Beyond Typologies of Global Value Chain Governance: the Accumulation of Technological Capabilities

Zhenming Sun,Guanghui Zhang

doi:10.5539/ijbm.v4n1p32

Abstract

Global value chains (GVC) offer opportunities and challenges for business developing in low income economies. The existing literature on GVC mainly focuses on two niches: governance and upgrading. The global buyers play as ‘lead firm’ in GVC context. However, the issues of upgrading activities at firm-level remain largely uncovered by the GVC literature. From the perspective of the literature on technological capabilities, this paper presents a framework to examine the levels of upgrading activities of producers in low income economies in the GVC quasi-governance structure.

Highlights

January, 2009 there are relationships characterized by a remark asymmetry of competence and power distribution between lead firms and subordinate firms in the chain
Coordination in the context of global value chains can be occur a variety of models; the advantage of lead firm within global value chains is based on their strong marketing power and their positioning in chain niches; Global value chains (GVC) governance indicate the capability of one in the separate segments of the chains to affect or determine the survival of other businesses along the chains, and; Initially, the structures of GVC structure emerge in answer to two key demands
The GVC approach accentuates the natures of the relationships among various factors involved in the value chains, and their implications for business growth

Summary

Introduction

Global value chains offer opportunities and challenges for business development in low-income economies. With the reference to current approach, Humphrey and Schmitz (2000) discuss the prospect of upgrading related to the mode of GVC governance They suggest that insertion into a quasi-hierarchical chain offers very favourable conditions for suppliers to process and upgrading, but hinder functional upgrading. The global buyers play a significant role for producers in low income economies to insert into global economies For this reason, the framework of evaluation of vertical dimensions of upgrading activities should focus on the context of quasi hierarchy governance structure. It illustrates each stage in the accumulation of local producers under the support of global buyers, and lists the activities most characteristic of each level

Conclusions and implications for further research

Replication of product specification and designs