Global value chain governance. A multinational enterprise capabilities view

Anthony Goerzen & Ari Van Assche (2021)

In: Mellahi, Kamel/Meyer, Klaus/Narulah, Rajneesh/Surdu, Irina/Verbeke, Alain (eds.) Oxford handbook of international business relations. Oxford: Oxford University Press, chapt. 21.

Introduction. “The question of global value chain (GVC) governance has gained widespread attention in recent years (Gereffi  Lee, 2016; Laplume, Petersen,  &  Pearce, 2016; Magnani,  &  Zucchella,  &  Strange, 2o19; Taglioni  Winkler, 2016). The multinational enterprises (MNEs) that lead GVCs have come under significant pressure from key stakeholders such as governments, non-governmental organizations (NGOs), trade unions, and consumers to improve labor and environmental standards, particularly among their developing country supplier factories. Through both hierarchical and collaborative means, lead MNEs have taken various tentative steps to establish and maintain global standards along their GVC, including the participation in third-party certification arrangements, equity-oriented programs, and the promotion of internal corporate social responsibility (CSR) standards. Yet, to date, the evidence is mixed as to whether these measures have actually led to the envisioned economic and social upgrading that was intended (Locke, Amengual  &  Mangla, 2009; Lund-Thomsen  &  Lindgreen, 2014; Ruwanpura  Wrigley, 201). The mixed success of a lead MNE in diffusing higher standards throughout its GVC highlights the need to develop a better theoretical understanding of the factors that influence that firm’s ability to influence economic and social outcomes among its GVC partners. In this chapter, we tackle this question by discussing the key sources of dis­ agreement between lead firms and other GVC members. Further, we explain why lead firms have been limited in their ability to address these disagreements with their GVC partners. We then build on both dynamic capabilities theory (Teece, Pisano  &  Shuen,  1997; Teece, 2007) and convention theory (Diaz-Bone, Didry  &  Salais, 2015; Gibbon, Bair  &  Ponte, 2008; Ponte  Gibbon, 2005; Thévenot, 2015) to discuss how lead MNEs  can build routines that allow them to more effectively orchestrate social upgrading in GVCs. We explore this concept by focusing on the diffusion of CSR practices as one important way of understanding the nature of GVC governance.” (p. 421-422)

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