Dependent Self-Employment

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1 Dependent Self-Employment

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3 Dependent Self-Employment Workers on the Border Between Employment and Self-Employment Ulrike Muehlberger Vienna University of Economics and Business Administration palgrave macmillan

4 Ulrike Muehlberger 2007 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London WlT 4LP. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted her right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act First published 2007 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin's Press, LLC and of Palgrave Macmillan Ltd. Macmillan is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN DOl / ISBN (ebook) This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress

5 Contents List of Tables and Figure Acknowledgements ix xi 1 The Blurring Boundaries Between Employment and Self-Employment 1.1 Introduction and motivation 1.2 What is dependent self-employment? 1.3 The theoretical and methodological approach Research design and methods The countries: varieties of capitalism? The industries 1.4 Overview of the book 2 Work on the Border Between Employment and Self-Employment 2.1 Recent trends of self-employment 2.2 Dependent forms of outsourcing and the development of self-employment 2.3 The special case of franchising 2.4 Evidence of independent contractors in the US 2.5 Evidence of dependent self-employment and dependent forms of outsourcing 2.6 Conclusions 3 The Institutional Factor: Labour Law and Regulations Across Europe 3.1 The legal uncertainty of dependent self-employment 3.2 The scope of labour law in comparative perspective 3.3 Conclusions 4 The Supply Side: Identifying Workers on the Border Between Employment and Self-Employment 4.1 The determinants of self-employment 4.2 The motives to supply-dependent self-employed work: qualitative findings v

6 vi Contents 4.3 Dependent self-employment in Austria 4.4 Dependent self-employment in the UK 4.5 Dependent self-employment in Italy 4.6 Conclusions The Organisational Governance of Dependent Forms of Self-Employment The importance of informal structures Markets, hierarchies and relational contracts The market-versus-hierarchy approach Relational contracts, repeated games and reciprocity Governing dependent forms of outsourcing Relational contracts and dependent forms of outsourcing The key features of dependent business relationships Explaining dependent outsourcing from an organisational sociology perspective Conclusions The Creation of Dependent Self-Employment in Comparative Perspective The research design Dependent self-employment in the British and Austrian insurance industry Employment in the British and Austrian insurance industry The creation of dependent self-employment in the insurance industry The organisational logic of tied agency The effects of labour law and the cost structure Managerial control, risk exposure and industrial regulation The effect of company culture Motivation and productivity Dependent self-employment in the Austrian service sector Employment trends in the Austrian service sector The dependent self-employed workers in the Austrian service industry 145

7 Contents vii Effects and consequences of dependent self-employment Dependent self-employment in the Austrian freight industry ISS Recent developments in the Austrian freight industry ISS The contractual organisation of dependent self-employment in the Austrian freight industry Motives for outsourcing the fleet of trucks Effects, risks and consequences of outsourcing The creation of dependency Dependency as a result of support Dependency as a result of managerial control Relational risk and mutual dependency Dependency, relational contracts and the creation of hybrid forms of organisational governance Power and trust in dependent business relations Conclusions Conclusions Explaining dependent self-employment: an evaluation of the research questions The key features of dependent business relationships The normative basis of dependent self-employment The control mechanism Methods of conflict resolution Tone or climate Commitment Degree of flexibility The factors determining the creation of dependent business relationships Managing resource dependency The influence of environmental changes The influence of institutional changes The role of imitative behaviour The role of organisational routines and norms The influence of the state 186

8 viii Contents 7.2 The borders of dependent self-employment and legal regulation Within-system diversity and mixed governance structures 191 Notes References Index

9 List of Tables and Figure Tables 2.1 Annual average growth rates of self-employment and total civilian employment Self-employment in some EU countries, Dependent self-employment in Austria (2001) Further characteristics of dependent self-employed workers in Austria (2001) Summary statistics by employment status (British Labour Force Survey) Employment status, t -1 and t (row percentages) Estimated risk of self-employment and dependent self-employment (multinomiallogit) Descriptive statistics of the sample (Italian Labour Force Survey) Estimated risk of being self-employed or being an employee in comparison to being a collaborator Estimated risk of being employed or self-employed in comparison to being a collaborator Transitions between three different labour market statuses Probit estimation of the likelihood to work at time t (work = I, unemployed = 0) Estimated risk of being self-employed or being an employee in comparison to being a collaborator Efficient governance of transactions Combinations of ownership and governance regimes that define four organisational forms Key features of various governance structures Number of employees in the Austrian insurance sector Number of employees in the UK insurance sector (Two digit SIC 1992: 66) Number of employees in the UK insurance sector (Microcensus, two digit SIC 1992: 66) Sources of new regular premiums in the British long-term insurance business (total individual regular premiums) 126 ix

10 x List of Tables and Figure 6.5 Sources of new premiums in the Austrian insurance business Multi-channel distribution of the insurance companies included in the case study (Status: June 2001) Overview on the personal characteristics and findings of the interviews conducted 153 Figure 6.1 Multi-channel distribution 116

11 Acknowledgements This book was written while working and studying at the European University Institute in Florence, the London School of Economics, Harvard University, the International Center of Economic Research (lcer) in Turin and the Vienna University of Economics & B.A. The academic environments of these institutions were highly stimulating for writing this book. I am grateful to Colin Crouch (Warwick Business School), who was my PhD supervisor at the European University Institute, for the many discussions, helpful guidelines and advise throughout the years. Thanks to Jackie O'Reilly (University of Sussex), Silvana Sciarra (University of Florence), Franz Traxler (University of Vienna) and Herbert Walther, the head of my academic unit and supervisor of my PhD thesis at the Vienna University of Economics & B.A., for helpfully commenting on various parts of this book. Stimulating joint research with Rene Bbheim (University of Linz), Silvia Pasqua and Sonia Bertolini (University of Turin) is reflected and cited in this book. I am, moreover, thankful to all my interview partners who offered their time and gave me a deep insight into their working environment. I am indebted to the Austrian Central Bank (OeNB) for financing a related research project Oubilaumsfonds Project No ) and a postdoc fellowship (Dr Maria Schaumayer Post-doc Fellowship) as well as the ICER in Turin for a fellowship to work with Italian data. I am very grateful for the support of my family and my friends. Looking back over the last years I realise their immense importance as they have always been the light house and the save haven in my life. You make my life so wonderful. I thank my father who saw the beginning of this research project, but not the end. His natural belief in me and his fatherly pride was always a source of stamina although I hardly realised it. This book is dedicated to him in loving memory. xi