Chinese Manufacturing Suppliers’ Upgrading in Global Value Chains

Abstract

This research investigates the institutional challenges faced by Chinese manufacturing suppliers and their corresponding strategic responses through an institutional theory lens. The empirical research is based on a multiple case study involving nine case companies of three company size categories in the Chinese nonwoven fabric product industry. Data were collected over a period of three years from 2015 to 2017. This paper identifies three categories of institutional challenges, i.e., macro-institutional challenges, meso- institutional challenges, and micro-institutional challenges, faced by Chinese suppliers. Furthermore, it identifies the strategic responses undertaken by these companies in response to the above challenges, i.e., economic upgrading, environmental upgrading, and social upgrading, which in turn are associated with the companies’ size and level of maturity in upgrading practices. Finally, a maturity framework is developed with five positions that reveal a four-stage upgrading trajectory and strategic changes on the trade- off between institutional efficiency and legitimacy. As most extant research on the phenomenon of sourcing from China approaches it from the viewpoint of global buyers, this research examines the phenomenon from the viewpoint of Chinese suppliers. Through applying the theoretical lens of institutional theory to investigate GVC upgrading, this study contributes to the literature streams on both GVC and institutional theory.