The Nature of the Firm in Global Value Chains

Abstract

Introduction The influence of ‘lead firms’ in the organization and structure of global value chains (GVCs) has been extensively addressed; however, less attention has been paid to firms’ permanent imperative to deal with the challenges and opportunities offered by nature. In this chapter, we draw out how relations of production inside of firms and relations of exchange among firms shape, and are shaped by, nature. Through a critical GVC analysis, we reclaim the essential – and often overlooked – focus on production as a fundamental moment in capitalism. We keep firms at the centre of the analysis by exploring chain governance and firm–nature dynamics. We find that the emphasis on inter-firm governance in GVC literature has generated an analytical focus on the sphere of circulation (i.e., exchange relations and the politics of buying and selling), to the neglect of the political-economic and ecological dynamics at points of production . We show that ecological dynamics are a driver of firm strategy across all nodes of value chains. Using the lens of nature deepens and broadens our understanding of firms and firm power in GVCs and enhances chain researchers’ explanations of the relationships among firms and the socio-economic outcomes of their activities. Our starting point is that global value chains, the firm and natural resources cannot be separated. The original material basis of most production involves the appropriation, transformation and exchange of natural resources by labour. This includes physical and intangible commodities, such as services and the products of immaterial labour for which natural resources still provide the means of production (electricity, keyboards), conditions of production (buildings, roads) or the conditions of reproduction (food, housing, transport). As put by Gavin Bridge (2009: 1218), ‘we live in a material world in which “the economy” is fundamentally (although not exclusively) a process of material transformation through which natural resources are converted into a vast array of commodities and by-product wastes’. Despite this, the intersections between firms and natural resources are an under-researched dimension of analyses using the global value chain (GVC) and global production network (GPN) frameworks (Smith and Mahutga, 2009). In GVC and GPN literature (from here, ‘GVC’), analyses rarely look at the strategies firms employ to produce raw materials and even more rarely at firms’ original appropriation of nature and attendant social relations.