Abstract
In this article, I extend recent macro-comparative empirical research on the developmental implications of global production networks. I draw from theories of commodity/value chains, global production networks and economic sociology to identify three contending theoretical perspectives for exactly how the developmental returns to network participants should be distributed-cooperation, exploitation and differential gains-and derive testable hypotheses for each. Adding to recent empirical advances for measuring the average network position of firms at the country level, I evaluate these hypotheses by way of dynamic panel regression models of hourly wage rates in the garment and transportation equipment industries. The results suggest that macro-sociological theories linking underdevelopment to the structure of the world-economy, as well as theories of the distribution of the gains from network participation, miss important variation at the industry level. Cooperation provides a poor account of the distribution of the gains from network participation. Instead, both industries appear to distribute the gains from network participation differentially across network participants. However, the extent of this inequality increases, and the garment industry transitions to exploitation, when global production networks become entrenched organizational logics. Variation in the distribution of the returns to network participation is explicable only by accounting for production-network governance as it varies across industries and over time. I conclude by highlighting the analytical utility to macro-comparative sociology of a turn toward the mesa-level of global industries.
Highlights
The results suggest that the returns to network participation vary critically by the governance of the production network in question
Our knowledge about the organization of global production networks in the garment and transportation industry should lead us to expect a negative association between network power and captivity
For macro-comparative scholars interested in the way in which the structure of the world-economy distributes the returns to economic behavior, the implications are clear: the answer varies across industries and with temporal changes in the organizational logic of globalizing industries
Summary
The Returns to Global Production Network Participation: Cooperation, Exploitation or Differential Gains?. Mitsubishi was happy to joint venture with Proton in the production of lower end vehicles for the Malaysian market, but resistant to the encroachment of Proton into Mitsubishi's core market of more sophisticated vehicles In addition to these relational mechanisms, exploitationists argue that the returns to captive manufacturing decline as GPNs become entrenched organizational logics, globally. If lead firm strategy revolves partially around the externalization of activities with low and/or declining returns, " the distribution of returns to network participation might be skewed toward the leading firms" (Mahutga 2014b: 32-33) This does not necessarily imply that captive firms lose in an absolute sense from their incorporation into GPNs. In short, the differential gains hypothesis suggests that both dominant and captive actors can gain from the diffusion of production networks in an absolute sense, but that leading firms will gain more than their captive counterparts
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