Reshaping the boundaries of the firm: global value chains and lead firm strategies

Abstract

Purpose – After tracing the development of the global value chains (GVC) approach, the chapter argues that by refocusing on the international strategies of lead firms it is possible to bring location specificity issues into play and contribute to retrieve a distinctive international content to the GVC governance theory. Design/methodology/approach – The chapter discusses the GVC governance theory, drawing from recent contributions in the field of international business (IB). Findings – Although designed to account for the rise of new inter-firm networks controlled by international lead firms, the new GVC theory of governance somehow lacks a distinct international content and, privileging transactional constraints, falls short of explicitly considering variations in lead firm structural characteristics and strategies. An alternative governance schema is then proposed, taking explicitly into account the strategic evaluations that lead firms carry out with regard to their internal resources compared to suppliers’. Research limitations/implications (if applicable) – The chapter provides the outlines of a new promising international research agenda for GVC researchers. Additional research is needed to further investigate the relation between location specificity, the strategic motives to go global and the international organisation of the value chain. Practical implications (if applicable) – The alternative governance schema proposed in the chapter aspires to represent a simple tool aimed at supporting managers in the establishment of the appropriate boundaries of the firm. Originality/value – The chapter shows that both IB research and GVC analysis could greatly benefit from reasoned cross-fertilisation.