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Valentina De Marchi, Eleonora Di Maria and Stefano Ponte

This paper aims at enriching the literature on international business (IB) studies to include insights from Global Value Chain (GVC) analysis to better explain how MNCs…

Abstract

This paper aims at enriching the literature on international business (IB) studies to include insights from Global Value Chain (GVC) analysis to better explain how MNCs can orchestrate a global network organization. A first important contribution of the GVC literature is that it shifts the focus from single firms to their value chains, providing instruments to study how activities are split and organized among different firms at the industry level, and how MNCs can implement different governing mechanisms within a network-based setting. The GVC literature also highlights that retailers (as global buyers) often act as ‘lead firms’ in shaping the trajectories of global industries, while IB studies have so far focused predominantly on manufacturing firms. A fine-grained analysis of alternative forms of governance characterizing value chains can offer additional elements in explaining how MNCs can manage their network relationships in a global scenario. Finally, through their focus on upgrading, GVC studies suggest that knowledge flows and innovation dynamics taking place within value chains are as important as those taking place within the MNC’s organizational border. We conclude by arguing that these insights can help the IB literature to examine the challenges and opportunities MNCs face in engaging with suppliers and to explain the dynamic evolution of orchestrating global activities at the global level.

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Orchestration of the Global Network Organization
Type: Book
ISBN: 978-1-78350-953-9

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Ruth Yeoman and Milena Mueller Santos

Organizations are increasingly required to take up extended responsibilities for social and environmental outcomes, including in global value chains. To address these…

Abstract

Organizations are increasingly required to take up extended responsibilities for social and environmental outcomes, including in global value chains. To address these challenges, the organization must call upon stakeholders to engage, contribute, and innovate, and in turn, this requires the organization to have a stronger social basis for its relationships. An integrative model of global value chain management based on social cooperation shifts the focus from corporate reputation to value chain reputation, from a firm-centric view of corporate reputation to a multistakeholder conception of value chain reputation. This approach conceptualizes reputation as a dynamic and potentially vulnerable organizational feature which cannot always be managed by public relations but requires a more stable notion grounded in something more permanent in the organization’s character, history, and the quality of its relationships with stakeholders. We consider the prospects for attending to organizational integrity as a stabilizing force for its public reputation. Integrity may be adopted as a hypernorm for motivating stakeholders who share a concern for the organization’s reputation. Co-creating reputation depends upon a social bond of cooperation developed by stakeholders caring about the organization and in turn, the organization caring about its stakeholders. This socialized understanding of reputation-building is grounded in an ethic of care and manifested through joint purposes, boundary-crossing processes, collaboration practices, and a division of labor into which value chain members are integrated and brought into relation with one another. We propose a model of global value chain management that discusses organizational capabilities required for such an approach.

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Global Aspects of Reputation and Strategic Management
Type: Book
ISBN: 978-1-78754-314-0

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Article

Luciano Barin Cruz and Dirk Michael Boehe

The main purpose of this article is to identify some emergent issues when sustainability is introduced into global value chains. These issues deal with the conditions…

Abstract

Purpose

The main purpose of this article is to identify some emergent issues when sustainability is introduced into global value chains. These issues deal with the conditions under which a sustainable global value chain might gain international competitiveness.

Design/methodology/approach

An exploratory research was conducted, based on a case study. The main players of the JOBEK's Global Value Chain were identified and interviews were carried out with representatives of these players. A thematic content analysis was developed, supported by Atlas TI software, using interview data and documents.

Findings

Three main themes have emerged, which can be considered as underlying issues of an emerging concept that the authors call the “sustainable global value chain”. These are: bargaining power between the chain's players; a differentiation strategy along the global value chain; and a collaborative awareness‐building process along the global value chain.

Research limitations/implications

Although the findings result from a single case study, the characteristics of this case have allowed the authors to suggest an emergent concept for the field of international business: the concept of a sustainable global value chain. This has implications for the development of a new research field and for the introduction of some ethical concerns into this field.

Practical implications

Managers of organizations that participate in sustainable global value chains may consider the emerging concepts and their interrelationships as a guideline for strategic decision‐making. In particular, managers need to be aware of how the relationships between power balance, CSR product differentiation strategies and awareness building may influence the competitiveness of their sustainable global value chain.

Originality/value

The article proposes the emergence of a new concept that has important ethical implications for international business: the sustainable global value chain. The authors suggest that the further development of this new concept is likely to stimulate the development of an emergent research field.

Details

Management Decision, vol. 46 no. 8
Type: Research Article
ISSN: 0025-1747

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Article

Weimu You, Asta Salmi and Katri Kauppi

This paper aims to analyze the roles that African suppliers play in global value chains and the strategies that foreign firms adopt to integrate African firms into their…

Abstract

Purpose

This paper aims to analyze the roles that African suppliers play in global value chains and the strategies that foreign firms adopt to integrate African firms into their supply chains.

Design/methodology/approach

The empirical research of this paper is based on a multiple case study and on interview data of foreign buyers and their entry into African supply markets: five Finnish companies and five Chinese companies were interviewed in 2014-2015.

Findings

The authors find that Finnish firms make relatively small investments and start sourcing operations on a small scale, whereas Chinese firms are running large infrastructural projects, relying on local sourcing. African firms typically only play modest roles with little value capture in the chain, supplying raw materials and simple products. The African infrastructural and cultural context makes it challenging for foreign firms to provide local suppliers with more strategic roles in their chains, thus hindering integration of local firms into global value chains.

Originality/value

This paper is one of the first to offer a comparison of Finnish (Western) and Chinese (other emerging economy) firms’ sourcing from Africa and provides understanding of the role of African suppliers in current value chains. The authors offer a qualitative exploration of why companies invest in African suppliers and of the scope of African presence in global value chains.

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critical perspectives on international business, vol. 14 no. 2/3
Type: Research Article
ISSN: 1742-2043

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Article

Timo Seppälä, Martin Kenney and Jyrki Ali-Yrkkö

The purpose of this paper is to integrate the issue of transfer pricing and logistics costs to understand trade statistics and the operation of supply chains by using…

Abstract

Purpose

The purpose of this paper is to integrate the issue of transfer pricing and logistics costs to understand trade statistics and the operation of supply chains by using invoice-level data for a single globally sourced product of a multinational firm.Supply chains are central to understanding wealth creation and capture in an increasingly globalized production system. The increasing disaggregation and dispersal of supply chains is profoundly affecting the geographical distribution of value added, input costs and profits of multinational firms. This suggests that understanding supply chains and where the activities and accounting for these activities take place is crucial for understanding the causes and consequences of contemporary globalization.

Design/methodology/approach

By using a case study of a single product and invoice-level data, it was possible to capture the actual costs incurred by a firm using a relatively simple global supply chain. The authors show how corporate intra-firm transfer pricing determines which business unit and location captures profits. A single firm provided the core data in this paper, including product- and firm-level information on intermediate product prices and input costs for all internal transfers.

Findings

This paper advances interesting insights into trade in value added and shows that, though not often considered significant, transfer pricing is a critical issue for understanding the geographical distribution of value added. The authors conclude with some observations about the nature of global supply chains, the value of international trade statistics and a hidden advantage of an integrated firm operating on a global scale the ability to somewhat arbitrarily select the activities to which profits should be allocated. For nation states, as supply chains become more international and complex, critical measures, such as gross domestic product, worker productivity, etc., are becoming ever more imprecise. The economic geography of cost of inputs and profits continue to separate as multinational enterprises drive the disaggregation of value creation and value capture.

Research limitations/implications

The case study facilitates an understanding of complex supply chain issues, thereby extending and deepening findings from previous research. This case study of transfer pricing in supply chains will assist other scholars in better formulating testable propositions for their studies and sensitize them to the internal complexities corporate managers face when making operationalizing decisions.

Originality/value

The case study suggests that understanding the configuration of and accounting in supply chains is vital for accurately measuring any national economic statistics. This case study provides some bottom-up evidence that national accounts and international trade economics undertaken without a deep understanding of supply chain organization is likely to generate misleading results. The methodology of using invoice-level data can provide a more granular understanding of how supply chains are organized and where the value is added and captured. For practitioners, the data suggest that firms should think very carefully about which of their activities generate the most value, and value those accordingly.

Details

Supply Chain Management: An International Journal, vol. 19 no. 4
Type: Research Article
ISSN: 1359-8546

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Article

Clinton Free and Angela Hecimovic

Through its impact on both demand and supply, the outbreak of novel coronavirus disease 2019 (COVID-19) has profoundly disrupted supply chains throughout the world. The…

Abstract

Purpose

Through its impact on both demand and supply, the outbreak of novel coronavirus disease 2019 (COVID-19) has profoundly disrupted supply chains throughout the world. The purpose of this paper is to explore the underlying drivers of the supply chain vulnerability exposed by COVID-19 and considers potential future directions for global supply.

Design/methodology/approach

This paper adopts a case study approach, reviewing the automotive manufacturing sector in Australia to illustrate how neoliberal globalisation policy settings have shifted large tracts of manufacturing from the global north to the global south.

Findings

The authors demonstrate the way that neoliberal globalisation policies, facilitated by certain accounting rhetorics and technologies, have consolidated manufacturing in China and Southeast Asia in ways that embed vulnerabilities in global supply chains. The authors present three scenarios for post-COVID-19 supply chains and the accounting techniques likely to garner stronger attention as a result of the pandemic.

Research limitations/implications

The paper illustrates how certain accounting rhetorics and technologies facilitate neoliberal globalisation, embedding supply chain vulnerability that has been exposed by COVID-19. It also suggests how supply chain accounting may develop more robust supply chains in a post-COVID-19 world and sets out an agenda for future research in this area.

Practical implications

A number of practical supply chain accounting and planning technologies are suggested to facilitate more robust supply chains.

Originality/value

This paper draws attention to the neoliberal globalisation policies that have shaped global supply chains as well as how COVID-19, in concert with other geopolitical trajectories, may represent a watershed moment for global supply chains.

Details

Accounting, Auditing & Accountability Journal, vol. 34 no. 1
Type: Research Article
ISSN: 0951-3574

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Article

Liu Linqing, Tan Liwen and Ma Haiyan

Massive increases in international trade and investment extend industries beyond national borders, so states and enterprises have become the two critical players in the…

Abstract

Purpose

Massive increases in international trade and investment extend industries beyond national borders, so states and enterprises have become the two critical players in the boundary of industries. The purpose of this paper is to provide a new conceptual framework to analyze the role of states and enterprises in enhancing the industrial international competitiveness (IIC).

Design/methodology/approach

Being a research‐based paper, the topic is approached by theoretical analysis and conceptual development. The paper reviews IIC literature and argues for a rational study ICC in the context of global value chain. Next, the paper puts forward a two‐dimensional governance model and five typical governance systems of the industries of developing countries. Examples of typical governance system are given based the practice of Chinese industries, such as appeal, rare earths, automotive, etc.

Findings

This paper constructs an industrial two‐dimensional governance model of the developing countries in the context of global value chain based on the interaction between industry governance and market governance, and also presents five typical governance systems – free to market, public governance, industrial governance, joint governance and network governance. Different governance system reflects different roles of states and enterprises played in the global value chains and result in different IIC in the end.

Research limitations/implications

The limitation is based primarily on methodology. The two‐dimensional governance model provides target‐oriented guidance for foresting international competitiveness of different types of industries. Future studies should include more in‐depth case studies on different governance system.

Originality/value

The paper presents a framework of the industrial two‐dimensional governance model, which emphasizes the important role of both states and enterprise in the IIC in the context of global value chain.

Details

Nankai Business Review International, vol. 2 no. 3
Type: Research Article
ISSN: 2040-8749

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Article

Joonkoo Lee and Gary Gereffi

The purpose of this paper is to introduce the global value chain (GVC) approach to understand the relationship between multinational enterprises (MNEs) and the changing…

Abstract

Purpose

The purpose of this paper is to introduce the global value chain (GVC) approach to understand the relationship between multinational enterprises (MNEs) and the changing patterns of global trade, investment and production, and its impact on economic and social upgrading. It aims to illuminate how GVCs can advance our understanding about MNEs and rising power (RP) firms and their impact on economic and social upgrading in fragmented and dispersed global production systems.

Design/methodology/approach

The paper reviews the GVC literature focusing on two conceptual elements of the GVC approach, governance and upgrading, and highlights three key recent developments in GVCs: concentration, regionalization and synergistic governance.

Findings

The paper underscores the complicated role of GVCs in shaping economic and social upgrading for emerging economies, RP firms and developing country firms in general. Rising geographic and organizational concentration in GVCs leads to the uneven distribution of upgrading opportunities in favor of RP firms, and yet economic upgrading may be elusive even for the most established suppliers because of power asymmetry with global buyers. Shifting end markets and the regionalization of value chains can benefit RP firms by presenting alternative markets for upgrading. Yet, without further upgrading, such benefits may be achieved at the expense of social downgrading. Finally, the ineffectiveness of private standards to achieve social upgrading has led to calls for synergistic governance through the cooperation of private, public and social actors, both global and local.

Originality/value

The paper illuminates how the GVC approach and its key concepts can contribute to the critical international business and RP firms literature by examining the latest dynamics in GVCs and their impacts on economic and social development in developing countries.

Details

critical perspectives on international business, vol. 11 no. 3/4
Type: Research Article
ISSN: 1742-2043

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Article

Allan Lerberg Jorgensen and Jette Steen Knudsen

Small and medium‐sized enterprises (SMEs) have increasingly become integrated into global value chains, where they face social and environmental requirements from

Abstract

Purpose

Small and medium‐sized enterprises (SMEs) have increasingly become integrated into global value chains, where they face social and environmental requirements from multinational buyers. The purpose of this paper is to examine the role of SMEs with respect to sustainable supply chain management in global value chains.

Design/methodology/approach

Drawing from a survey of sustainable supply chain management practices among 300 Danish SMEs, the paper discusses the concept of governance in global value chains. The paper addresses two questions: first, to what extent are SMEs affected by social and environmental requirements from buyers? Second, to what extent do SMEs apply such requirements to their own suppliers?

Findings

The paper concludes that SMEs face requirements from their buyers much more frequently than they apply such requirements to their own suppliers. Also many buyer requirements in the value chain seem to be latent in that they are neither contractual nor subject to verification. The paper argues that this points to a gap between rule making and rule keeping in sustainable supply chain management.

Research limitations/implications

Research should focus on the impact of sustainability standards on the competitiveness of small firms in other developed countries, as well as in emerging markets such as China and India.

Practical implications

Multinational buyers and SME‐support providers should focus on improving the capacity of SMEs to reconcile sustainability standards with competitiveness.

Originality/value

The paper provides new data on the role of SMEs in sustainable supply chain management.

Details

Corporate Governance: The international journal of business in society, vol. 6 no. 4
Type: Research Article
ISSN: 1472-0701

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Book part

Lorenzo Gui

Purpose – After tracing the development of the global value chains (GVC) approach, the chapter argues that by refocusing on the international strategies of lead firms it…

Abstract

Purpose – After tracing the development of the global value chains (GVC) approach, the chapter argues that by refocusing on the international strategies of lead firms it is possible to bring location specificity issues into play and contribute to retrieve a distinctive international content to the GVC governance theory.

Design/methodology/approach – The chapter discusses the GVC governance theory, drawing from recent contributions in the field of international business (IB).

Findings – Although designed to account for the rise of new inter-firm networks controlled by international lead firms, the new GVC theory of governance somehow lacks a distinct international content and, privileging transactional constraints, falls short of explicitly considering variations in lead firm structural characteristics and strategies. An alternative governance schema is then proposed, taking explicitly into account the strategic evaluations that lead firms carry out with regard to their internal resources compared to suppliers’.

Research limitations/implications (if applicable) – The chapter provides the outlines of a new promising international research agenda for GVC researchers. Additional research is needed to further investigate the relation between location specificity, the strategic motives to go global and the international organisation of the value chain.

Practical implications (if applicable) – The alternative governance schema proposed in the chapter aspires to represent a simple tool aimed at supporting managers in the establishment of the appropriate boundaries of the firm.

Originality/value – The chapter shows that both IB research and GVC analysis could greatly benefit from reasoned cross-fertilisation.

Details

Reshaping the Boundaries of the Firm in an Era of Global Interdependence
Type: Book
ISBN: 978-0-85724-088-0

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