This article builds a theoretical framework to help explain governance patterns in global value chains It draws on three streams of literature ‐ transaction costs economics, production networks, and technological capability and firm-level learning ‐ to identify three variables that play a large role in determining how global value chains are governed and change These are: (1) the complexity of transactions, (2) the ability to codify transactions, and (3) the capabilities in the supply-base The theory generates five types of global value chain governance ‐ hierarchy, captive, relational, modular, and market ‐ which range from high to low levels of explicit coordination and power asymmetry The article highlights the dynamic and overlapping nature of global value chain governance through four brief industry case studies: bicycles, apparel, horticulture and electronics

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The governance of global value chains

/pdf/the-theory-of-industrial-organization-19bejph0ej.pdf

The Theory of Industrial Organization

Humphrey J. and Schmitz H. (2002) How does insertion in global value chains affect upgrading in industrial clusters?, Reg. Studies 36, 1017–1027. What is the scope for local upgrading strategies where producers operate in global value chains? The literature on industrial clusters emphasizes the role of inter-firm co-operation and local institutions in enabling upgrading. The value chain literature focuses on the role of global buyers and chain governance in defining upgrading opportunities. This paper argues that clusters are inserted into global value chains in different ways, and that this has consequences for enabling or disabling local-level upgrading efforts. It pays particular attention to the position of developing country firms selling to large, global buyers.

How does insertion in global value chains affect upgrading in industrial clusters

We are grateful to colleagues in both our individual institutions and in the Spreading the Gains from Globalisation Network (particularly those participating in the Bellagio Workshop in September 2000) for discussions around many of the issues covered in this Handbook and also to Lest anyone feel overwhelmed by the depth of detail in this Handbook, especially with respect to the sections on methodology, we would like to emphasise at the outset: this Handbook is not meant to be used or read as a comprehensive step by step process that has to be followed in order to undertake a value chain analysis. We know of no value chain analysis that has comprehensively covered all the aspects dealt with in the following pages, and certainly not in the methodologically sequential Handbook set out below. Indeed to try and do so in this form would be methodologically overwhelming, and would certainly bore any reader of such an analysis to tears. Our intention in producing a Handbook on researching value chains is to try and comprehensively cover as many aspects of value chain analysis as possible so as to allow researchers to dip in and utilise what is relevant and where it is appropriate. It is not an attempt to restrict researchers within a methodological strait-jacket, but rather to free them to use whatever tools are deemed suitable from the variety presented below. The text below attempts to cover the broad terrain of researching value chains, and hence spans the contextually relevant, the conceptually abstract, the methodologically particular, and the policy relevant. Part 3 on Methodology can therefore be read in a number of ways: as a form of expanding the conceptual issues raised in Part 1 on Basic Definitions and Part 2 on Analytic Constructs; or as an array of possible technical tools, some of which may be usefully adopted and methodologically applied either partially or fully depending on circumstances; or whole parts can be skipped and not read at all. Indeed, apart from using it as a research tool, it is not even our intention that everyone should read the Handbook in the way one would go through a (good) novel – sequentially, and from cover to cover. We therefore urge readers to use their common sense and treat it as one does an edited book, or researchers to read it in the same way one reads a mechanics manual for finding …

A handbook for value chain research

I argue that the linkage-formation propensity of firms is explained by simultaneously examining both inducement and opportunity factors. Drawing upon resource-based and social network theory literatures I identify three forms of accumulated capital—technical, commercial, and social—that can affect a firm’s inducements and opportunities to form linkages. Firms possessing these capital stocks enjoy advantages in linkages formation. However, firms lacking these accumulated resources can still form linkages if they generate a radical technological breakthrough. Thus, I identify paths to linkage formation for leading as well as peripheral firms. I test these arguments with longitudinal data on technical collaborative linkages in the global chemicals industry. Copyright © 2000 John Wiley & Sons, Ltd.

The duality of collaboration : Inducements and opportunities in the formation of interfirm linkages

An increasing number of developing countries engage in contract manufacturing for a decreasing number of global buyers. This constellation characterises many labour intensive export sectors. The positioning of developing country enterprises in such buyer-driven chains is central to research concerned with identifying the winners and losers from globalisation. This study contributes to this debate by seeking answers to two questions: First, what can researchers learn from global buyers about the relative strengths and weaknesses of developing country producers; second, what can these producers learn from global buyers and what circumstances facilitate or constrain such learning.

Learning from Global Buyers

Constrained gazelles : high potentials in West Africa's informal economy

Survival and growth-oriented entrepreneurs follow qualitatively different logics. In this article we retrace the scattered previous theorization of this distinction and present a consolidated set of key characteristics of the two types of enterprises, enriched by our own observations in the field. Our main purpose is to typify the different rationalities of the two groups of entrepreneurs. Second, we argue that because most existing interventions are based on the implicit assumption that all entrepreneurs are growth-oriented, they often fail to address the specific needs of survivalists. Finally, we outline an intervention rationale more attuned to the logic of survival entrepreneurs. Les entrepreneurs axes sur la survie suivent des logiques qualitativement differentes de ceux dont l′objectif est la croissance economique. Dans cet article nous revenons sur la theorisation deja vaguement esquissee de cette distinction et presentons un ensemble consolide des caracteristiques cles des deux types d′entreprises, en nous appuyant sur nos propres observations de terrain. Nous cherchons, en premier lieu, a caracteriser les logiques des deux categories d′entrepreneurs. Puis, nous montrons que les interventions sont generalement fondees sur l′hypothese implicite que tous les entrepreneurs sont axes sur la croissance. De ce fait, celles-ci repondent mal aux besoins specifiques des entreprises axees sur la survie. Enfin, nous decrivons une approche d′intervention plus en lien avec la logique des entrepreneurs qui sont axes sur la survie.

https://link.springer.com/content/pdf/10.1057%2Fejdr.2011.61.pdf

‘Helping a Large Number of People Become a Little Less Poor’: The Logic of Survival Entrepreneurs

Agra: An Old Cluster Facing the New Competition

Social capital is a contested concept, embraced by the mainstream as “the missing link” in economic analysis. This article suggests a way to turn it into a more meaningful understanding of how soci...

Peter Knorringa

Papers

Learning from Global Buyers

Constrained gazelles : high potentials in West Africa's informal economy

‘Helping a Large Number of People Become a Little Less Poor’: The Logic of Survival Entrepreneurs

Agra: An Old Cluster Facing the New Competition

Unpacking social capital in Economic Development: How social relations matter