the preferred practices of obtaining new skills among these kinds of enterprises. Another element of their enterprise strategy was the intensified use of subcontracting arrangements. Especially during peak seasons (three to six months) they put-out work to four secondary sub­ contractors that were located within twenty miles radius of the factory. Fashion exporters subcontracted out only the sewing part of the produc­ tion process of items that did not require immediate delivery. Together, the secondary subcontractors employed 170 workers, i.e., 110 per cent as many dependent workers as those directly employed by fashion exporters. However, the need to maintain rigorous quality control over the final product, combined with the urgency to turn around orders very quickly. prevented enterprises of this kind from establishing subcontracting linkages with lower cost producers elsewhere in the Balkans. The strategies implemented by fashion exporters differed distinctively from those of the enterprises that cater mainly to the price-competitive segment of the market. The latter were usually medium-scale enterprises that were founded by returned migrants from Germany. Overall, three of the enterprises surveyed could be included in this category. Together, they employed 200 persons—nearly 8 per cent of the workforce in the panel. They manufactured items that catered to mass markets, and, at the time of the survey, large-scale orders were gained almost exclusively from manufacturers in South-East Asia. 'Exporters of mass-produced items' in Eastern Macedonia and Thrace received only small-scale orders with shorter delivery dates than those offered to manufacturers in less developed countries. 'More specifically, enterprises of this kind usually had a six-month lead time, and the buyer finalised the colours and sizes four weeks before the consignment of the final product. The small size of their orders forced them to produce on the basis of a relatively large number of designs, on an average approximately 300 per year. Another characteristic of their products was that they did not require meticulous finishing and hence quality control was only of secondary importance.

, m.m in the manufacture of mass-produced items meant involvement m t ^ ^ dep,oyment of QRS, and they at they did not have any ^ ^ th & ^ d u d n g the 1990s The

did not invest in CAiJ' d e c e n t r a l i s a t i o n of production to lower revolved around the in ^ ^ ^ ^ by ^ p u t t i n g _ o u t t 0 s e C 0 ndary wage areas m the Ba . ^ ^ ^ m a r g i n a l i s e d ) i n v o i v i n g only 28 subcontractors w tni ^ ^ ^ ^ ^ e m p l o y e d b y e x p orters of outworkers u=. P ^ . ^ ^ par{ of the,r productl0n ^ ^ ^ ^ ^ m a s s produced tems. m was done .n ™&™^J f a c t o r i e s i n t h a t c o u n t r y . This figure was ^ ^ ^ ^ ^ ^ ssecondary s u b c o n t r a c t o s o r ^ rer p C t l C o r y ^ ^ , aid is the highest among all the five em categories Local

Initiatives

Enterprises of this kind were defined by the relatively modest extent of their integration in the international markets. Five of the enterprises in the panel could be included in this category. They were a very important source of employment for the local economy. More specifically, they employed 1,020 workers—about 39 per cent of the total. These were invariably large-scale enterprises that were established during the early or mid-1970s, and hence were among the oldest enterprises in the industry in Eastern Macedonia and Thrace. They were set up and owned by persons who were born and lived the best part of their lives in the region. However, they were among the main beneficiaries of the financial and taxational incentives provided by the regional development policy. They were not involved in long-term con­ tractual agreements with foreign buyers, and they directed only part of their turnover to the international markets. At the time of the survey, exports varied from 35 to 90 per cent of their total sales. This meant that the domestic market was a significant source of revenue for local initia­ tives. Enterprises of this kind were involved in the manufacture of both mass-produced and differentiated items. They manufactured, on the basis of subcontracting, for renowned fashion houses such as Artisti Italiani, Mondi and Crisca as well as marketed under their own trade brand signifying an attempt to move into 'own labelled products'. They produced on the basis of more than 1,000 different designs per year. Partly as a result of their size and their long presence in the industry, enterprises of this kind were able to develop design and marketing and

18/Christos Kalantaridis and Lois Labrianidis vertically integrate the entire manufacturing process. As far as design is concerned, local initiatives invariably (directly) employed graduates from colleges in Greece or abroad. They deployed a wide range of marketing practices, partly because of the contrasting degree of concentration in the distribution channels between the domestic and the international markets.14 The Greek market, characterised by the predominance of small independent retailers and the limited influence of wholesalers, was accessed through representatives of the company who sold directly to retail outlets. However, one of the enterprises of this kind recently decided to venture into retailing by setting up its own outlet in the town of Xanthi. Sales in the international markets, particularly the German market, where multiple chains and department stores were responsible for 40 per cent of the total sales, took place mainly through intermediating agents. Other means of expanding exports include visits to international trade fairs and, very recently, the establishment of sales offices abroad. Local initiatives had been successful in internalising not only the cutting-sewing-finishing parts of the production process but also auxiliary services such as knitting and dyeing. This degree of concentration had significant implications for the resources at hand and subsequently the enterprise strategies implemented by enterprises of this kind. They were at the forefront of technological change in the region after the acquisition of CAD/CAM systems and automated, labour-saving, packing equipment. All of the local initiatives in the study area have developed QRS, whilst one of them was linked to a German department store through the Electronic Data Interchange (EDI) system. This facilitates the transmission of information collected by individual stores to the head office of the department store, and the exchange of information and trading documents between the retailer and the manufacturer on a day-to-day basis. This increased the emphasis on short production runs and quick delivery. As a result, lead times for mass-produced items were reduced to eight weeks, and for differentiated items to three weeks. Investment in new technology and changes in the organisation of production was associated with significant improvement in the human capital employed. Enterprises of this kind, however, did not invest heavily on 'off-the-job' training like the companies under foreign ownership. Rather unexpectedly, they opted for the recruitment of already trained workers from advanced industrialised countries, particularly Ger­ many. In return, they offered relatively high salaries and a clutch of benefits including medical insurance, housing and company cars. The product mix of these enterprises, and particularly their involvement

I ternationalisation and Entrepreneurial R e s p o n s e / 1 9

in mass-produced items enabled them to decentralise production to secon­ dary subcontractors to a considerable extent. As a result, at the time of the survey local initiatives employed 320 external workers—approximately a third as many as those directly employed on the shopfloor. A significant but rapidly declining number was employed in twenty-five secondary subcontractors located within Greece. However, approximately 40 per cent of the outworkers were employed by subcontractors or rented fac­ tories in Bulgaria. This practice of putting-out work to lower wage economies was initiated in 1992, which adversely affected the number of outworkers and factory workers within Greece. The Performance of the Clothing Industry during 1 9 8 8 - 1 9 9 5 : Evidence from the Survey The suspension of the Census of Industry created considerable difficulties in monitoring the performance of the clothing industry and in comparing levels of success of the enterprise strategies implemented during the 1990s. In order to be able to gauge changes in the employment, sales turnover and profitability, we used material from face-to-face interviews and the Annual Business Directory. As far as changes in the employment provided by the clothing industry are concerned, there is evidence from the companies included in the sample that there has been only modest growth in the number of workers employed on the shopfloor during the 1988-1995 period. Overall, internal employment in the panel, excluding all those working from home or on the basis of subcontracting, has increased by nearly 30 per cent or at an annual rate of 4.3 per cent. This growth in employment, however, was by no means continuous: the year 1992 appears to be a decisive turning-point. We see from Table 6 that between 1988 and 1992 there was a 30 per cent increase in the absolute numbers of those working in the industry. In marked contrast, after 1992, and after twenty-three consecutive years of growth, there was very little change in the employment provided by clothing manufacturers. However, evidence regarding sales turnover indicates that even after the peak of internal employment growth, clothing enterprises continued to expand. More specifically, sales, in constant prices, increased rapidly during 1993 and remained virtually unchanged during the following year. Profitability figures are much less reliable than both employment and sales turnover and must be treated with great caution. This is because they are susceptible to meticulous manipulation from professional accountants. With this in mind we can draw two very broad conclusions about the profitability of

Internationalisation and Entrepreneurial Response/21

20/Christos Kalantaridis and Lois Labrianidis the enterprises in the panel. No company had registered losses during the 1988-1994 period; moreover, there seems to be no remarkable change in the level of net profits. TABLE 6 Index of Employment Change in the Clothing Industry of Eastern Macedonia and Thrace: 1988-1995 Category of Companies Companies under Foreign Ownership Quasi-independent Enterprises Independent Exporters Local Initiatives Total

1988'

1989

1990

1991

1992

1993

1994

1995

100

100

99

120

173

187

183

180

100 100

114 90 103

123 84 113

120 88 117

109 94 119

102 93 99

99 106 100

94 107 108

100

101

105

113

130

124

126

129

Source: Survey Data. 'Note: 1988= 100

Nevertheless, not all companies included in the panel were able to adjust to changes in the international markets with the same degree of success. A comparison of employment change between the four categories included in the typology indicates that companies underforeign ownership were undoubtedly the most successful. Overall, the size of their workforce increased by some 80 per cent or at an annual rate of 11 per cent. As a result, their contribution in the employment provided by the enterprises surveyed increased from 30 per cent to well over 40 per cent. No other category was able to achieve both an absolute and relative increase during the 1988-1995 period. However, local initiatives and independent exporters (both of fashion and mass-produced items) were able to achieve a modest increase in the number of their employees. More specifically, the former were able to increase their workforce at an average annual rate of just over 1 per cent. However, their contribution in the employment provided by the enterprises of the panel dropped from 46 per cent to less than 40 per cent. The failure of these enterprises to maintain their position as the single largest element in the local clothing industry could be attributed primarily to the decentralisation of parts of the manufacturing process to Bulgaria. Indeed, between 1992 and 1993(when international subcontracting out practices were established) the employ­ ment provided by enterprises of this kind dropped by approximately a fifth, whereas the value of their sales turnover increased by nearly a third

(32 per cent) in constant prices. Exporters of both fashion and massproduced items also recorded a modest increase of just 1 per cent per annum in the employment that they provided. As a result, their contribu­ tion in the employment provided by the industry fell from 17 per cent to 14 per cent. Quasi-independent enterprises were undoubtedly the worst performers in Eastern Macedonia and Thrace. They reported a decline in the size of the workforce of some 6 per cent during the 1988-1995 period, and their significance, in terms of employment for the local clothing industry, declined from 7 per cent to 5 per cent. Conclusions The experience of industrial growth after 1969 in Eastern Macedonia and Thrace helps illustrate how enterprises located in the European periphery interact with buyers in advanced industrialised regions through a mosaic of spontaneous or long-term subcontracting arrangements, as well as direct linkages of ownership and control. Despite the distinctiveness of the pattern of industrial growth in the region in comparison with other parts of southern Europe, it is becoming increasingly clear that such practices are now widespread in manufacturing industries. Dependence characterises the relationship between local manufacturers and parent enterprises which certainly shows similarities with conditions else­ where.35 However, empirical evidence indicates that there is significant differentiation in the nature of dependency relationships. They vary from direct control (in the case of companies under foreign ownership) to a mere reliance upon a relatively small number of buyers (local initiatives). This diversity has significant implications for the degree of the embededness of manufacturing enterprises in the local socio-economic milieu. Specifically, the only link between companies under foreign ownership and the locality is the supply of labour, whereas local initiatives rely heavily upon local capital and raw materials too. Despite the dependent nature of this pattern of growth and the modest (though varying) extent of embededness in the local milieu, enterprises located in Eastern Macedonia and Thrace were able to adjust to recent changes in the institutional framework governing world trade with a considerable measure of success. The anticipated contraction of the industry in the face of intensified competition during the 1988-1995 period (first hypothesis) did not happen. In fact! the firms included in the panel were able to achieve a modest increase in the size of their workforce, although at a much lower rate than the 1969-1988 period. Employment

22/Christos Kalantaridis and Lois Labrianidis growth was combined with increased sales turnover and sustained profitability. The resilience of the enterprises surveyed, at a time when the clothing markets were opening up to competition from producers in LDCs and the NICs, lends supports to those arguing that this pattern of industrial growth augers well for long-term viability and growth. However, the success of the adjustment strategies varied significantly between the four types of enterprises. More specifically, 'dependence' upon parent enterprises in core countries appeared to be a strength, rather than a weakness, in the development and implementation of strategies for the 1990s (second hypothesis). Rather unexpectedly, companies under foreign ownership appear to be the most successful in the 1988-1995 period. As a result of the inflow of capital and technological knowhow from the parent enterprise, these companies became major contributors to the local economy. This was partly because of the significant increase in the number of their employees, and partly due to their considerable investment in enhancement of human capital in the locality. This, com­ bined with a shift towards short production runs and differentiated items, could help the long-term survival of companies under foreign ownership in the region. The commitment of companies under foreign ownership to the locality also provides interesting contrasts with the strategies imple­ mented by the largest companies under Greek ownership. Local initiatives achieved growth in terms of sales turnover and profitability through the increased use of subcontracting arrangements and decreasing employ­ ment locally. Moreover, new skills were acquired through the recruitment of workers from the FRG. This paradox, whereby companies under foreign ownership display greater commitment to the economy of the region than local initiatives, has significant implications for scholarly research. Clearly, the motive behind the decisions taken by parent enterprises in Germany was not to develop poor peripheral areas: direct investment in the Greek clothing industry enabled them to remain com­ petitive in lines that would otherwise have been challenged by the LDCs and the NICs. Their financial strength and the possession of information regarding technological developments and changes in the product markets, combined with the maintenance of the previous owners/ managers, enabled them to utilise the local resources at hand to a much greater extent than local initiatives. Nevertheless, the assumption about the successful adjustment of the combination of foreign ownership and local management must be hedged with qualifications. First, not all enterprises that relied heavily upon foreign buyers were able to adjust successfully to changing external

Internationalisation and Entrepreneurial R e s p o n s e / 2 3 conditions. The success of companies under foreign ownership stands in sharp contrast to the failure ot quasi-independent enterprises. T h e s "

enterprises were trapped in relationships of dependence on parent enterprises in the FRG that do not readily translate into inflow of n e w skills and technology. As a result, these units were unable to develop a long-term strategy and experienced a gradual erosion of their competitive position. This was reflected in the declining employment experienced by the fashion segment of independent exporters. Enterprises of this type maintained a relatively diverse customer base, produced differentiated items, and employed both CAD and QRS. They established subcontract­ ing arrangements with a network of micro and small-scale businesses in the locality and refrained from putting-out work elsewhere in the Balkans. However, these units by virtue of their size were unable to invest in new skill formation in the locality and relied heavily on 'poaching' trained workers from elsewhere. This illustrates the modest resource base of independent exporters catering to the fashion segment of the market and the ensuing vulnerability of these firms to rapid changes in their external environment. The long-term survival of these units remains unclear despite the fact that they were successful in expanding the employment in the medium term. Methodological Appendix Extensive fieldwork research was undertaken in Eastern Macedonia and Thrace in order to obtain comprehensive and reliable information about the performance and strategies of manufacturing enterprises during the late 1980s and early 1990s. Our survey was part of a wider project on the 'Future of Greek Manufacturing' that was commissioned by the Depart­ ment of Industry and financed through the European Structural Funds. Therefore, policy considerations were of great importance. Another con­ sideration in the conception of the project was the lack of official statistics regarding changes in the employment provided by manufacturing in­ dustries during the post-1988 period. This was because 'economies' in the budget of the National Statistical Service of Greece (ESYE) led to an indefinite suspension of the Census of Industry. The research was carried out in four stages. The first stage involved desk-top analysis of official statistics in order to identify the main economic trends during the 1969-1988 period. Data from the Census of Industry pointed at the significance of the clothing industry as the single ;t component of manufacturing. Subsequently, the owners and

24/Christos Kalantaridis and Lois Labrianidis managing directors of large, medium, and small-scale enterprises were invited to participate in three seminars organised in the towns of Drama, Kavala and Xanthi in June 1995. There was an open, round-table discus­ sion of the aims of the project and the problems confronting the owners/managers. As a result, a programme of nineteen face-to-face interviews was drawn for June-July. The main criteria for inclusion of firms in the study were size and position in the subcontracting chain. More specifically, there was a bias in favour of the larger employers in the region, the aim being to select those responsible for a large part of the total employment provided in the industry locally. Thus, the enterprises in­ cluded in the panel were responsible for approximately a quarter of the total employment provided in the industry in 1988. Moreover, the survey excluded the mass of secondary subcontractors who did not maintain any direct linkages with the product markets. The semi-structured question­ naires started with a profile of the business, and monitored changes in performance in terms of employment, sales turnover and profitability, the problems as well as the objectives that owners and managers had in relation to products, markets and production processes. Finally, strategies regarding the decentralisation of production elsewhere in the Balkans and networking practices were discussed in detail. The third stage of the research involved follow-up interviews in March 1996. Notes 1.

A. Amin and N. Thrift. Globalisation, Institutions and Regional Development in Europe (Oxford: Oxford University Press, 1994).

2.

K.J. Dickerson. Textile and Apparel in the International Economy (New York: Macmillan, 1992).

3.

A. Moody and D. Wheeler, 'Towards a Vanishing Middle: Competition in the World Garment Industry', World Development, XV-10/11 (1987).

4.

C. Simmons and C. Kalantaridis, 'Flexible Specialisation in the Southern European Periphery', Comparative Studies in Society and History, XI-2 (1995).

5.

E. Andrikopoulou, 'Local Industrial Structure and Restructuring in the 1980s' (in Greek), Topos, I (1990); F. Belussi, 'Local Systems, Industrial Districts and Institu­ tional Networks: Towards a New Evolutionary Paradigm of Industrial Economies', European Planning Studies. IV-1 (1996); Z. Chronaki. C. Had jimichalis, L. Labrianidis and D. Vaiou, 'Diffused Industrialisation in Thessaloniki: From Expansion to Crisis', International Journal of Urban and Regional Research, XVII-2; J. Ferrao, 'Social Structures, Labour Markets and Spatial Configurations in Modern Portugal' ,Antipode, XIX-2 (1987); dei G. Ottati, 'Economic Changes in the District of Prato in the 1980s: Towards a More Conscious and Organised Industrial District', European Planning Studies, IV-1 (1996); A. Vasquez-Barquero, 'Small-scale Industry in Rural Areas: The

rternationalisation and Entrepreneurial Response/25 Spanish Experience since the Beginning of this Century·, in K. Arrow (ed), The Balance Between Industry and Agriculture in Economic Development (New Delhi: Macmillan, 1986). R Hudson and J. Lewis, 'Capital Accumulation: The Industrialisation of Southern Europe' in A Williams (ed.). Southern Europe Transformed: The Political and Economic Change in Greece, Italy. Portugal and Spain (London: Harper and Row, 1984) F. Murray, ' "Flexible Specialisation" in the Third Italy', Capital and Class, XXXIII (1987). A Amin, Flexible Specialisation and Small Firms in Italy: Myths and Realities', Antipode, XIX-1 (1989); A. Amin and N. Thrift, 'Neo-Marshallian Nodes in Global Production Networks', International Journal of Urban and Regional Research, XVI-4

7

8 9.

(1992). J. de la Torre, Clothing Industry Adjustment in Developed Countries (London: Trade Policy Research Centre, 1984). United Nations Industrial Development Organisation (UNIDO), Handbook of Industrial Statistics (Geneva: UN Publications, 1990).

10. Ibid. 11. Dickerson, Textile and Apparel (no. 2 above). 12. United Nations, International Trade Statistical Yearbook (Geneva: UN Publications, 1982; 1992). 13. Z.A. Silberson, The Multi-Fibre Agreement and the UK Economy (London: Her Majesty's Stationery Office (HMSO), 1984). 14. K. Hoffman, 'Clothing Chips and Comparative Advantage: The Impact of Micro­ electronics on Trade and Production in the Garment Industry', World Development, XIII-3G985). 15. R. Anson and P. Simpson, 'World Textile Trends and Production', Textile Outlook International, July (1991). 16. P. Barnes, 'Clothing Manufacturer-Retailers in Europe', Textile Outlook International, March (1992). 17. National Statistical Service of Greece (ESYE), Population Census (Athens: 1991) ZSYE, Census of Industry (Athens: 1969; 1973; 1978; 1984; 1988). 18. Ibid. 19. L. Papayannakis, L. Vasenhoven, S. Lolos, G. Notaras, L. Labrianidis, V. Sinanoglou and N. Zonzilos, The Development of Thrace: Challenges and Prospects (in Greek) (Athens: Academy of Athens, 1994). 20. C. Tsoukalas, State, Society and Work in Post-War Greece (in Greek) (Athens: Themelio, 1987). 21. ESYE, Census of Industry (Athens: 1993). 22. Papayannakis et al„ The Development of Thrace (no. 20 above). 23. ESYE, Population Census (1991); and ESYE, Census of Industry (1993). 24. ESYE, Population Census (1961, 1971). A. Argins, Regional Economic Policy in Greece, 1950-19X1 (in Greek) (Thessaloniki: Kynakidis, 1986).

26/Christos Kalantaridis and Lois Labrianidis 26. L. Labrianidis and N. Papamichos, 'Regional Distribution of Industry and the Role o the State in Greece', Environment and Planning, VIII-4 (1990); L. Labrianidis, 'Sub­ contracting in Greek Manufacturing and the Opening of the Balkan Markets', Economia/Cyprus Journal of Economies, IX-1 (1996); idem, 'The Opening of the Balkan Markets and Consequent Economic Problems in Greece', Modern Greek Studies, XII (1996). 27. Tsoukalas, State, Society and Work (no. 21 above). 28. ES YE, Census of Industry (1970). 29. For a discussion of the decentralisation process in the FRG, see Simmons and Kalan­ taridis, 'Flexible Specialisation' (no. 5 above).

30. A. Phizacklea, Unpacking the Fashion Industry: Gender, Racism and Class in Production (London: Routledge, 1990); Dickerson, Textile and Apparel (no. 2 above).

31. The agents act as representatives of department stores, manufacturers, groups of retailers, and wholesalers in the FRG, Scandinavia, Holland, UK, France and several other advanced industrialised countries. Their role is to negotiate prices and delivery times, and also undertake quality control. In return they receive a commission of 8 per cent from the domestic manufacturer, though they act as the buyer's representatives. For more details on the role of the agents see Simmons and Kalantaridi:. 'Flexible Specialisation' (no. 5 above). 32. In fact, it has been argued during the interviews that in exceptional cases these enterprises can guarantee delivery even within three weeks from the date of placing the order. 33. Indeed, there is evidence from enterprises of this kind that a sudden end to long-term subcontracts led to bankruptcy within a relatively short period of time. 34. C. Simmons and C. Kalantaridis, 'Labour Regimes and the Domestic Domain: Manu­ facturing Garments in Rural Greece', Work, Employment and Society, IX-2 (1995).

35. S.Mitter, 'Industrial Restructuring and Manufacturing Homework: Immigrant Women in the UK Clothing Industry', Capital and Class, Spring (1986); Phizacklea Unpacking the Fashion Industry (no. 31 above).