Global Value Chain Governance Research Articles

Restructuring toward a modernized agro-food value chain through vertical integration and contract farming: the swine-to-pork industry in Vietnam

PurposeRestructuring swine and pork value chain plays important role in agriculture reformation of Vietnam, the top global pork-lover and swine producer worldwide. This study aims at investigating the modernization of its entire swine-to-pork value chain.Design/methodology/approachThis study combines the secondary data and primary data. The secondary data included the publications, procurements, databases from both worldwide and in Vietnam. Primary data comprised the results from field-trips in March 2018 and February 2019 that used in-depth interviews with representative key persons of involving stake-holders.FindingsThe prevalence of contract farming, vertical expansion and conglomerate mergers mainly boost vertical coordination in the industry, which creates three hierarchy paradigms of governance named the full- and semi-vertically integrated model, and the formal coordinating relation institution. Consequently, consolidation has occurred and lead the swine and pork value chain toward modernization.Research limitations/implicationsThis study generalizes its first trends of the modernization of the swine-to-pork industry instead of provides its concreted impacts to the involved stakeholders.Social implicationsSwine and pork industries retain historical and socio-political issues in Vietnam. Social problems are going to raise if number of traditional swine producers are failed in the competition from the equipped large-scale producers leading by the giant vertically-integrated contractors.Originality/valueThis study provides the empirical synthesis of the vertical coordination in entitle swine and pork value chain of Vietnam through combining the view of the strategic alliance of the firm and global value chain governance.

Digitalization and the geographies of production: Towards reshoring or global fragmentation?

The relationship between digitalization and the governance and geographies of global value chains has not been explored systematically. This contribution discusses how digitalization affects the variables that determine the localization of manufacturing, i.e. the substitution of work through automation, the deepening of the customer–producer relationship, the rationalization of distribution through digitalized logistics networks, and the increased modularization of supply chains through standardization and ‘platformisation’. The results of the theoretical exploration defy expectations of a straightforward ‘reshoring’ of production through the combined effects of automation and benefits through a co-localization of companies within their target markets. Tendencies that would support a stronger integration of production in advanced economies are instead being undercut by ongoing countertrends towards fragmentation. The contradictory tendencies of a geographical integration of manufacturing and target markets on the one hand and geographical fragmentation through sophisticated supply-chain organization on the other will affect the technologically facilitated processes of value chain restructuring in a sector-specific manner.

An Anthropological Reimagining of Contract in Global Value Chains: The Governance of Corporate-community Relations in the Colombian Mining Sector

Abstract This contribution introduces an ant’s rather than a bird’s eye view on the legal institution global value chains (GVCs) have become. An ant’s view makes the abstract construct of the GVC tangible but at the same time reveals its unclear boundaries – where do GVCs begin and end? The article reflects on the role of contracts and contract law in the drawing and subsequent regulation of boundaries. It takes the reader into Colombia’s globalised natural resource sector where complex contractual constructs determine the relationships between firms, the state and local communities. These contractual constructs, together with the law, corporate codes of conduct and international standards that regulate them, create close and intertwined boundaries between the firm and its societal environment. In that closeness, the mining firm assumes and voices far-reaching responsibilities for the economic and social well-being of local communities. In regard to those corporate social responsibilities, contract law could and should play a pivotal role in the societal governance of GVCs.

Addressing Governance Gaps in Global Value Chains: Introducing a Systematic Typology

Multinational enterprises (MNEs) dominate the governance of global value chains (GVCs), such that according to the concept of political corporate social responsibility (PCSR), they are responsible to address governance gaps throughout the chains, even at the level of their independent suppliers. In practice, MNEs often struggle to cope with the complexity of these governance gaps, and PCSR does not provide a clear definition nor offer guidance for how to analyze and address them. By adopting the notion of governance mechanisms from GVC literature, this study proposes a more nuanced view, in which governance gaps result from inactive, ineffective, or inequitable governance mechanisms adopted by relevant actors, rather than a complete absence of governance. MNEs, through their governance mechanisms, commonly create governance gaps. This study distinguishes different types of governance mechanisms to create a typology of governance gaps, such that it contributes to the literature on PCSR by offering a more refined understanding of governance gaps, along with a means to identify mechanisms to address them. Furthermore, it contributes to the literature on GVCs by defining governance-related terms and adding an ethical perspective on MNEs’ global business conduct. To illustrate the typology, this article presents the case of low wages (below a living wage) for workers in the textile industry and efforts by H&M to deal with this governance gap.

The multiplicity of international corporate social responsibility standards

Purpose This paper aims to examine the multiplicity of corporate social responsibility (CSR) standards, explaining its nature, dynamics and implications for multinational enterprises (MNEs) and international business (IB), especially in the context of CSR and global value chain (GVC) governance. Design/methodology/approach This paper leverages insights from the literature in political science, policy, regulation, governance and IB; from the own earlier work; and from an inventory of CSR standards across a range of sectors and products. Findings This analysis’ more nuanced approach to CSR standard multiplicity helps distinguish the different categories of standards; uncovers the existence of different types of standard multiplicity; and highlights complex trends in their evolution over time, discussing implications for the various firms targeted by, or involved in, these initiatives, and for CSR and GVC governance research. Research limitations/implications This paper opens many avenues for future research on CSR multiplicity and its consequences; on lead firms governing GVCs from an IB perspective; and on institutional and market complexity. Practical implications By providing overviews and classifications, this paper helps clarify CSR standards as “new regulators” and “instruments” for actors in business, society and government. Originality/value This paper contributes by filling gaps in different existing literatures concerning standard multiplicity. It also specifically adds a new perspective to the IB literature, which thus far has not fully incorporated the complexity and dynamics of CSR standard multiplicity in examining GVCs and MNE strategy and policy.

Gender and governance of global value chains: Promoting the rights of women workers

AbstractPrivate governance channelled through social compliance programmes and gender initiatives of multinational companies have had limited impact in tackling gender discrimination in global value chains (GVCs). The United Nations Guiding Principles on Business and Human Rights (UNGPs) provide a public–private governance framework to address human rights globally, including gender equality. This article considers whether the UNGPs can provide a more effective governance framework for addressing women workers’ rights in GVCs. It argues that interlayered forms of governance (involving public, private and social actors) are critical in addressing gender discrimination in GVCs and advancing a gendered approach to human rights due diligence.

Firms' efficiency and global value chains: An empirical investigation on Italian industry

AbstractThis paper investigates the effect of participation in global value chains (GVCs) on firms' efficiency and explores heterogeneity in this impact across different firms, according to GVC governance, positioning in the chain and time length of participation. Our analysis takes advantage of survey data providing information on involvement in GVCs for a large set of Italian industrial SMEs between 2008 and 2012. We employ Data Envelopment Analysis (DEA) to retrieve a measure of firms' technical efficiency (i.e., DEA efficiency scores) and estimate the impact of involvement in GVCs on firms' efficiency through propensity‐score matching techniques and truncated regression. Our results show that participation in GVCs induces significant efficiency premia, especially for suppliers, with stronger effects in the case of relational modes of participation.

Governance and Upgrading in GVCs: Why does Embeddedness Matter

Purpose – [This study’s primary objective is to propose actors embeddeness as a source for governance and upgrading within the GVC (Global Value Chain) framework.] Design/methodology/approach – [This study uses co-word analysis to study GVC scientific production. The analysis is conducted using the controversies mapping from the Theory of Scientific and Technological Change (TSTC)] Findings – [Two theoretical gaps were pointed due to GVC theory evolvement. First, that governance and upgrading have more than one definition and second that value and network are upgrading strategies. This article proposes the use of Montenegro e Bulgacov (2014) framework to translate governance and upgrading respectively as network governance and strategic outcomes. Embeddedness matters because is a stable theoretical concept (Granovetter, 1985) that can be a link between network governance and strategic results.] Originality/value – [The study main contribution is to propose a relativist embeddeness sourcing governance and upgrading. The second contribution is to present a framework, ANT based, modeled to study governance and its strategic results.]

GLOBAL VALUE CHAIN GOVERNANCE AND RELATION BETWEEN LOCAL ACTORS IN THE BURUNDIAN TEA SECTOR

In the context of globalization, the success of a firm to sell its products on international and regional markets depends on the type of governance exercised in a given sector. This article mobilizes a theoretical framework of global value chain governance to analyze the type of governance exercised in the tea sector in Burundi. A qualitative analysis of data from a survey of 120 small tea farmers in the Ijenda and Teza areas reveals that control and coordination in the sector is ensured by captive governance. In addition, a stagnation of the price of the green leaf tea over a decade generates a lack of interest in the tea farming out on small farming areas. Only 25% of small tea farmers in Ijenda and 36% in Teza want an extension.

Beyond market, firm, and state: Mapping the ethics of global value chains

AbstractThe growth of global value chains (GVCs) and the emergence of novel forms of value chain governance pose two questions for normative business ethics. First, how should we conceptualize the relationships between members of a GVC? Second, what ethical implications follow from these relationships, both with respect to interactions between GVC members and with respect to achieving broader transnational governance goals? We address these questions by examining the emergence of transnational eco‐labeling as an increasingly prominent form of GVC governance that is redefining the relationship between nominally independent firms. On the first question, we argue that GVCs occupy a middle ground between intrafirm and interfirm transactions, thereby posing a challenge to theoretical frameworks that attempt to apply ethical standards based on transaction types. On the second question, we argue that this unique institutional status leads to a range of novel ethical considerations and dilemmas for GVC members. Lead firms, their suppliers, and third‐party standard‐setters all confront new ethical quandaries when third‐party eco‐labeling is introduced to a GVC. The nature of these quandaries means that, while GVCs may be well‐positioned to serve as instruments of transnational governance, they are frequently not well‐oriented to do so. Our analysis marks an initial attempt to map the ethical considerations that apply to members of a GVC, and in doing so, places the literature on normative business ethics and transnational governance in a closer conversation.

Editorial – Business and human rights in global value chains

Ideas about the social responsibility of business are in flux. The foundations of ‘Corporate Social Responsibility’ have been transformed in recent years by normative developments in the field of business and human rights. The latter norms are a direct response to the evolution of transnational modes of production, such as global value chains coordinated by multinational corporations. This special issue explores these attempts to advance respect for human rights in the context of business activity in global value chains. The special issue consists of an introduction and four articles which describe and interrogate some of the principle changes currently taking place in global value chain governance as these relate to human rights: the impact on worker power of the rise of larger emerging-market multinationals in value chains traditionally dominated by global brands; the limits of monitoring and transparency mechanisms as effective regulators of human rights in supply chains; the role of contracts in ensuring respect for human rights; and the possibility to use the courts to enforce respect for rights across fragmented production networks.

Power in global value chains

Power has been a foundational concept in global value chain (GVC) research. Yet, in most GVC scholarship, power is not explicitly defined and is applied as a unitary concept, rather than as having multiple dimensions. Clarifying the concept of power has become particularly urgent in recent years as GVC research has proliferated beyond dyads of transacting firms or firm-state linkages and incorporated other stakeholders and mechanisms such as NGOs, labor unions, standards, norms and conventions. In this article, we propose a typology for the varied meanings and usages of power in GVC governance. We delineate two principal dimensions: transmission mechanisms – direct and diffuse; and arena of actors – dyads and collectives. Combined, these two dimensions yield four ideal types of power in GVC governance: bargaining, demonstrative, institutional and constitutive. We offer brief illustrations of these four types of power and provide an agenda for further research in the field.

Power and Export Sophistication in Buyer-Supplier Relationships: Insights from Colombian Customs Data

This paper investigates the association between buyer-supplier international trade relationships and supplier’s product upgrading. We proxy the suppliers’ upgrading with a measure of product sophistication. We first propose a measure of power in the trade relationship, combining the dependence of each firm on the trading partner and their market shares. Using transaction data from Colombia, we next estimate if the measure of power relationship predicts a supplier’s export sophistication, the probability of adding a new product in the trading relationship, and that of increasing export sophistication. We find that suppliers that are highly dependent on buyer’s imports are more likely to fall into a specialisation trap in low sophistication products. Buyers with large market shares trade in sophisticated products, therefore with little margin for upgrading; suppliers with large market shares are more likely to introduce new products, but trade pairs where the buyer depends on the supplier are more likely to upgrade. We further test whether these relationships hold across different destination countries, finding in particular that buyers dominating the market in the US tend to import low-sophistication products and make it harder for suppliers to upgrade. We contribute to the recent literature on buyer-supplier relationships by explicitly including a measure of power into our analysis. In doing this, we also offer further support and complement the qualitative evidence put forward by the literature on governance in global value chains (GVCs).

A pragmatist perspective on sustainable global value chain governance – the case of Dr. Bronner’s

PurposeThis paper aims to highlight the challenges and opportunities of sustainable global value chain governance, it demonstrates strong theoretical deficits in this field and offers new pragmatist conceptual perspectives.Design/methodology/approachThe empirical analysis is based on document analyses, 47 expert interviews and on field observations in Ghana, Africa.FindingsBased on an in-depth analysis of a US firm operating a fair trade value chain in an intercultural environment, the authors show that universalistic value chain-oriented governance instruments often fail because of strong institutional and cultural distances. Against the prevailing strategies of top-down management, the authors suggest a more bottom-up, pragmatist and collaboration-based approach to sustainable global value chain governance.Research limitations/implicationsThe results of an in-depth case study are not generalizable. Instead, they provide holistic insights into a so-far insufficiently examined field and an empirical fundament for further research on sustainable governance in global value chains. In particular, research on pragmatist, collaborative, dialogue based, bottom-up approaches of sustainable value chain governance will be of great value to further theoretical development of this field.Practical implicationsThis study is relevant to researchers and practitioners in the field of sustainable value chain governance. It reveals several misunderstandings about the effectiveness and impacts of sustainable governance in less developed countries and thus builds a foundation for better and more effective problem-solving approaches in international sustainable management activities.Social implicationsNontransparent supplier networks and (illegal) sub-contracting, as well as the strong influences of institutional, cultural and sub-cultural factors, make responsible value chain management a challenging task for any firm with international value creation activities. This leaves workers in local factories vulnerable to infringements of their fundamental human rights and the environment unprotected against long-lasting damages. Addressing these challenges and developing new solutions, therefore, can have strong impacts on the lives of workers in international supply chains.Originality/valueThe authors contribute, first, a differentiated empirical description and analysis of a sustainable value chain approach in a less developed country in Africa. Second, using an example of the field study, the authors highlight limitations of value chain-related governance theory based on a field study by illustrating the challenges and barriers and a lack of existing concepts concerning effective sustainable governance in global value chains. Third, the authors show different managerial responses to these cultural and institutional challenges between universalism and relativism, and, fourth, the authors suggest a more collaborative, bottom-up and pragmatist approach to sustainable value chain governance.

Tourism intermediaries and innovation in the hotel industry

ABSTRACTThis paper examines the influence of tourism intermediaries on innovation in SMEs in the hotel industry from the perspective of the global value chain approach. The paper contributes towards characterizing the changing patterns of governance in the tourism global value chains. In addition, it provides useful information about SMEs’ innovation for tourism destination managers. The dataset for this study comes from a survey of hotel SMEs in Spain. The results indicate that dependence on tour operators leads to lower levels of marketing innovation, while dependence on on-line travel agencies stimulates it. Dependence on traditional travel agencies is observed to be associated with less product innovation. Overall, dependence on tourism intermediaries implies lower autonomy in a hotel's determination of rates and margins, but can favour innovation by means of stimulating the introduction of information and communication technologies and quality standards.

When the State Brings Itself Back into GVC: The Case of the Indonesian Palm Oil Pledge

AbstractDuring the last decades the role of the state in governance of Global Value Chains (GVC) for sustainability has been largely ignored. This paper contributes to the re‐centering the state in GVC analysis. We provide an analysis of the rise and fall of the Indonesian Palm Oil Pledge (IPOP). IPOP is a commitment of some biggest palm oil companies towards zero‐deforestation in Indonesia, but was dissolved after serious critique from the Government of Indonesia (GoI). Our question is: why and how did the GoI decide to put an end to the IPOP? We show that the GoI orchestrated the IPOP's demise by framing it as a danger to smallholder development, as not acknowledging public standards, and as an illegal cartel. The GoI's counter‐framing re‐asserts its sovereignty over producers, rule‐making and economic organization. We argue that when a state perceives that when non‐state‐driven GVC governance threatens its sovereignty over producers, rule‐making and economic organization, it will engage in discursive power struggle with non‐state actors. More specifically, collective action of non‐state actors can particularly trigger a state to engage in discursive power struggle with non‐state actors.

The Trade-Labour Nexus: Global Value Chains and Labour Provisions in European Union Free Trade Agreements

Labour standards provisions contained within the European Union’s (EU) free trade agreements (FTAs) are a major iteration of attempts to regulate working conditions in the global economy. This article develops an analysis of how the legal and institutional mechanisms established by these FTAs intersect with global value chain governance dynamics in counoutries with contrasting political economies. The article formulates an original analytical framework to explore how governance arrangements and power relations between lead firms in core markets and suppliers in FTA signatory countries shape and constrain the effectiveness of labour provisions in FTAs. This analysis demonstrates how the common framework of labour provisions in EU trade agreements, when applied in a uniform manner across differentiated political-economic contexts, face serious difficulties in creating meaningful change for workers in global value chains.

When Workplace Unionism in Global Value Chains Does Not Function Well: Exploring the Impediments

Improving working conditions at the bottom of global value chains has become a central issue in our global economy. In this battle, trade unionism has been presented as a way for workers to make their voices heard. Therefore, it is strongly promoted by most social standards. However, establishing a well-functioning trade union is not as obvious as it may seem. Using a comparative case study approach, we examine impediments to farm-level unionism in the cut flower industry in Ethiopia. For this purpose, we propose an integrated framework combining two lenses, namely a vertical one (governance and structure of global value chains) and a horizontal one (socio-economic context). We identify 10 impediments that point to three major dimensions contributing to unionisation. These three dimensions include awareness of and interest from workers, legitimacy of trade unions, and capacity of trade unions to act. Furthermore, our results suggest that private social standards may, in certain cases, be counterproductive for the efficient functioning of trade unions. Although we argue that there is no ‘quick fix’ solution to weak workplace unionism at the bottom of global value chains, we stress the importance of considering the dynamics of, and interactions between, the impediments when designing potential support measures that mitigate negative impacts.

Trade costs, global value chains and economic development

Abstract This paper develops a model to study the impact of trade costs on developing countries’ industrialization when sequential production is networked in global value chains (GVCs). In a two-country setting, a decrease in trade costs of intermediates is associated with South joining and moving up the value chain and both North and South experiencing a welfare improvement. The wage gap between North and South first increases and then decreases. Extending the model to a multi-country setting, I show that reduced trade frictions lead to South countries joining GVCs due to wage differentials and low trade costs. This increases the wage in North but may decrease the wages of South countries that are already part of the network. Moreover, South countries that join tend to be regionally clustered. The model provides a first look at GVCs from the development angle, and raises policy questions regarding the governance of GVCs.

Rents, Power and Governance in Global Value Chains

This paper addresses the generation of rents and the distribution of gains in the global operations of governed Global Value Chains (GVCs) and seeks to provide an architecture for analyzing the governance of GVCs. It distinguishes between four sets of rent—gifts of nature; innovation rents; exogenously defined rents; and market power—and three spheres of governance—setting the rules -“legislative governance”; implementing the rules -“executive governance”; and monitoring rules and sanctioning malfeasance -“judicial governance.” The exercise of governance power in GVCs over the generation, protection and appropriation of rents is considered though the lens of four sets of key GVC stakeholders—the corporate sector, civil society organizations, the nation state and supranational institutions. This general analysis is given flesh through three case studies: food-safety standards in GVCs; taxation policies and competition policies. In these sectors, the corporate sector is generally much more effective in governing rent generation and appropriation in the global operations of GVCs than are the three sets of non-corporate stakeholders. From this observation we offer a hypothesis that the capacity of non-corporate stakeholders, including national states, to govern GVCs is contingent upon the extent to which this coincides with the interest of the corporate sector. However, as noted, this balance of power between private and non-corporate actors is a contested terrain and dynamic in nature.