Analyze how the two key organizations in this case (Nokia and the supplier) are striving for legitimacy.
The activities of an organization are legitimate as long as the society accepts them. This is why, in order for organizations to keep going, they must strive for legitimacy, and they must make their activities appropriate, coherent and attached to norms, values and beliefs so the society will admit them. Due to the fact that social responsibility is one of the key elements that the society is looking for in a company nowadays, and through mimicry with other companies in order to strive for legitimacy, Nokia tried to demonstrate not only to their investors and stakeholders but also to the society their “social responsibility image” showing their concern about ethical working conditions of their suppliers in China.
Through an extensive research about the conditions of the supplier, Nokia realized the supplier worked unethically with its employees in China. Nevertheless, Nokia never put direct pressure into the supplier about this; instead, Nokia used a subtle way to express its concerns about the situation to the managers of the supplier. While the team of Nokia exposed to the managers of the supplier their concerns, the managers realized that they had to adopt better practices in order to be compatible and work with Nokia. We can see here a form of coercive isomorphism fighting for legitimacy not only from the Nokia perspective but also the supplier. Nokia used formal and informal pressures, persuading the supplier in China to change the way they were treating to their employees. This was not also Nokia fighting for its legitimacy but it was also a way for the supplier to realize how important it was that they changed the way they were treating their employees in order to continue with the contract with Nokia and for fighting about legitimacy at the eyes of the society. As Paul DiMaggio and Walter Powell said: “coercive isomorphism may be more subtle and less explicit”. Through coercive pressure and a subtle persuasion over the supplier, Nokia let the supplier know their concerns about the situation.
At the same time, the supplier´s bigger concern was realizing that Nokia had a video and that they did not want it to be exposed to the society. The supplier knew really well that they would lose legitimacy because the video indicated the way they operated: violating Chinese law, paying under minimum wage and offering unfair and unsafe working conditions to their employees.
This video lets the viewers of the documentary to think if Nokia was doing this because they were really worried about the conditions of the employees in the supplier in China or because they wanted to maintain their “social responsibility image” and strive for legitimacy in the society showing that they are at least trying to improve working conditions in China.
Since social responsibility has become an important key for companies to strive for legitimacy, many of them are following in a subtle way, the path of isomorphism.
Is the approach taken by Nokia an effective way of diffusing sustainability criteria?
In an era of economic globalization, the states have lost some control in norms and regulations, it is the private market based nonstate authorities the ones that “have gained significance because the state has lost its effectiveness in areas that the “free market” has never been able to provide adequately, such as security, monetary stability, law enforcement…” Nokia, as a representation of the private sector, has started to make a precedent about security working conditions of the employees of their supplier in China; raising awareness of the unethical conditions in which employees are working there. Nokia made an observation into conditions that sometimes the government fail to see, understand and sanction.
Part of diffusing sustainability criteria is the social system integrity and I think Nokia has made a good start about it. This sustainability criteria is linked with the concepts of “human capital which comprises the abilities of individual people to do productive work and therefore includes physical and mental health, motivation and a constructive and cooperative attitude. It also involves social / organizational capital which comprises the social structures and institutions which enable individuals to maintain and develop their human capital and be productive” 
Nevertheless, I think that Nokia does not take a firm position about the unethical conditions, it is too subtle and this fails for diffusing sustainability criteria. According to the UN Conference on Environment and Development (UNCED), the goal to achieve sustainable development is “to improve firms’ handling of hazardous wastes, encouraging clean production technologies and facilitating the transfer of those technologies to developing countries” If we use this statement as a metaphor for sustainable criteria in this case, Nokia is encouraging the supplier to revise the processes of their production and through it, treat its employees in a better way. Nevertheless, it fails to put more pressure to the managers of the supplier in order for them to change the human resources policies of its businesses in China. This pressure would be a though external factor for the supplier, “factors external to firms create incentives and expectations for managers, intrafirm politics influences how managers perceive and interpret external pressures and act upon them” 
I think Nokia does not take a solid position because it knows that its business is to profit through manufacturing cell phones; a component of the profits that Nokia gained over the years were based on the low costs of the parts that were manufactured by suppliers in China. Nokia knows that in order for the supplier to maintain these lower costs, the supplier must continue having this “unethical system” with their employees. As a viewer of the documentary, it is not clear if Nokia is going to give up part of these profits in order to fight for better conditions of the employees in their suppliers or if it is just a way to present to the society their awareness.
A good example for diffusing sustainability would be the implementation of certifications not only based on environmental issues like the one of 14001 but also on ethical conditions for the workers. The supplier and Nokia would be encouraged to establish their own standard ethical conditions for their workers and make it public upon request. It is important to take into account how private firms are being considered now for diffusing sustainability criteria and it does not only rely on the Government side.
This idea of Nokia to raise this awareness of “unethical conditions” and improve the research they made into the supplier can be complemented with normative mechanism. The two Nokia’s business ethics advisers, who examine the conditions at the Chinese factory, were hired through filtering of personnel in Nokia, being chosen for their studies and their education. I think that universities and professional training institutions can help to prepare even more professionals who, according to Di Maggio “are willing to define the conditions and methods of their work to control “the production of producers” (Larson, 1977)”. If these professionals have the vision to project a more sustainable production, taking into account the ethical conditions of the employees in outsourcing companies, then the normative mechanism will help to establish practicing this “ethical conditions” in suppliers in China as a common practice and soon can also become a norm for all the companies that want to work with outsourcing. Because professionals are subject to the same coercive and mimetic pressures as organizations, if organizations start to take into account really seriously “social responsibility” and developing these new norms of ethical conditions, the system itself can be more sustainable. Companies will try to reach the best practices for being social responsible through the new vision of professionals in the normative mechanism.
How could another coordination mechanism improve on this?
According to Ostrom, the coordination mechanisms almost never occurred in an isolated way, in this case it is not only about Nokia as a private firm, it is also about self organization between firms and suppliers and it is also about the function of the Government. Firms and suppliers in the market must self organize but also the Government should be the one which sanctions the unethical way in which employees are being treated.
This is why, I think three coordination mechanisms that could improve this situation are self-organization, private – interest government and government.
At this point, private companies that use outsourcing suppliers in China, through self organization, should create stronger norms and put pressure upon suppliers. Supplier companies in China should accomplish these norms in order to be hired by big companies like Nokia as its outsourcing supplier. These norms should be based on treating supplier organization’s employees in a fair way, using safety conditions for them and paying at least the minimum wage.
On one hand, companies will operate in a more “ethical way”, they will create better rules and on the other hand, Chinese government will put pressure on supply firms in their country in order for them to obey the law. At the same time, Governments will support the norms created by companies. This is how this private – interest government mechanism can help the situation.
 Di Maggio, P and Powell, 1983. The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Field. American Sociological Review.
 Susan Strange mentioned in “Clapp, Jennifer. “The privatization of global environmental governance: ISO 14000 and the developing world”. Global Governance, 1998.
 Tippet, Joanne. “Criteria for sustainability”. http://www.holocene.net/sustainability/sustainability.htm
 Clapp, Jennifer. “The privatization of global environmental governance: ISO 14000 and the developing world”. Global Governance, 1998.
 Prakash, A. Why do firms adopt beyond-compliance environmental policies? Business Strategy and Environment, 2001.