The Market in the Factory

In-house outsourcing, where activities are maintained under the same roof, is a major organizational innovation. This paper conducts in-depth analysis of ‘in-house’ outsourcing strategies at Fiat Auto in Italy. It grasps the complex nature of the implications of such a strategy for the organisation of production and social and industrial relations by providing a rich material for such analysis. The Fiat case shows that the implementation of outsourcing increased the complexity of inter-firm contractual relationships which led to the development of a strategy of co-ordination on both organisational and labour relations matters. Whereas the study illustrates the emergence of four different organisational patterns of outsourcing, employment relations are not affected by diverse paths of market contracts. However, an increase in the complexity of labour relations emerges as the result of the fragmentation of labour which led to ‘active’ union responses.