Upstream complex power relationships and firm’s reputation in global value chains

Abstract

Previous research into the upstream supply chain governance mechanisms that focal firms use with suppliers to improve their ethical performance and reputation is incipient. The original contribution includes the development of empirical model using global value chain and transaction cost perspective by exploring the complex power relationship between upstream supply chain governance mechanisms (Modular, relational and captive), value co-creation efforts, sustainable ethical performance and reputation through an original survey of companies from an emerging economy – India. The results indicate that, supplier modular and relational governance mechanisms have an impact on suppliers' ethical performance, supply chain performance and reputation. Additionally, suppliers' ethical performance plays a mediating role between governance mechanisms in upstream supply chain networks and the supply chain performance and reputation of focal companies. In agreement with the literature, focal firms' sustainability-related value co-creation activities were found to positively influences the ethical performance of both suppliers' and focal firms’ reputation. This provides implications for practitioners which was previously unknown with respect to food supply chains.