Methodology for the study of New York garment firms

The study of firms' strategies focuses on the dress (SIC 2335) and sportswear (SIC 2339) sectors, that accounted respectively for 33 per cent and 46 per cent of employment in the New York women's wear industry in 1993, and on Manhattan, which concentrated 74 per cent of employment during that same year (New York State Department of Labor, unpublished data). Based on the listing of the International Ladies Garment Workers' Union as well as public firms' records, introductory letters were sent to 85 manufacturers and 120 contractors during the Summer and Fall 1994. Contractors were also informally contacted through their manufacturers and industry associations. CEOs were asked for a confidential interview about their firm's competitive strategy, employment and contracting practices. Overall, interviews were conducted with 40 CEOs, including 16 manufacturers and 24 contractors, as well as 5 production managers who supervise manufacturers' contracting networks. They lasted 1 to 2 hours, up to 4 hours in 4 cases. Because small firms were more difficult to access, the sample tends to be biased toward large firms in both manufacturer and contractor categories. This shortcoming was partly compensated by stressing inter-firm differences in data analysis.

		Manufacturers	Contractors	Total
Industry Sectors	Dresses (SIC 2335)	8	6	14
	Sportswear (SIC 2339)	8	18	26
Number of Employees	<20	4	5	9
	> 20 to 40	2	6	8
	> 40 to 100	5	9	14
	> 100	5	4	9
Annual Sales (million dollars)	<1	0	11	11
	> 1 to 10	6	12	18
	> 10 to 50	4	1	5
	> 50	6	0	6
Total		16	24	40

Consistent with its exploratory nature, the study is based on qualitative data analysis principles, with an emphasis on inter-firm comparisons [Miles and Huberman, 1994]. As summarized below, a detailed guideline was used to interview CEOs in order to ensure cases comparability, complemented with open questions to CEOs and production managers.

Economic Characteristics Retail and contract price range Own/private label (manufacturers) Retail channel (manufacturers) Sales concentration and seasonality Average number of styles per year (manufacturers) Average number of garments per order (contractors) Product diversification Perceived importance of design / quality / speed / cost Range of functions performed / externalized Year of establishment of the company Years of CEO's experience in the industry (contractors) Number and location of companies / establishments Number of employees Sales amount and profit levels Trend in sales and profits (last three years) Use of new technologies (CAD, EDI, computarized costing) Social and Institutional Characteristics Union status of production workers Union status of trading partners Ethnicity of production workers Ethnicity of CEO (contractors)

Contracting Characteristics Structure of contracting network (location, number, concentration of manufacturers / contractors) Variation in number of contractors / manufacturers over the year Frequency and nature of interactions Technical/financial involvement of manufacturers Contractors selection criteria (manufacturers) Percentage of relations older than 3 years Ease in finding new orders (contractors) Employment Characteristics Employment seasonality Employee turnover Employment security policy Compensation level and system for production workers Hiring network and criteria Formal and informal training Work organization Percentage of multiskilled production workers (contractors) Human resource development policy Average age of production workers (contractors)

A detailed comparative analysis was conducted for 16 manufacturers and 21 contractors on which sufficient information was available. It aimed at grouping firms according to their similarities and differences, in order to identify dominant firm profiles within the industry. Using sample-based parameters, two by two contingency tables were built for a systematic comparison of cases across variables. The Fisher Exact Test of independence was used to help evaluate the significance of links between variables. On that basis, firms were grouped according to their main economic, employment and contracting characteristics. A derived typology highlighting the characteristics of the various groups was presented for validation to seven industry experts, and further modified and refined on the basis of their comments. The final classification distinguished six manufacturers' profiles grouped in three main categories, as well as six contractors' profiles grouped in four categories. Table 4 provides a summary of some key characteristics associated to each category of firms. A more detailed presentation of the results can be found in Palpacuer [1996].

Table 1. Typologies of employment and inter-firm relation systems

Conceptual perspective	Authors	Bureaucratic system	Commitment system	Professional system	Traditional system
Employment System	Jacoby (1985)	Bureaucratic	White Collar		Traditional
	Osterman (1987, 1988)	Industrial	Salaried	Craft	Secondary
Employment Relation	Williamson (1975)	Hierarchy			Market
	Ouchi (1980)	Bureaucracy	Clan	Clan	Market
Control	Edwards (1979)	Bureaucratic			Simple
Labor Market	Doeringer and	Blue Collar	Managerial	Craft / Professional
	Piore (1971)	Internal / Primary	Internal / Primary	Internal / Primary	External / Secondary
	Piore (1975)	Lower Tier Primary	Upper Tier Primary	Upper Tier Primary	Secondary
Industrial Relations	Kochan et al. (1986)	New Deal System	Nonunion System
	Brown et al. (1991)	JAM System	SET System
Interfirm Relations	Piore and Sabel (1984)	Mass Production	Flexible Specialization
	Best (1990)	Old Competition	New Competition
	Powell (1990)	Hierarchy	Network		Market
	Badaracco (1991)		Knowledge Links
Organizational Form	Burns and Stalker (1966)	Mechanistic		Organic
	Miles and Snow (1978)	Defender	Analyzer	Prospector
	Ouchi (1981)	Type A	Type Z
	Hayes et al. (1988)	Command and Control	Continual Improvement
	Dertouzos et al. (1990)	Pattern A	Pattern B
	Aoki (1990)	H-Mode	J-Mode
Human Resource Management	Walton (1985)	Control	Commitment
	Schuler and Jackson (1987)	Work Harder	Work Smarter	Work Differently
	Dyer and Holder (1988)	Inducement	Investment	Involvement
	Ulrich (1991)	Cost	Differentiation

Table 2. Employment and firms characteristics in New York City women's wear industry (SIC 233)

Years	Share of US employment (1) (%) SIC 233	Real average hourly wages of production workers (1) (dollars 1982-84)	Average establishment size (2) (Number of employees)
1958	33.5	7.99	na
1959	32.1	8.08	29
1963	26.8	8.10	na
1967	24.4	8.62	29
1970	21.6	8.79	29
1972	19.9	8.78	29
1977	17.2	8.05	29
1980	16.9	7.08	30
1982	17.1	6.79	28
1987	16.6	6.95	26
1990	17.9	7.31	23
1992	17.6	6.54	22
(1) US Department of Labor, Bureau of Labor Statistics, Employment and Earnings, various years. (2) US Department of Commerce, Bureau of the Census, County Business Patterns, various years.

Table 3. Ethnic distribution of resident labor force in New York City garment industry

		Managers and Professionals		Production Workers		Total	Total
		1970	1990	1970	1990	1970	1990
		%	%	%	%	%	%
White	NB	64	51	26	7	38	19
	FB	27	18	30	18	26	18
Black	NB	3	5	8	4	6	6
	FB	0	4	2	4	2	5
Asians	NB	0	0	2	0	2	0
	FB	1	13	4	38	3	27
Hispanics	NB	2	1	15	1	13	1
	FB	3	8	13	29	10	23
Total	FB	31	43	48	88	42	73
Total	(number)	14,400	13,522	105,800	64,476	157,700	112,190
Source: 1970: US Census of Population, 5 per cent public sample, adapted from Waldinger (1986). 1990: US Census of Population, PUMS data. NB: Native Born; FB: Foreign Born; percentages add up vertically.

Table 4. Typology of firms' profiles in New York women's wear industry

	ManufacturersCore(n=4)	Second-tier(n=5)	Third-tier(n=7)	ContractorsCore(n=10)	Periphery(n=4)	Intermediate(n=4)	Traditional(n=3)
Economic Profile
Trend sales & profits	Up / Stable	Up / Stable	Down	Up / Stable	Down	Varied	Down
Sales seasonality	Moderate	Moderate	High	Moderate	High	Varied	High
Product range	Large	Narrow	Narrow	Large	Narrow	Narrow	Narrow
Product category	Sportswear	Varied	Varied	Sportswear	Varied	Varied	Couture
Size	Large (1)	Small	Small	Large (2)	Small	Small	Small
Primary competitive advantage	Quality	Quality	Cost	Quality	Cost	Varied	Quality
Link to buyers	Close+Stable	Stable	Unstable	Close+Stable	Unstable	Mixed	Mixed
Product development	Important	Little	Little
Production system development				Yes	No	Varied	No
Employment profile
Employee skills development	Yes	Some	Little	Yes	No	Varied	No
Avg. wages prod. workers	High	Moderate	Moderate	Varied (3)	Low	Low	High
Employee turnover	Low	Moderate	Moderate	Low	High	Varied	Low
Owner experience				High	Low	Varied	High
Employee skills				High	Low	Low	High
Buffering devices (4)				Yes	No	Varied	No
Social and institutional profile
Ethnicity (CEO)	[	European Immigrants	]	[	Asian Immigrants	]	European Immigrants
Union status	[	Varied	]	[	Varied	]	Yes
Contract with nonunion firms	[	Yes	]	[	Yes	]	No
Contracting profile
Contractors' skill development	Yes	Some	No
Global network	Yes	No (local)	No (imports)
Contract price pressure	Moderate	Some	High
Variation no. contractors	Varied (3)	Moderate	High
Dual contracting	Yes	Yes	Yes
(1) annual sales over $50 million; (2) annual sales over $1 million; (3) depending on market price segment; (4) work sharing, temporary workers, subcontracting.