Skill provision patterns and strategic organizational ...Skill provision patterns and strategic organizational practices 7 their employees.4 The content and extent of training initiatives,

Francesca Odella

SKILL PROVISION PATTERNS AND STRATEGIC ORGANIZATIONAL PRACTICES.

THE EFFECTS OF PUBLICLY FUNDED TRAINING PROJECTS ON FIRMS.

DSS PAPERS SOC 7-03

INDICE

Introduction ............................................................................. Pag. 5

1. A comparative perspective on in-company training ...................... 8

2. The institutional regulation of in-company training in theAutonomous Province of Trento .................................................... 12

3. Investment preferences: the cases of two medium-sized firms ... 20

3.1. Firm A ........................................................................................ 21

3.2. Firm B ........................................................................................ 25

4. Cooperate or compete? The training choices of two multinationals .................................................................................. 30

4.1. Firm C ........................................................................................ 31

4.2. Firm D ........................................................................................ 37

5. Concluding remarks: effects of training at the local level andpatterns of regulation ...................................................................... 43

References ........................................................................................ 51

Skill provision patterns and strategic organizational practices 5

Introduction

By the term ‘training’ is usually meant the acquisition of knowledge

and practical and relational skills useful not only for productive purposes but

for social and individual ones as well (Zucchermaglio, 1996). The enterprise

is indubitably one of the places in which training is acquired: as a person

participates in the work and social relations that take place within the

enterprise, s/he learns skills and forms of knowledge that are at once unique

and generalizable to other production activities (Streeck, 1996).

However, whilst in the organizational models of the past training was

an integral part of the development of a distinct work identity, with the

advent of 'modern’ forms of production the workplace has lost its

significance as a source of training (Regalia and Regini, 1996), and the

function has been gradually transferred to the educational system. Because

entrepreneurial investment in human capital makes it possible to reconcile a

company’s interest in acquiring a more skilled (and therefore more

productive) workforce with social interest in a general increase in workers’

professionalism, training has been generally regarded as a public good

(Regini, 1997; Streeck, 1994), and as such subject to institutional regulation.

However, the process of creating work skills and transferring them from

vocational training systems to the production system has often proved

problematic, due to institutional factors which are difficult to reproduce and

therefore extremely variable in their outcomes.1

1 Among the most important works on this topic are Finegold and Soskice’s study

(1988) on the failure of the British vocational training system, Soskice’s comparativeanalysis (1993) on the American and British training systems, and Regini’s (1997)study of the institutional regulation of vocational training in France, Germany, Spainand Italy. All these studies show that the success of a training model depends on theinterweaving of technological and organizational variables (the need for new skills

6 Skill provision patterns and strategic organizational practices

Despite awareness that training and economic development are closely

inter-related, analyses of firms’ behaviour in the labour market (Montanino,

1997) have shed relatively little light on the motives that induce firms to

invest in human capital,2 or on the methods used by them to enhance the

competence of their employees (OECD, 1991; Ferri and Mattesini, 1997).

The quality of the labour force, in fact, has historically been a problematic

aspect for economics, due to the difficulty of distinguishing among various

kinds of training externalities3 and therefore of identifying empirically the

factors that affect the formation of firms’ long-period preferences (Stabile,

1996).

One of the most influential factors is technical progress, which induces

firms to renew internal competences and to update and extend the skills of

and the ability of enterprises to create ‘spaces’ where their employees can acquirethem) as well as institutional ones (the structure of the educational system, forexample, or the presence of specific legislation on apprenticeships, as in Germany).

2 The concept of human capital was introduced into economic terminology some thirtyyears ago (the standard reference is Becker, 1964). Since then its use has spread toother disciplines, and the term is now widely employed to denote an individual’sknowledge, skills and other attributes of importance for economic activity. Sociologyhas taken up the concept to show that social capital may influence the acquisition ofhuman capital: an example being the case in which community membershipencourages young people to invest in higher education (Coleman, 1988).

3 When speaking of training externalities it is important to distinguish among threetypes: individual, those relating to the contract, and those arising from relations amongfirms (Chapman, 1993). The first category comprises the effects (and especially thedifficulties) connected with the decision of an individual worker to take a trainingcourse, while the second kind of externality concerns the form and content of thecontract stipulated between worker and firm, with specific regard to the consequencesin terms of career advancement and job promotion. The third type concerns theexchange – or better the ‘poaching’ – of trained workers among firms (‘poachingexternalities’). There is also a fourth form of externality which has been mainlyexamined by sociological studies of the labour market: namely ‘system failures’ or theexternalities connected with the negative interaction between the structure of thelabour market and the structure of the educational system (as in the case of the Britisheducational system analysed by Finegold and Soskice in 1988).


their employees.4 The content and extent of training initiatives, moreover,

has been connected to the type of control exerted by the institutions over the

behaviour of firms towards their employees (Crompton, Gallie and Purcell,

1998). As well as these ‘binding’ factors there are others, such as corporate

culture and the organizational structure, which influence a firm’s

representation of the human capital ‘invested’ in its employees (Jones,

1998). The way in which a firm configures its needs for personnel and skills

may decisively influence its propensity to undertake training initiatives and

the forms that these assume, and also its strategy vis-à-vis the labour market

and the public and private training institutions.

Starting from the assumption that it is the interaction between

organizational and economic factors (the human capital possessed and

expectations about future returns therefrom) and socio-institutional factors

(relations with the local institutions) that determines strategic choices in the

field of training, in this paper I shall describe how this interaction has come

about in four firms situated in a local setting – the Autonomous Province of

Trento in northern Italy – endowed with public policies to incentivize

training.

In particular, the company case studies will determine whether there

exists a relation between the content and orientation of in-company training

and the goals pursued by the provincial authorities, and they will highlight

the main socio-economic factors that structure the forms of regulation of

training externalities adopted by the four firms.

4 This applies in particular to the engineering sector, to which the four firms analysed in

what follows belong. Here, organizational changes and the use of automatedtechnologies has recently increased job complexity and given rise to greater efforts toupdate workforce skills.


1. A comparative perspective on in-company training

The sources of human capital and the social organization that regulates

its creation and maintenance have been throughly investigated in the past

decade as the issue of training has attained greater visibility in social policy

analysis. Part of the debate has concentrated on the nature of this special

resource, investigating its economic and social dimensions as well as its

collective and individual features (Keep and Mayehew, 1999). Other

scholars have preferred to investigate how human capital is created in

different countries and to consider the ability of different national models to

provide an efficient system of skills provision.

In particular, when investigating the relationship between training and

workers’ opportunities, an interesting approach is to look at the processes of

skill formation, focusing on the characteristics of company based training.

At the micro level, according to some scholars, it is possible to trace

innovation and development in institutionalised patterns of educational and

knowledge transmission. Trivellato (1995) analyses the differences between

Italy and Japan as two ways of conceiving the workforce’s place within the

firm, its position in the organizational hierarchy, and the place that the

individual worker acquires in the productive system by means of on-the-job

training. Trivellato’s study emphasizes the differences in time perspective

that tend to shape companies’ provisions and expectations about their

workers. While training is seen in Japan as a normal content of the

employment relationship, and is also sustained and encouraged by cultural

and institutional conventions, in Italy – despite the presence of vocational

education and a well-established legal framework for apprenticeships –

training is still perceived as a separate activity that requires detachment from


the work environment so that the trainee can acquire specific knowledge that

will be further applied to job tasks.

One of the most exhaustively investigated cases of training provision in

Europe, Germany, provides other types of training. Some authors see the

German training system as intended to achieve a good match between the

individual worker’s assets (education, social and practical skills) and the

industry’s organizational structure (Culpepper and Finegold, 1999). The

development of skills and expertise is of extreme importance in this process,

which is monitored by various institutions (experts, work councils,

employers associations). Moreover, the German system has also benefited

from the priority given to the nurturing of broad occupational specialties, so

that workers are adaptable to new forms of production and to innovative

processes.

Training has also been framed in a long term perspective and seen as an

important element of active labour market policies, with effects not only on

the economic system but also on the social organization of German society.

This gives comparative advantage to industry and ensures its ability to keep

pace with technological innovations and new forms of production. A similar

outcome has also been reported for Japan, where the collective character of

company training is linked to the country’s specific culture and its ability to

transform traditional linkages and relations (reciprocity, horizontal

hierarchies, solidarity and the priority of the collective) into organizational

resources for the development of industry.

In contrast, Italy displays factors whose joint presence may prevent the

adoption of effective training programmes within firms: a high conflict level

in relations between ownerships and the trade unions, the presence of a

personnel management often unable to evaluate or to design programmes


properly, and the extensive use of external agencies. These constraints may

be understood better if we recall that the dominant view in Italian society is

that training is largely an individual asset (in the firm’s view as well the

employee’s) leading to the acquisition of specific abilities, and not a

collective benefit or an instrument of organizational and economic

governance. (see table 1 for a synthesis of this international comparison).

Table 1. Characteristics of training at the micro level

Germany Italy Japan

Time perspective Long term – Short term – Long-term –

Relation to

production

Preliminary and

preparatory

Separate and

dependent

activity

On the job and

continuous

Expected personal

result

Professional self

confidence

Ability to

perform

Sharing of

experiences and

knowledge

Activity focus onAcquisition of

skills

Acquisition of

knowledge

Mutual

teaching/learning

Relevance of

training

Employment

specificTask specific Career specific

Training

representation

Sharing of

costs/benefits

Individual

achievement

Collective

requirement


These aspects have important implications for the study of institutional

regimes of skill provision and for the comparability of national regulation

policies. In order to understand the distinctiveness of the cases described

below, it should therefore be borne in mind that the significance of this

international comparison is strictly dependent on the structural features of

Italian industry.

Size constraints in particular may play a more important role in Italy

than in other countries and foster the emergence of very different skills

provision institutions. Territorial local differences may also arise because,

whereas large firms tend to be located mostly in the Western and Northern

regions of Italy, small and medium sized firms (or SMEs) are historically

related to local dimensions and territorial resources. Furthermore, there are

institutional factors such as the role of local agencies and local government

in the labour market and the effects of their policies on the local labour

market.

As a consequence, when investigating the role of training in the Italian

case, it is of extreme importance to reconsider the framework for evaluating

company training provision with reference to structural and territorial

aspects. In the sections that follow I shall describe this context, and by

means of case studies of four firms located in the Autonomous Province of

Trento – a region in the North-East of Italy – seek to highlight the contents

and forms of specific training practices. The role of institutions and the

availability of publicly funded training projects will also be considered as a

potential factor of change in human resources creation processes within

small and medium sized firms, and as a factor which rebalances firms’

strategies to deal with negative interaction problems (lack of resources,

poaching) on the local labour market.


2. The institutional regulation of in-company training in theAutonomous Province of Trento

A region of the recently industrialized north-eastern part of the country,

Trentino is today one of the Italian Provinces with a legislative and

administrative autonomy recognised by the Constitution of the Italian

Republic.5 As a consequence of this political provision, the Trentino

Autonomous Province (with the province of Alto Adige) has wide

administrative and legislative competence on a large range of matters: from

land planning and the use of natural resources to social issues like

employment policy and economic development.6 From an administrative

point of view, the governing body of the Autonomous Province of Trento

has always supported a long term strategy to deal with problems related to

economic development, both industrial and agricultural, such as those of

governance of the territory, the development of locally based economic

activities (mostly in tourism and services) and the diffusion of production

innovation in general

5 The autonomy of Trentino is a direct offshoot of that granted to Alto Adige, with its

ethnic and linguistic minorities, a region which was the subject of long and complexpolitical and diplomatic negotiations between Italy and Austria following modificationof Italy’s frontiers at the end of the First World War. The autonomy of the TrentinoAlto Adige Region was established in 1946 and then ratified by the Italian Parliamentwith a constitutional law. In 1972 the Autonomous Statute became law and theTrentino Alto Adige Region was divided into the Autonomous Provinces of Trentoand Bolzano. The administrative and political role of the two autonomous provinceswas recognised, and they were endowed with a decentralized institutional structureunique in Italy.

6 In practice, the Council of the Autonomous Province of Trento (PAT as it is called)discusses and approves its own laws and intervention measures which in the majorityof the cases are only ratified by the central government in Rome.


These political and institutional provisions make sense if we consider

that Trentino is also a mountainous region and a border region. In the past,

its morphological and geographical features were obstacles to change in the

social and economic structure, as well as imposing constraints on the

settlement of local industries. Measures to enhance workforce skills

(vocational training) and to foster human resources development in firms

(continuing training) have always been given especial importance by the

administration and agencies of the Autonomous Province of Trento.

The provincial regulations have been developed since 1983 as a

corollary to labour policy measures issued by the provincial government

(L.P. 19/83). Also created in 1983 was the Agenzia del Lavoro of Trento, an

autonomous body tasked with monitoring interventions in the field of

employment and vocational training.7 This Agency is flanked by the

Province’s Servizio Formazione Professionale (Vocational Training

Service) which, besides planning direct initiatives and counselling services

in the province’s schools and vocational institutes, organizes training

courses and funds the projects defined by company administrations (the

costs borne by the public administration may vary between 25/30% and 70%

of expenditure).

With regard to the last four-year period (1998-2002), for example,

continuing training schemes accounted for almost half of all vocational

7 A large part of public employment policies in Trentino are targeted on the so-called

‘weak segments’ of the labour force (low-skilled workers, women, and recentlyworkers with seniority), the purpose being to enhance their competences and thereforetheir employability. Although 60% of interventions are intended for white-collarworkers, provincial courses usually comprise all job classifications, from seniormanagement to shop-floor worker, and specific programmes for skilling and workintegration have recently been organized. For a description of these initiatives see thepublications of the Agenzia del Lavoro di Trento and the reports of the Assessoratoalla Formazione Professionale cited in the references.


training actions undertaken by provincial bodies (see table 2). As for the

previous period (1996-98), the Operational Programme of the Autonomous

Province of Trento comprised more than one thousand company and inter-

company training courses (a total of 1200 with 17,695 participants), besides

consultancy services to SMEs for the management of specific training needs

(Galetti, 1999).8

Table 2, Training provisions in the Autonomous Province of Trento (1996-2002)for application article 87/88 CEE ,

Year 1998-99* 2000 2001 2002Number oftraining courses 111 92 89 75

Participants(firms)

176 135 140 56

Participants (workers) 2,305 -

2,319 1818

First threecontents oftraining coursesfinanced (%total courses)

12% Safetyissues; 23,2%Quality issues;29% Specificfirms activities

34% Safetyissues; 29%Quality issues;29% Specificfirms activities

24% Safetyissues; 23%Quality issues;21% Specificfirms activities

Notes: * data available for the two year period.

Direct and indirect incentives for training fulfil an important function in

that they enable local firms significantly to reduce the costs of investing in

human capital. If one looks in detail at publicly-funded company training

initiatives, however, account should be taken of the possibility that

8 Source: La formazione continua in Provincia di Trento, Rapporto 2002 del Servizio

Formazione e Addestramento Professionale.9 Source: La formazione continua in Provincia di Trento, Rapporto 2002 del Servizio

Formazione e Addestramento Professionale.


economic support does not alter the corporate culture but instead reinforces

the practice of investing in human capital for short-term purposes, delivering

skills for which there is little demand, or reproducing already-existing

inequalities among employees. Observing the interweaving between

institutional policy directions and their reception in firms may therefore help

identify specific ways in which training externalities are regulated, and the

relationship between firms’ human resources policies and their impact on

the quality of the Trentino labour force. Moreover, analysis of the Trentino

context may shed light on the form assumed by the interaction between

institutional action and entrepreneurial strategies in the training field.

A useful reference in this regard is the typology of forms of externality

regulation drawn up by Anastasia and Corò (1996) for the North-East of

Italy. According to these authors, this area of the Italy comprises three

different systems for the regulation of externalities and the creation of public

goods connected with industrial activity. To date, these systems have

received little attention from economists because of their close

embeddedness in the local socio-political context. However, Anastasia and

Corò maintain, their role is bound to acquire importance in the evolution of

the industrial system of north-eastern Italy.

- The first system for the regulation of training externalities consists in

cooperation among economic actors like firms, local banks and private

investors, and in some cases the regional or provincial institutions. By

means of evolutionary learning mechanisms, these actors are able to

coordinate themselves and have their interests and strategies coincide. An

example is provided by the creation of business services centres,

information systems supporting local firms, or training organizations.


Besides a commonality of interests, this has been made possible by the fact

that these actors share the same values, languages and attitudes (work ethic,

propensity to risk and innovation).

- The employers’ associations represent the second system of

externalities regulation. They tend to be more efficient in the field of

vocational training and in dealing with needs connected with the acquisition

of technology, and they usually collaborate with the local public institutions

and with the system of regional or provincial government.

- The third form of regulation identified by Anastasia and Corò consists

of medium-sized and large firms. By acting as leaders, these tend to

influence the local labour market and the system of relations between firms

and the context. Large firms, in particular, are able to devise long-term

strategies which alter productive, social and economic relations to the point

that small firms and individual entrepreneurs depend on them, not only from

the productive point of view but also financially. In some cases, this

dependency is exploited by small firms, which adopt free-riding behaviour;

but in reality it is mainly the large firms that perform the role of meta-

organizations of production and the suppliers of ‘collective’ goods and

services (research, infrastructures, cultural support and welfare).

The three models described by Anastasia and Corò suggest that

distinctions should be drawn with regard to the particular situation of the

Autonomous Province of Trento, where (due to its special statute of

autonomy and the normative opportunities connected therewith) the

‘training question’ has been addressed with very advanced instruments and

forms of action closer to those adopted in other countries than in Italy.


Compared to the other north-eastern Italian regions, in fact, the

Trentino economic system is distinguished by its close dependence on the

institutions and by a labour market with an extremely low rate of

unemployment, scant geographical mobility, and a high level of public-

sector employment.10 As regards the industrial structure of Trentino, to be

stressed is not only the direct and indirect influence of the local government

(for example, through co-participation in consortia or business initiatives)

but also the relative scarcity of large firms and the substantial number of

medium-sized ones owned by, or part of, extra-regional groups.

This suggests that Trentino companies are interested in developing

networks of relations (Aldrich and Dubini, 1989) with the public institutions

and with representatives of the local community (local administrators, the

directors of training institutes) according to their manpower needs. As a

consequence, the regulation of externalities in the Province of Trento tends

to be markedly localist in character (Diamanti, 1994; Trigilia, 1985).

Therefore, when examining the training policies of four Trentino firms, and

analysing their content and orientation (what categories of the workforce

does training address, and how is it organized in practice), it will also be

essential to examine the modes of training externalities regulation adopted

by individual firms in relation to the opportunities and the constraints and

incentives determined by the local context and the provincial institutions.

10 The Autonomous Province of Trento has one of the highest activity rates in Italy

(52.1% in 1999), a very low unemployment rate (4.3% in 1999), and a level ofemployment in the public administration (21.66%) among the highest in the northernregions of Italy (although in line with the national average). For details see the sourcesin the bibliography and in particular the Rapporto sulla Situazione Economico-Socialedella Provincia di Trento and the surveys periodically carried out by the Osservatoriosul Mercato del Lavoro di Trento.


In describing the firms and their choices by comparing the four cases

(two medium-sized firms and two medium large multinationals), I have

organized the accounts on the basis of two specific aspects of the strategies

adopted: the problems of coordination and competition among firms (a)

relative to labour (poaching externalities), and the investment policies (b)

adopted by the firms with regard to training.

I believe that these two aspects can shed interesting light on the effects

of the interaction among public regulation, the local context, and the

behaviour of firms in the local labour market. Moreover, by opting to

analyse firms all of which operate in the metalworking sector, an attempt

has been made to control some of the factors exerting the greatest influence

on the training choices of firms. This is because the manner in which

relationships among firms belonging to the same value chain are organized

tends to influence the types of jobs available and to characterize them in

terms of career opportunities and training opportunities.

Moreover, when analysing the four cases, I paid particular attention to

the interdependencies that arise among the training choices of firms, the

local context (and specifically the local labour market) and the institutions

active in the area of vocational training. The aspects deemed of prime

importance were:

1) the presence of schools or other public training institutes and

their privileged relationships with the municipal administrations. These

actors, by modifying the preferences of firms (which can thus draw on a

pool of potential employees often suitably qualified for the jobs necessary

for the company), may induce them to organize their skills intake in a

manner unexpected by the public institutions;


2) the location of the firm in different areas of the province (a

tourist area, an industrial zone, and an area with a multi-sectoral economy),

and the effects of their presence on workers’ local mobility;

3) how training was managed ‘in-house’ (training as an internal

function, and the possible presence of external referents such as business

consultants);

4) at which workforce category it was directed; and finally

5) on what occasions it was delivered (whether it was planned or

otherwise).

Table 3- Characteristics of the four case firms according to the framework ofanalysis.

Firm A Firm B Firm C Firm D

Contacts withschools or otherpublic trainingagencies

TechnicalSchools

Local labourmarketagencies

TechnicalSchools

TechnicalSchools;Local labourmarketagencies

Location of thefirm Tourist area multi-sectoral

economyan industrialzone

multi-sectoraleconomy

Training as aninternal separatefunction

No Yes No Yes

Workforcecategory targetedby trainingprovisions.

Skilledworkers(mostly men)

All workers(mostlywomen)

Skilledworkers(mostly men)

All workers(mostlywomen)

Delivery oftraining Planned Situation

Constrained Planned Planned


3. Investment preferences: the cases of two medium-sized firms

The simplest way to deal with training externalities is to view them as

connected with a problem of economic choice. In the logic of the firm, in

fact, there exists a trade-off between the costs sustained for the purposes of

production and those incurred in developing human capital (Nugnes, 1999).

Investment in training has effects on future production, so that it represents a

substantial risk for the firm. Moreover, the outcome of the training cannot be

completely protected against the provisions of the contract stipulated

between firm and worker, and the likelihood that the latter will move to a

rival firm increases in proportion to the quality and quantity of the training

investment made in him/her (Chapman, 1993).

The two small firms analysed in this section well represent this

framework of choice for investment in human capital. Although similar in

their basic features (composition of the workforce, organization of work,

and type of technology used), and although both of them were under

pressure to introduce methods and technologies typical of quality automated

production, the two firms responded in different ways. In particular,

technical change was handled in the two firms in very different manners,

and according to very different logics, especially as regards the role of

personnel in business growth.

Besides the factors described in detail in the case studies, this

difference was due to diverse expectations concerning needs and the

profitability of different forms of competence. Contrasting with a view of

training as exclusively functional to production and therefore targeted on the

potentially ‘most profitable’ employees was the opposite view that training


is essential for organizational strategy and crucial for business growth. This

antithesis also involved phenomena of interaction with the external

environment, especially with the public institutions.

3.1. Firm A

The first case – firm A - concerns a firm operating in the metalworking

sector which produces small plastic components for the pharmaceuticals and

cosmetics industry. Firm A is located in a tourist area not far from the

provincial capital, and it consists of three small plants separate from the

urban area and from farmland. It is a medium-sized company (with circa

200 employees in 1998) which in the last ten years has acquired a good

position on the international market.

Firm A has based its growth over the last ten years almost exclusively

on technological development. It has progressively restricted the content of

its training programme, which is addressed primarily to production

personnel. Before moving to detailed description, it is important to stress

certain features of the firm, its organizational model and its environment,

these being the factors which have led to definition of its personnel

management model.

The first feature is the ownership of the firm. The majority shareholder

is a local industrial group, while a large proportion of shares (20%) is also

held by the Autonomous Province of Trento. This ownership structure has

played a role in the priority given by the firm to an investment policy based

on technological innovation (see below).11

11 I cite in this regard the explanation given by the managing director during an

interview: “The approach adopted by CO is the one that got a Nobel for Modigliani:investment in fixed capital is more advantageous than circulating capital (…) I wouldsay that the consultants steered us towards investment in technology, but if we tend to


Secondly, the organization of work and the characteristics of Firm A’s

workforce have influenced the type of relationship established by the firm

with the local context over the years. The work is organized into three

departments engaged respectively in production, control and the shipping of

finished products. There is also a section devoted to the research and

development of new products. The employees are therefore required to

possess a variety of skills. But the distinctive feature of the firm with respect

to the others in the zone – the majority of which operate in the metalworking

sector – is the presence of a high percentage (more than 60%) of female

workers in the production department. This is partly due to the need for

particularly accurate control on the quality and functionality of products (a

task traditionally assigned to female workers), and partly to the nature of the

local labour market, which is characterized by low geographical mobility.

These features have influenced the firm’s policy, its investment

decisions, and its attitude towards training. On the view that a firm’s

strategy consists of a flow of actions (Pettigrew, 1990) undertaken in

response – often unintentional – to stimuli from the environment, in order to

interpret Firm A’s personnel policy we must also consider the specific

conditions in which it has developed. I shall thus first examine changes in

production and investment, and then those relative to personnel and training.

finally dwelling on problems to do with the firm’s relations with its context

– in particular its interaction with the local labour market.

Firm A’s productive history over the past ten years has been

determined by a sudden shift in market preferences which transformed it

from a small firm specialized in a niche product into a market leader in its

invest in fixed capital, i.e. production structures, process creation and also a quota inresearch, this has been due to decisions taken by the owners. It is considered a


sector. Besides a marked increase in profits, this has required the firm to

make a series of major changes in its productive structure. Thanks to

provincial programmes,12 Firm A was able to implement a wide-ranging

investment plan centred on technological innovation and the construction of

a new and completely automated plant. The firm’s need to adjust its

production structure to demand from its recently acquired market, and to

keep its foreign customers, induced it to create new products and improve

the quality of its already-existing ones, which also required intervention in

the organization of work. A large proportion of the more elderly workers

were laid off or re-allocated, their places being taken by young school

leavers on training/work contracts and technicians specialized in the control

of automated processes.

Finally, some production phases deemed not remunerative were

contracted out to small artisan firms in the area or to former employees. The

use of more sophisticated technologies also compelled the management to

insist on high product quality standards. To this end, it organized ad hoc

training courses and introduced performance-related wage bonuses. New

recruitment and training activities were focused on the departments which

the firm regarded as crucial: quality control, and research and development.

Overall, these changes have had a profound impact on the firm’s

structure and culture, ‘modernizing’ it and forcing it to adopt an increasingly

flexible production model. Many of the side-effects (dismissals, transfers,

changes to contracts), however, have aroused hostile reactions from the

strategic aspect”.

12 The incentives offered by the provincial programme to boost local industry (L.P. 4/81:Agevolazione ai credito per le imprese per opere di ristrutturazione e investimenti instrutture e innovazione tecnologica).


trade-unions whose relations with the firm have deteriorated, with

difficulties of dialogue which still persist.

As regards training, whilst in the past this mainly took the form of

participation in group work and the flanking of more experienced

colleagues, the structural changes have given rise to various problems. In

particular, the new model based on ‘flexible’ training (Giannini, 1997),

introduced to adjust workforce skills to the new technologies, has proved

particularly disruptive In fact, it does not enable the workers to acquire a

global view of production; rather, it ‘trains’ them in a set of procedures

which are difficult to transfer either within the firm or to other local firms.

Moreover, the programme comprises training activities which are highly

specific (and which therefore impart skills for which there is little demand in

the local labour market) as well as tending to remain circumscribed to more

highly-qualified positions. This applies in particular to workers with control

functions – that is, the majority of the female workers in the production

department.

The tendency of the company, therefore, has been to create a sharp

cleavage between jobs in which training is necessary because it concerns

product quality, and other jobs for which training amounts to instructions on

how to use the machinery. This strategy is coherent with the marginal

position occupied by human resources at Firm A: in the past because the

traditional system of recruitment and on-the-job training was sufficient to

meet the firm’s needs, and thereafter because of deliberate choices made by

management. With respect to the institutional context, the firm has thus

pursued a policy of under-investment, and although it is eligible for funding

for training initiatives, Firm A tends to use it to only a minor extent.


Any general comment on Firm A’s training choices must inevitably

point out that its policy of under-investment in human capital over the past

ten years is at odds with standard economic theories on training. Despite

scant competition among firms in the local labour market, and despite the

availability of financial incentives, the firm has only taken up the option of

increasing its fixed capital. This propensity, besides springing from the

corporate culture, can be explained in terms of the geographical area in

which the firm is situated, and in terms of the local institutions that operate

therein.

Owing to its location in a predominantly tourist area, the firm occupies

a privileged position in the local labour market. It is one of the few firms in

the area able to offer jobs for skilled technicians, and shop-floor jobs for

young diploma-holders from local technical schools, as well as for lower-

skilled workers. The presence of training institutions and little geographical

mobility, together with scant competition for labour with other firms, has

therefore long made a large pool of personnel available to the firm. This set

of factors has made initiatives to develop human capital less essential for

Firm A, so that collaboration with public programmes has therefore

concerned only financial incentives, and has not given rise to any change in

attitudes towards personnel management.

3.2. Firm B

The second firm considered is also of medium size (around 200

employees). It too belongs to the metalworking sector and produces small

components for the motorcycle industry, which it sells in Italy and abroad.

Although Firm B has features similar to those of the previous firm

considered (Firm A), its management pursues a substantially different


personnel development policy. Given that different outcomes spring from

productive situations bearing close similarities, this case seems particularly

pertinent to our analysis of the consequences of training choices by Trentino

companies.

Whilst in the case of Firm A the main objective of company

development was to reconcile a traditional organizational model with

intense investment in technologies and production facilities, in the case of

Firm B technological development has been accompanied by a need to

retain technicians and shop-floor workers trained by the firm. Insofar as

Firm B applies the principles of flexible production, it too places great

emphasis on product quality, with a department devoted to the design and

development of new products. Moreover, the high proportion of female

workers in its production department also makes its internal structure similar

to that of Firm A. However, if we look at the problems that the two

managements have had to address, we note a number of differences between

the two firms due to their differing geographical locations and relations with

the local community.

Firm B is situated in an industrial area and in a zone of the province

with a high concentration of SMEs, in part belonging to the metalworking

sector. Competition among firms for labour is therefore intense; and

especially in the past five years the difficulty of recruiting personnel, and the

consequent shortage of skilled workers in the local labour market, has been

a cause for concern. Secondly, the extra-regional ownership of Firm B has,

especially in the past, distanced the firm from the community and the local

institutions.

In the case of Firm A, the firm’s reluctance to implement training

programmes to upgrade workforce skills and enhance social equity was due


to the presence of scant business motivation to do so, and to an institutional

context overly favourable to the firm. By contrast, in the case of Firm B, the

constraints and difficulties connected with its location and the personnel

area, and despite a type of production with scant innovation, the firm has

developed its own, and successful, approach to training. Firm B shows how

the coordination of company strategy and public training intervention makes

it possible to transfer into the organization social and relational skills which

foster innovation and increase workforce motivation (Ballarino, 1998).

In order to examine the birth and development of Firm B’s training

policy, I shall start with the events that followed a profound production

crisis at the firm; a crisis which prompted the management to take action in

the commercial area (marketing and other promotional initiatives), the

production department (renewal of the machinery, reorganization of various

sections of the plant), the organization of work, and the personnel

department. The aim was to respond better to market demands, to renew the

firm’s image by developing new products, and to improve the quality of

those already in production. This process of renewal was facilitated by the

installation of a new management, which identified the firm’s crucial

problems as being its lack of a business culture and an unsatisfactory

relationship with the local institutions.13

13 The new managing director described the situation as follows: “A sharp increase in

personnel and turnover (rather chaotic growth, I would say) had not been matched byan equivalent development of human resources. The professional contents of theworkforce had remained unchanged. Running a firm with 40 employees is a differentmatter from running one with 200, if nothing else because of the complexity of thebusiness. So the people who were already here, although they were prepared from thetechnical point of view they were absolutely not from the managerial one. Also, thecompany was completely unknown as regards image, with an entirely non-existentsocial presence”.


Following investments in technology, output doubled, and so too did

the number of employees. This increase highlighted a lack of skills and

organizational abilities in the area of personnel management. Whereas in the

past (as in the majority of medium-sized Trentino firms), the personnel

function had taken the form of ‘distance monitoring’ by a consultancy firm,

and only functions like career structuring were undertaken by the plant

manager, with the advent of new production models this type of

organization proved unsatisfactory. In particular, extremely high turnover in

production personnel and the difficulty of retaining more skilled workers –

easily lured away from Firm B by the higher wages offered by other local

firms – were viewed by management as symptomatic of the firm’s inability

to valorize the skills already present and to manage a productive structure

intended to be flexible and competitive but which was in fact still tied to

traditional management methods.

In this case too, the new management tackled these problems with

measures concerning personnel already working for the firm and with a

‘targeted’ recruitment plan. The firm made major investments in personnel,

and in a few years not only had professional figures been renewed and

increased (the firm is one of the few in the area to have hired a specially

qualified manager of training), but the firm had intensified its relationships

with vocational training institutes and the local administration. Besides the

industrial associations, the firm actively involved the trade unions in this

project, and thus established a positive climate of collaboration.

Closer contact with the local institutions and the municipal

administration increased opportunities for collaboration, and it helped create

a new image for the firm with the public and in the local institutional

context. In fact, given its situation in an industrial area populated mainly by


local firms, and given the absence of particular problems (due to size, type

of production or harmful environmental impact), until a few years ago the

firm had few relations with the local community, and those that existed were

restricted to bureaucratic matters. The policy introduced by the new

management therefore changed the situation for the better: the firm’s

visibility was increased by its participation in initiatives mounted by the

industrial associations, and advantage was taken of the opportunities offered

by the provincial institutions (Agenzia del Lavoro and Servizio Formazione)

to support changes to the firm’s internal organization.

One of the main outcomes of this change in the firm’s external relations

was the start-up of two projects to enhance workforce skills. Organized

jointly with the body responsible for vocational training in the province

(Assessorato alla Formazione Professionale), these schemes were intended

to increase the competences of production personnel, and to improve the

firm’s retention of technical staff.14 The schemes were organized into a

multi-year plan for the re-training of technical and shop-floor personnel.

Hence, the response to the problem of competition for manpower did not

follow the traditional route of economic incentives (where the firm would

have to stand direct comparison with its rivals) but instead drew on the

expertise of (and the economic benefits offered by) the provincial

institutions. In fact, the contents of the courses run by the firm’s head of

training were centred not only on technical aspects (quality and automation)

but also on the development of relational skills.

14 In the case of technical staff, the firm’s location in an industrial area meant that there

was a high risk that skilled labour would be ‘poached’ by other firms. In the case ofproduction workers, the problem was a high turnover rate due to the large number offemale workers and the repetitive nature of their work.


By increasing its employee retention rate, while simultaneously

increasing the number of intermediate personnel and enhancing the skills of

more senior production personnel, Firm B managed to give greater

incisiveness and reliability to its productive capacity, while also developing

a corporate culture that was more attractive to its personnel.

4. Cooperate or compete? The training choices of two multinationals

In order to analyse the aspects of the territorial organization of human

resources, this section describes the cases of two large firms, subsidiaries of

foreign multinational groups located in Trentino. Referring to the previous

categorization of table 3, it takes into account both those relationships

relative to cooperation between firms and training bodies like schools and

vocational institutes, and those relative to competition among firms for the

recruitment of skilled personnel. The former aspects have been the subject

of numerous studies in recent years, which have sought to analyse the role of

the institutions in promoting initiatives which respond to the skilling needs

of the economic system (Regini, 1997). At the basis of these studies is

awareness that the relationships between capital and labour depend not only

on technological and organizational variables within the firm but also on

external factors of institutional and cultural type (and as such subject to

marked local variability).

As industrial systems tend to decentralize, firms seek their strengths

and competitive advantages at the regional level (Porter, 1991). This also

applies to those firms which operate mainly in international markets, using

advanced technologies. On examining the cases of two large firms we shall


see that it is often precisely the ‘global enterprises’ that consciously attribute

a prominent role to their territorial context – which gives them access to

infrastructures, services and indirect support for their activities – and they

are often among the promoters of initiatives to develop regional economies

(Perulli, 1995).

In like manner to study of competition among firms for human

resources, we can obtain information about relations with the local context,

and in particular on training preferences, as elements in ‘strategies of

openness’ towards the labour market. If we treat this problem as an

interweaving of utilitarian strategies intended to secure the most expert

workers at the lowest price, we can regard firms as having a relatively wide

range of choices available to them: for example, they may punish the

behaviour of the other firm, or they may establish forms of negotiated

cooperation (Acemoglu and Pischke, 1998).

4.1. Firm C

Subject first to analysis is the training policy of a large firm operating

in the metalworking sector and belonging to a large American multinational.

The company (here denoted with Firm C) has a total workforce of around

800 employees, the majority of them specialized in the use of automated

technology, and it manufactures and assembles mechanical components

(axles and reduction gears) for large motor vehicles. This is an extremely

specialized type of product, which is designed and produced only on

commission by large foreign manufacturers. Despite its growth in size over

the last ten years (and two changes of ownership), the company has always

had a production philosophy centred on specialization and high standards of

product reliability.


The company has three plants in the province, each of them situated in

a different local context: a tourist area, an area of intense industrialization

(resembling an industrial district), and a rural area. The multi-location of the

company therefore enables observation of its relations with different local

labour markets, and the ways in which the company adapts to constraints

and resources of institutional origin.

A dichotomy is often drawn in the literature between the internal labour

market and the occupational labour market (Marsden, 1990) as two distinct

forms of regulation by firms of their specialized manpower needs. The

prevalence of one type of regulation rather than the other has differing

implications for training. Whereas in the internal market the acquisition of

competences and new skills is ‘led’ by the company, which decides its times

and forms, in the occupation market it is the worker – usually already in

possession of a specialization – who moves among firms, acquiring skills

specific to the particular work context. Moreover, the different positions of

workers in the two markets have often been viewed in terms of their greater

or lesser freedom and capacity to bargain their work situation with the

company. In reality, argues Marsden (1990), the two types of regulation are

not alternatives to each other. Rather, they are institutionally defined and

therefore subject to historical – and, I would add, geographical –

contingencies. I shall therefore examine the case of Firm C and its plants in

order to verify the hypothesis that personnel policies vary according to the

institutional context in which the firm must operate.

Firm C’s three plants undertake all the manufacturing phases, from

transformation of the raw materials (mainly cast iron, special steels, and

ferrous alloys), through the precision engineering and finishing of the

components, to their final assembly. Because these production phases have


diverse exigencies, in the past ten years the firm has utilized a wide variety

of job coordination systems (work groups and supervision) and working

time arrangements (there are at least five different types of contract). The

organization of work at Firm C has therefore undergone major changes since

the company was founded in the 1960s, passing through various phases, one

of which has involved the implementation of automated technologies. The

company’s personnel management model has changed in concomitance with

these various phases. With the crisis of the traditional model of skills

acquisition, and with the advent of what is known as the ‘integrated

approach’ to production, the company has found it increasingly difficult to

recruit and train workers suited to its production needs. In partial response to

these difficulties, the new management has introduced training courses in

the areas of quality, safety and the work environment, as well as courses to

deliver specific technical skills.

The end of 1996 saw an occasion of especial importance for the

establishment of specific relations with social actors external to the company

and which influenced the evolution of its personnel policy. Whilst the

previous ownership, a European group, had given priority to the avoidance

of conflict in its market strategy and in its external relations (with the trade

unions and the public institutions), the new ownership adopted a more

assertive stance in its personnel policy, pressurizing the unions to resume

bargaining practices and imposing controls that had lapsed into disuse

during the final phase of the previous management. Moreover, for

productive reasons (but also, as we shall see, for the purposes of territorial

planning), the new management transferred a part of production to a new

plant constructed in an industrial area of Trentino, so that its production sites

became three in number. Analysis of Firm C’s personnel policy will


therefore focus on how the need to deal with specific personnel problems at

the three plants induced the company to devise strategies and to seek

alliances, and on some occasions opportunities for cooperation, with the

local training institutions.

I begin with the main plant, which manufactures the company’s most

specialized product and is situated close to a tourist area. Here, the local

context has been problematic for the firm mainly owing to its location. The

area’s economy, in fact, has evolved by concentrating increasingly on

tourism, creating environmental problems (the transfer among plants of

finished product components encountered heavy traffic) and difficulties in

recruiting skilled labour. These the company sought to resolve by

establishing a network of alliances.15 The need to protect the shared interests

of local firms gave rise to a lobbying strategy vis-à-vis workers, who, given

the small number of manufacturing firms in the area, enjoyed a position of

advantage. Firm C in particular sought to ‘curry favour’ with the local

authorities by holding recruitment campaigns at the local vocational

schools.16

With respect to the above distinction between internal labour market

and the occupational labour market, at this first Firm C plant the presence of

institutional constraints (pact among firms) and of specific historical and

situational conditions (corporate culture, presence of training institutes)

favoured the development in the company of an internal labour market, and 15 Competitive behaviour (like poaching) would have worsened relations among

companies and created a collectively damaging climate, as regards both regulation ofthe local labour market and other common goods.


in the local context of a ‘closed’ market where skilled workers constituted a

‘club good’ for the firms in the zone.

Firm C’s second plant in order of foundation undertakes ‘heavy’

production operations (the processing of cast iron and special steels) and is

located in a peripheral valley of Trentino bordering on the Veneto region.

Despite structural measures by the public authorities, the area is

economically underdeveloped compared to the rest of the province and has

low levels of entrepreneurship. The difficulty of recruiting personnel in this

area is therefore correlated mainly with the features of the local context

(high emigration rate, lack of an industrial culture) and its marginal position

with respect to the regional economy, but it is also partly due to the work

organization methods used by the company. Whereas at the company’s other

plants, shiftwork, and in particular night and weekend shifts, are by now part

of the firm’s contractual regime (thanks also to the mediation of the trade

unions), at this plant resistance has always been strong, and the problem of

finding personnel to cope with production peaks has still to be resolved.

Yet it is precisely in this area that we find close and enduring

collaboration between the company and local schools. Since the plant was

opened, relations between the company and teachers have been excellent,

giving rise to a series of initiatives (work experience placements for final-

year students, training sessions on the technology used at the plant), the fact

that the company has no competitors in the labour market has induced it to

invest in relations with the local institutions, although these are not enough

to meet its training needs in the short term. The strategic importance of

cooperation remains, therefore; but it is protracted in time and takes the 16 There is no reason why competition should not be based on non-economic factors like

job security and the quality of the work environment, or membership of an


form of training credit on which the firm relies to off-set the lack of a real

labour market.17

The third Firm C plant, the most recent and modern of them, is the one

where the firm has concentrated its final assembly phases and where

production logistics are coordinated among the three sites. In this area, the

opening of the plant did not create particular problems: neither urbanistic,

because of its location in an industrial area, nor as regards the recruitment of

personnel – although poaching was initially intense, especially from small

artisan firms, where Firm C ‘found’ most of its specialized technical

personnel.

The fact that Firm C’s ‘predatory’ behaviour was not sanctioned was

due to the situation of the local labour market, which, given the large

number of firms in the area, is governed principally by market principles.

Moreover, the attitude of the municipal administration is decidedly

favourable to the development of industry, and it is especially well-disposed

to firms which ensure continuation of the local productive specialization,

namely mechanical engineering. Firm C has thus benefited from a set of

positive factors whereby its hiring policy has been viewed as short-term

behaviour connected to productive contingencies.

In the light of the diversity of Firm C’s behaviour in relation to the

different local contexts with which it must interact, it is possible to make a

general observation regarding the manner in which the company handles

training externalities. One notes that it has different images and needs vis-à-

vis institutions and external actors, to which it responds either by

organization considered ‘prestigious’ because of the quality of its products.

17 One may also say that it is the firm itself, as an institution collaborating with otherinstitutions (schools and municipal administrations), that helps create a local labourmarket.


cooperating or competing in the local labour market in order to obtain the

greatest benefits offered by the context. Its adaptation to the context is

therefore prompted by a deliberate strategy, rather than by any real affinity

with local rules and values (as will instead be the case of the firms analysed

in terms of their environmental externalities). This is evidenced in particular

by two indicators of the firm’s concern for workers’ needs: the content of

training as a means to develop human capital, and the relationship with the

trade unions.18 In both cases, Firm C demonstrates that production needs

and management style in the planning of personnel development are the

constants in the company’s strategy, and therefore exert more influence than

do the institutions and ‘openness’ to social instances and collective interests.

4.2. Firm D

The fourth and final case is a large multinational company which

manufactures domestic appliances and is situated in an industrial area to the

north of the provincial capital. Like the other firms examined, Firm D began

operations at the end of the 1960s as a detached production unit of a leading

Italian manufacturer of electrical appliances. From an organizational point

of view, the Trento plant is a free-standing unit: with the exception of

marketing, all the phases of production, control and logistics are undertaken

internally to it, and only few of the components used in production are

contracted out to small crafts firms in the zone.

18 Firm C’s attitude to the unions and the type of involvement required of them was

described by the personnel manager as follows: “We work closely with the unions.They talk to us. It’s not that we always agree in the end, but at least we talk. Therehave been very few strikes in recent years (…) But it’s we who decide on training:when to do it, how to do it, with whom to do it. There’s no agreement on it with theunions, if there’s something big involving a large number of employees, we informthem about it, and that’s all”.


The internal organization is structured into three macro-departments

respectively engaged in the processing of plastic and metal for the base

components, the setting up and operating of machinery, and the assembly

and final control of the product. This last production phase has always been

of great importance to the company, but when it was taken over by an

American multinational it became the core of Firm D’s production strategy,

and in the management’s view crucial for maintaining a good position in the

market. Given that a decisive factor in achieving standards of excellence is

relations with suppliers, the company places great importance on trust and

exclusiveness with suppliers, whether they are software companies

operating world-wide or small crafts firms to which certain product

components are outsourced.

At present Firm D has more than 800 employees, of whom 75% are

shop-floor workers. The majority are male, although in recent years the

number of female production workers has increased to the point that they are

now the majority in the product functionality and appearance control

departments. A high level of product standardization has been achieved by

introducing automated technologies and through close production control.

This, however, has had repercussions on job tasks, which on the shop floor

are repetitive and mechanical. Thanks to the plant’s central position in the

Adige Valley, close to the provincial capital and to the main transport

routes, and also thanks to the good image of the company (which has made

major investments in recent years to improve working conditions, and

developed relations with local schools), recruiting personnel was not a

problem until a few years ago. All shop-floor jobs as well as those requiring

specific skills were easily filled, either by internal growth or by recruitment

from other firms.


The majority of workers are hired on open-ended contracts, although

for a number of years the company has hired a large number of workers on

fixed-term contracts to meet production peaks in the summer. As we shall

see, this has been an important stimulus for training initiatives by the

company. Initially intended for the summer workers, these initiatives were

subsequently extended to other categories of employees. Moreover, the need

to adjust to new quality monitoring techniques and a search for technical

solutions has given a role of central importance to the personnel and

planning functions, on which depend the implementation of technologies

and knowledge in the various departments and among workers. The

company’s attention to quality has thus induced it to adopt an approach

focused on the responsibilization of the workforce. Performance bonuses

and other kinds of incentives are offered for shop-floor workers, while for

medium-to-high qualified workers and managerial staff the emphasis has

been on developing their versatility and ability to deal with production

problems.

The company’s intention has been that competition among plants and

the progressive raising of quality standards should contribute to its market

strategy. This endeavour largely explains Firm D’s positive attitude towards

human resources development. We know that one of the variables most

influential on the model of human resources utilization is the company’s

strategy in the market and at the organizational level (Regini, 1997).

Understanding these general measures therefore requires reference to the

company’s strategy closely focused on productive excellence, which Firm D

has acquired from the ownership group (which in turn implies a strong belief

in technology), and to its propensity to base personnel management on

flexibility and constant change.


These aspects orient Firm D’s investments in terms of both content (the

training programme) and the importance given to training as part of the

development and consolidation of corporate goals. This is especially evident

in the programmes drawn up by the new management for the professional

development of employees. In order to promote the achievement of

excellence through organizational and technological innovation, since the

national headquarters of the multinational took over Firm D it has

introduced a wide-ranging programme of annualized training courses. But it

is above all with regard to staffing problems that, in the past five years, Firm

D has pursued a strategy of cooperation with the provincial authorities.

The personnel problems of principal recent concern to Firm D are the

recruitment of shop-floor workers and increased turnover among technical

staff.19 Both these problems are connected to the organizational model and

the attractiveness of the company’s market, and the company has addressed

them by leveraging internal and external resources. Information and training

initiatives organized by the company’s national headquarters have failed to

deal with the problem of personnel retention, however. As a consequence,

the company has been forced to collaborate with the provincial institutions

and the industrial associations.

In the past three years, collaboration with the Trento Agenzia del

Lavoro has given rise to two projects for, respectively, the retraining of

production workers and the promotion of contacts with students at local

vocational institutes. The former scheme continues throughout the year,

while the latter is organized in concomitance with summer production peaks

19 In 1998, a survey conducted by the personnel department showed that every year

around 5% of medium-level personnel voluntarily left the company. Although thisloss was not of serious proportions, management was worried about its possible long-term consequences.


– an opportunity which has been taken up by several schools in the past

three years.20

Of particular interest is the outcome of the company’s programmes to

reduce turnover. Whilst in the case of shop-floor personnel, the job

enrichment scheme has been successful, the reverse applies to technical

staff. There has been an outflow of human resources over which the

company admits it has little control, and the stemming of which would

require changes to the production structure not envisaged by the company.21

However, the company does not view this development as negative; rather,

it sees it as a signal that the training received by workers at Firm D gives

them an important advantage in the local labour market, and as such

enhances the company’s image.22

These schemes highlight the importance given by Firm D to relations

with the outside, with the public institutions, and with interest organizations.

In particular, after a period of open conflict with the unions during the 1970s

20 The content of the two schemes is also different. In the former case, theoretical lessons

in the classroom are flanked by job rotation experiences and the sharing of productiontasks, the purpose also being to enhance work motivation. The latter scheme is insteadintended to socialize students to factory work. After a preliminary phase of theoreticalinstruction, the students are assigned to a workbench for the entire duration (sixmonths) of their work placement. They are also awarded a training credit which,should they be subsequently taken on by the company, is included in their paypackets.

21 This outflow has mainly involved workers with several years’ experience who leaveFirm D either to set up on their own or to take a more motivating (by variety and typeof tasks) job.

22 During an interview, the head of personnel described the economic return on Firm D’shuman relations model as follows: “The aim of our company is also to enrich, raisethe cultural level of our workers, so that we normally give further training. Itsometimes happens that after a quite long period of training, the trainees putthemselves on the market because they have qualifications and experience in demand,so they leave us (…) So people leave the company but they often set up small firmswhich work as sub-suppliers to us or which anyway use the type of on-the-job trainingthey’ve received here”.


and early 1980s, both sides are willing to engage in dialogue, and the

success of the company’s training initiatives has been partly due to the

climate of cooperation that now obtains between management and the trade-

union representatives.23 With reference to the typology of trade-union

responses to human resources initiatives drawn up by Eaton and Voos

(1989), we may view the function performed by the unions with regard to

Firm D’s training programmes as a slow shift from a phase of ‘protective

involvement’, where the workers’ representatives exercised bargained

control over management’s training initiatives, to a phase (still in its

beginnings) of their ‘appropriation’ by the unions in order to carry forward

the workers’ interests. This has also been made possible by public

incentives, which have enabled Firm D greatly to increase its training

provision (the hours of which have tripled in three years) – an indubitably

significant development if one considers that the increase in training has

mainly involved shop-floor workers.

Firm D’s use of the financial and knowledge resources of the public

institutions has therefore chimed with the endeavour by the latter to foster

training initiatives which maintain and upgrade the skills of all categories of

workers. At the same time it has brought two benefits to the company: more

23 The contrast between industrial relations at Firm D in the past and at present was

illustrated as follows by the head of personnel: “Once, when training was organizedthe unions were not always informed about it. They only found out indirectly. Nowthey seem very interested, and the union representatives often ask directly if trainingcourses are planned and when they are due to begin. When we draw up trainingprogrammes we allocate some hours to the internal union representatives. Theysometimes invite the provincial secretaries of the three trade-union confederations totalk about the unions, what they do and what they’re all about, because young peopleoften don’t even know. So the unions are more concerned about training than theyused to be, and they’re also more interested in taking an active part in the trainingprocess, in the sense that they also act as teachers”.


funds for training, and greater visibility and prestige in the eyes of potential

employees or collaborators.

5. Concluding remarks: effects of training at the local level andpatterns of regulation

In the light of the foregoing description of the Trentino cases, this

concluding section emphasises two aspects of the manner in which the firms

analysed have managed ‘good’ training. The first concerns the regulation of

training externalities in the province and its relation to Anastasia and Corò’s

(1996) typology outlined earlier. The second aspect is more general and

concerns the content and outcomes of training schemes according to specific

institutional patterns of regulation.

-Principal among the elements that determine regulation of training

externalities among firms are the structure of the local labour market and the

possible presence of overlaps among the training needs of different sectors

(Stoper and Scott, 1990). This latter aspect is a variable of crucial

importance, for it facilitates or impedes the passage of a trained worker from

one firm to another (poaching), and as such prefigures the type of

relationship (cooperative rather than competitive) that may arise at the local

level among firms operating in the same sector.

As evidenced by the cases analysed, the majority of in-company

training initiatives in Trentino have been connected with technological

development, but not exclusively so: internal management problems, and

especially a firm’s relationship with the local context and labour market,

have proved decisive in determining the form of regulation adopted.


However, with regard to the thesis put forward by Anastasia and Corò

(1996), in the case of the Trentino’s firms coordination problems have not

found a response at the associative level; nor have the large firms analysed

set up their own ‘private’ training systems.24

One gains the impression that the strength of local and contextual

factors in Trentino has given rise to an unforeseen interaction between

public regulation and market competition in the management of skilled

personnel. Consider the third firm, for example, which has three plants

located in three different areas of Trentino, and whose strategy is difficult to

fit with one single modality (cooperation versus competition) and therefore

with one specific form of the regulation of training externalities.25

Whilst in the fourth case the need to solve the problem of personnel

recruitment has led principally to cooperation among the firm, the

institutions and the social partners on a school/work training project

intended to attract potential employees, in the third case the multinational’s

personnel policy has been largely geared to opportunities for implementing

it as efficiently as possible (and therefore with less commitment of time and

resources), using an opportunist strategy only in part predictable given the

local context. In both cases, it has been the presence of local and 24 It is likely that the relative weakness of these two forms of regulation in Trentino is

due to the presence – even excessive in some cases – of institutional action as regardstraining and generally in the governance of the local economy. Lacking as aconsequence are the space and motivation for direct intervention by the employers’associations, or for the emergence of other forms of cooperation based on acommonality of interests.

25 Likewise in the case of the two medium-sized firms, this difference is apparent in theresponses by the two firms to the transferability of their employees’ skills connectedwith training externalities. In one case the solution was to reduce the skills demandedto the minimum, and consequently to specialize even further the training given toemployees (by investing in technology). In the second case, transferability stimulated


institutional resources (and constraints) that has most induced the firms to

seek alliances and to adopt behaviour directed towards the development of a

training policy both efficacious and coherent with the local context.

Yet the experience of other countries shows that the regional-level

regulation of workforce training is motivated by, and functional to, the

presence of externalities that often cannot be addressed at either the national

level or that of the individual company, but which tend to have harmful

effects on both of them because of interaction in the labour market between

firms and workers. An example of best practice to be cited is the

‘territorialization’ of the French training system (EOCD, 1997), where the

devolution of state powers to the regional and local authorities has been

followed by closer contacts between firms and public bodies. The

consequent increase in flexibility and labour force mobility, monitored by

the institutions and the social partners (municipalities, local government,

employers associations and schools), has enhanced the match between

training and firms’ needs.26

The benefits of decentralizing the regulation of training to the local and

territorial level, as well as the introduction of flexibility into work contracts

and work organization, therefore urge re-assessment of the long-term

outcomes of training policies with respect to competitiveness, as well as to

the specific features of the institutional context and the social rights of

the differentiation of training and its use for the purpose of job enrichment (andthereby increase workers’ motivation to stay with the firm).

26 Whereas in other countries, Germany for instance, the public vocational trainingsystem has collaborated with the employers’ associations and trade unions to create aregulatory system which ensures the quality and efficacy of training for both firms andworkers (Regini, 1997), in Italy the decentralization of vocational training policies hasuntil recently not received support from the institutions in terms of regulations,funding, or dialogue with the actors involved (trade unions, employers’ associations).


workers (Negrelli and Varesi, 1999).27 Accordingly, observation of the

interweaving between the intentions of institutional measures and their

practical application in the Trentino firms has brought to light different

methods for the regulation of training externalities, be they produced

autonomously by the firm or incentivized by the public institutions.

Table 4 – The four firm cases, their investment preferences and typeof relationship in the local labour market regarding labour.

Type of relationship with other firms in the local labourmarket

Cooperation Competition

Fixed capital Firm A Firm CInvestment

preferences Human capital Firm D Firm B

- As for the second issue addressed by this paper, concerning the

content of training, we have to consider the effects exerted in the long run

by specific institutional patterns of regulation, such as the presence

opportunities in Trentino of large public funded training projects. In fact the

economic logic of the firm, especially insofar as it shapes personnel and

skills needs, is not impermeable to the influence of training institutions,

although it incorporates instances from different institutional sources

27 An example is provided by selective training targeted on lower-skilled workers and on

those who (rightly or wrongly) believe that they are less influential on the firm’sfuture development. An example is ‘gender-segregated’ training (Gallie, 1996), wherefemale workers receive less training than their male colleagues, partly for reasons todo with the organization of work (different job tasks are assigned to the two genders)and partly because of differing cultural beliefs as to the abilities of the two categoriesof workers.


(Luciano, 1999).28 Insofar as it manifests the connection between investment

in training and employers’ beliefs with regard to the profitability of training,

the differing importance given to human capital in terms of investment can

therefore be viewed as symbolising different notions of the relation between

firm and workers, and specific modalities of the relationship established by

the firm with the training institutions and the trade-union organizations.

With reference to the content of the training programmes usually

organized in firms, the literature distinguishes between general training

(which can be ‘spent’ in the labour market) and specialist training (which

delivers skills of little use in contexts other than the one in which the

training is received) (Finegold, 1996). However, this dichotomous view has

recently been questioned by Stevens (1996 and 1999), who has shown that

in reality the type of training provided by firms can be better described as a

set of more or less transferable skills. When a worker receives training, s/he

acquires a package of skills some of which are specific, others general, and

others usable in a small number of firms similar to the one delivering the

training. The issue of transferability is not irrelevant, especially if we bear in

mind that public policies to date have given priority to training programmes

centred on general skills (Keep and Mayhew, 1996), while firms have

always made their largest investments in specialist training courses (which

impart skills less in demand in the market and which are therefore less 28 An example is provided by the planning of vocational training schemes and

programmes by the public authorities. The knowledge and skills delivered correspondin part to the situation as perceived by the institutions at various levels (statisticalsurveys, ad hoc inquiries, pressure by employers) and in part to what it is assumedwill make workers competitive in the market (according to forecasts on thedevelopment of the economic system and the characteristics of workers themselves).Observation of the content and transferability of the skills acquired from in-companytraining programmes financed or run jointly with the public authorities is therefore of


risky). Acknowledging that there is a certain degree of transferability of

acquired skills requires recognition that the opportunities in the labour

market opened up by training depend on the differing degrees of the

transferability of skills, and therefore on the extent to which the latter match

the training preferences of firms.29

In this regard, the above descriptions have shown that the Trentino

companies analysed do not neglect training. It seems, however, that they

have scant awareness of the fact that training can equip workers with skills

other than those strictly related to their jobs. As a consequence, what is

called ‘training’ often consists simply in the imparting of practical

knowledge and does not foster (except in particular cases like those of the

second and fourth firm) the ‘professional’ development of workers. I use the

term ‘professional’ to denote a stock of knowledge and skills which,

although acquired within a particular work context and therefore specific to

a type of work organization, can be understood as enriching workers as

active members of society (Cella, 1994), and as such consisting of assets

which at one particular moment are at the disposal of firm X but at a

subsequent one may be used in other functions (not necessarily to do with

work: one thinks, for example, of care or voluntary work,).30

decisive importance in understanding the interaction between firms’ strategies and theinstitutional opportunities to which they respond.

29 Data provided by the 1996-08 report of the Assessorato alla Formazione edall’Istruzione Professionale (Provincial Vocational Training Department) show thatpublic incentives for continuing training are used mostly to organize courses foradministrative personnel. They are used to a lesser extent for production workers,except when technological and organizational changes have been introduced.

30 A recent national survey (Lidner et al., 1999) has confirmed that skilled workersreceive more than twice the training than do less skilled workers with lowereducational qualifications (10% of graduates compared to 1.4% of workers withlower-secondary school certificates). Moreover, some specific components of theworkforce (women, newly-hired workers, more elderly workers) are systematically


The ‘poverty’ of training content is all the more evident when we

realize that the human capital most productive in economic and social terms

is what in the myopic view of the utilitarian is redundant, dysfunctional in

the immediate term, and ‘useless’. It is this type of training, in fact, which

gives individuals flexibility when they have to move to other jobs or to other

firms, or when they must cope with restructuring or other types of changes

in work organization (Grunberg at al., 2000). Again, it is this type of

training that brings the trainees most closely into contact with other workers,

whether these are colleagues, subordinates or superiors, and that therefore

develops a sense of group membership.

It is evident, however, that firms are susceptible to ‘deterministic

temptations’ which induce them to see training only in immediate terms and

as strictly correlated to the technology used at the time in production (the

most striking example is the emphasis on quality and control techniques).

Yet, and perhaps this is the most serious aspect, also the institutions run the

risk of committing the same error when they provide incentives for company

training but fail to introduce a logic other than that of immediate utility. In

the cases examined, this control over training content was exerted to a

greater extent by the trade unions, which performed a mediatory role and

‘socialized’ the firms into rules of exchange (and therefore indirectly into

values) compatible with economic logic but not necessarily ‘myopic’

towards other aspects of equal importance for the future growth of the firm

and its workers. The need for firms to adjust to, and act in accordance with,

local systems of rules and institutions (Streeck, 1987) – whether these are

the formal rules of the provincial bodies responsible for continuing training

discriminated against in their access to training opportunities, both because of thetasks that they perform and because they are viewed as less productive in terms of


programmes or the informal ones of the trade unions – is therefore what

most induces them to cooperate, and thereby regulate training externalities

(economic utility and social utility) coherently with the goals of the parties –

institutions and workers – involved.

long-period investment.


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