Theoretical Article
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Economic and Social Upgrading of Supplier Firms in Global Value Chains: An Institutional Approach

Year 2023, Volume: 4 Issue: Current Issues in Management Research, 156 - 177, 25.10.2023
https://doi.org/10.54733/smar.1355795

Abstract

This paper develops a conceptual model that explains the relationships between global value chain (GVC) participation and economic/social upgrading. Furthermore, the model also introduces the moderating effect of institutions on the proposed relationships between GVC participation and upgrading. The model critically explores GVC literature and explains how economic and social upgrading can be achieved by supplier firms through participating in GVCs. Although the relevant literature has aimed at understanding the concept of upgrading, earlier studies have mostly applied a narrow approach and mainly focused on economic upgrading. However, the recent negative incidents in GVC (i.e., Rana Plaza collapse) has demonstrated that there should be holistic approach in upgrading and social upgrading should also be at the forefront of participating firms’ upgrading objectives. While previous literature shows how and in which conditions economic upgrading can be achieved, there is limited understanding on social upgrading and also the interaction between economic and social upgrading. Furthermore, previous studies have mostly focused on GVCs’ inner dynamics (i.e., governance) and overlooked the importance of external factors in affecting upgrading. Building on these research gaps, the present study makes a timely contribution to the literature by developing a conceptual model, which explains how and in which contexts economic and social upgrading can be achieved in GVCs. The interactions between GVC participation, economic and social upgrading, and institutions are critically explained and conceptualized with six propositions.

References

  • Aguiar de Medeiros, C., & Trebat, N. (2017). Inequality and income distribution in global value chains. Journal of Economic Issues, 51(2), 401-408.
  • Barrientos, S., Gereffi, G., & Rossi, A. (2011). Economic and social upgrading in global production networks: A new paradigm for a changing world. International Labour Review, 150(3‐4), 319-340.
  • Barua, U., & Ansary, M. A. (2017). Workplace safety in Bangladesh ready-made garment sector: 3 years after the Rana Plaza collapse. International Journal of Occupational Safety and Ergonomics, 23(4), 578-583.
  • Blažek, J. (2016). Towards a typology of repositioning strategies of GVC/GPN suppliers: the case of functional upgrading and downgrading. Journal of Economic Geography, 16(4), 849-869.
  • Boschma, R. (2022). Global value chains from an evolutionary economic geography perspective: A research agenda. Area Development and Policy, 7(2), 123-146.
  • Gehl Sampath, P., & Vallejo, B. (2018). Trade, global value chains and upgrading: What, when and how?. The European Journal of Development Research, 30(3), 481-504.
  • Gereffi, G. (2005). The global economy: Organization, governance and development. In N. J. Smelse, & R. Swedberg (Eds.), The handbook of economic sociology (2nd edition, pp. 160-182). Princeton University Press.
  • Gereffi, G. (1994). The organization of buyer-driven global commodity chains: How US retailers shape overseas production networks. In Gereffi, G., & Korzeniewicz, M. (Eds.), Commodity chains and global capitalism (pp. 95-122). Greenwood Press.
  • Gereffi, G. (1999). International trade and industrial upgrading in the apparel commodity chains. Journal of International Economics, 48(1), 37-70.
  • Gereffi, G., & Fernandez-Stark, K. (2011). Global value chain analysis: A primer. Center on Globalization, Governance & Competitiveness at the Social Science Research Institute. Duke.
  • Gereffi, G., & Lee, J. (2012). Why the world suddenly cares about global supply chains. Journal of Supply Chain Management, 48(3), 24-32.
  • Gereffi, G., & Lee, J. (2016). Economic and social upgrading in global value chains and industrial clusters: Why governance matters. Journal of Business Ethics, 133, 25-38.
  • Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The governance of global value chains. Review of International Political Economy, 12(1), 78-104.
  • Gibbon, P. (2008). Governance, entry barriers, upgrading: A re-interpretation of some GVC concepts from the experience of African clothing exports. Competition & Change, 12(1), 29-48.
  • Gibbon, P., Bair, J., & Ponte, S. (2008). Governing global value chains: An introduction. Economy and Society, 37(3), 315-338.
  • Goerzen, A., Iskander, S. P., & Hofstetter, J. (2021). The effect of institutional pressures on business-led interventions to improve social compliance among emerging market suppliers in global value chains. Journal of International Business Policy, 4(3), 347-367.
  • Hansen, M. W., Langevang, T., Rutashobya, L., & Urassa, G. (2018). Coping with the African business environment: Enterprise strategy in response to institutional uncertainty in Tanzania. Journal of African Business, 19(1), 1-26.
  • Henderson, J., Dicken, P., Hess, M., Coe, N., & Yeung, H. W. C. (2002). Global production networks and the analysis of economic development. Review of International Political Economy, 9(3), 436-464.
  • Hernández, V., & Pedersen, T. (2017). Global value chain configuration: A review and research agenda. BRQ Business Research Quarterly, 20(2), 137-150.
  • Humphrey, J., & Schmitz, H. (2002). How does insertion in global value chains affect upgrading in industrial clusters?. Regional Studies, 36(9), 1017-1027.
  • Johnson, R. C. (2018). Measuring global value chains. Annual Review of Economics, 10, 207-236.
  • Kan, D., Lyu, L., Huang, W., & Yao, W. (2022). Digital economy and the upgrading of the global value chain of China’s service industry. Journal of Theoretical and Applied Electronic Commerce Research, 17(4), 1279-1296.
  • Kano, L., Tsang, E. W., & Yeung, H. W. C. (2020). Global value chains: A review of the multi-disciplinary literature. Journal of International Business Studies, 51(4), 577-622.
  • Kaplinsky, R., Memedovic, O., Morris, M., & Readman, J. (2003). The global wood furniture value chain: What prospects for upgrading by developing countries. UNIDO Sectoral Studies Series Working Paper.
  • Khanna, T., & Palepu, K. G. (2010). Winning in emerging markets: A road map for strategy and execution. Harvard Business Press.
  • Kummritz, V., Taglioni, D., & Winkler, D. E. (2017). Economic upgrading through global value chain participation: Which policies increase the value-added gains?. World Bank Policy Research Working Paper, (8007).
  • Lee, J., & Gereffi, G. (2015). Global value chains, rising power firms and economic and social upgrading. Critical Perspectives on International Business, 11(3/4), 319-339.
  • Lee, J., Gereffi, G., & Barrientos, S. (2011). Global value chains, upgrading and poverty reduction. Capturing the Gains Briefing Note, NO. 3. https://dx.doi.org/10.2139/ssrn.1990232
  • Li, X., Zhou, W., & Hou, J. (2021). Research on the impact of OFDI on the home country's global value chain upgrading. International Review of Financial Analysis, 77, 101862.
  • Locke, R., Kochan, T., Romis, M., & Qin, F. (2007). Beyond corporate codes of conduct: Work organization and labour standards at Nike's suppliers. International Labour Review, 146(1‐2), 21-40.
  • Marcato, M. B., & Baltar, C. T. (2021). Economic upgrading in global value chains: Concepts and measures. Revista Brasileira de Inovaçao, 19, 1-25.
  • McDermott, G. A., & Corredoira, R. A. (2010). Network composition, collaborative ties, and upgrading in emerging-market firms: Lessons from the Argentine autoparts sector. Journal of International Business Studies, 41(2), 308-329.
  • Milberg, W., & Winkler, D. (2011). Economic and social upgrading in global production networks: Problems of theory and measurement. International Labour Review, 150(3‐4), 341-365.
  • Ndubuisi, G., & Owusu, S. (2021). How important is GVC participation to export upgrading?. The World Economy, 44(10), 2887-2908.
  • Ndubuisi, G., & Owusu, S. (2022). Wage effects of global value chains participation and position: An industry-level analysis1. The Journal of International Trade & Economic Development, 31(7), 1086-1107.
  • Nguyen, C. P., Su, T. D., & Nguyen, T. V. H. (2018). Institutional quality and economic growth: The case of emerging economies. Theoretical Economics Letters, 8(11), 1943-1956.
  • North, D. C. (1990). Institutions, institutional change, and economic performance. Harvard University Press.
  • Peng, M. W., Wang, D. Y., & Jiang, Y. (2008). An institution-based view of international business strategy: A focus on emerging economies. Journal of International Business Studies, 39(5), 920-936.
  • Pietrobelli, C., & Rabellotti, R. (2007). Upgrading to compete. Clusters and value chains in Latin America. Harvard University Press.
  • Pietrobelli, C., & Rabellotti, R. (2011). Global value chains meet innovation systems: Are there learning opportunities for developing countries?. World Development, 39(7), 1261-1269.
  • Polaski, S. (2006). Combining global and local forces: The case of labor rights in Cambodia. World Development, 34(5), 919-932.
  • Ponte, S., & Sturgeon, T. (2014). Explaining governance in global value chains: A modular theory-building effort. Review of International Political Economy, 21(1), 195-223.
  • Ponte, S., Kelling, I., Jespersen, K. S., & Kruijssen, F. (2014). The blue revolution in Asia: Upgrading and governance in aquaculture value chains. World Development, 64, 52-64.
  • Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. The Free Press.
  • Puppim de Oliveira, J. A. (2008). Social upgrading among small firms and clusters. In Puppim de Oliveira, J. A (Ed.) Upgrading clusters and small enterprises in developing countries: Environmental, labor, innovation and social issues (pp. 1-22). Ashgate Publishing.
  • Raworth, K. (2004). Trading away our rights: Women working in global supply chains. Oxfam.
  • Redding, G. (2005). The thick description and comparison of societal systems of capitalism. Journal of International Business Studies, 36(2), 123-155.
  • Reinecke, G., & Posthuma, A. (2019). The link between economic and social upgrading in global supply chains: Experiences from the Southern Cone. International Labour Review, 158(4), 677-703.
  • Ring, P. S., Bigley, G., D’Aunno, T., & Khanna, T. (2005). Perspectives on how governments matter. Academy of Management Review, 30(2), 308-320.
  • Schmitz, H. (2004). Local upgrading in global chains: Recent findings. Institute of Development Studies. Sussex, 6, 1-7.
  • Scott, W. R. (1995). Institutions and organizations. Sage.
  • Selwyn, B. (2013). Social upgrading and labour in global production networks: A critique and an alternative conception. Competition & Change, 17(1), 75-90.
  • Stringer, C., & Michailova, S. (2018). Why modern slavery thrives in multinational corporations’ global value chains. Multinational Business Review, 26(3), 194-206.
  • Sturgeon, T. J., & Kawakami, M. (2011). Global value chains in the electronics industry: Characteristics, crisis, and upgrading opportunities for firms from developing countries. International Journal of Technological Learning, Innovation and Development, 4(1-3), 120-147.
  • Uddin, M. T., Goswami, A., Rahman, M. S., & Dhar, A. R. (2019). How can governance improve efficiency and effectiveness of value chains? An analysis of pangas and tilapia stakeholders in Bangladesh. Aquaculture, 510, 206-215.
  • World Bank. (2020). World development report 2020: Trading for development in the age of global value chains. World Bank.

Küresel Değer Zincirlerinde Tedarikçi Firmaların Ekonomik ve Sosyal Yükselmesi: Kurumsal Bir Yaklaşım

Year 2023, Volume: 4 Issue: Current Issues in Management Research, 156 - 177, 25.10.2023
https://doi.org/10.54733/smar.1355795

Abstract

Bu makale, küresel değer zinciri (KDZ) katılımı ile ekonomik/sosyal yükselme arasındaki ilişkileri açıklayan kavramsal bir model geliştirmektedir. Ayrıca model, kurumlar kavramının KDZ katılımı ve iyileştirme arasında önerilen ilişkiler üzerindeki düzenleyici etkisini de ortaya koymaktadır. Model, KDZ literatürünü eleştirel bir şekilde irdelemekte ve tedarikçi firmaların KDZ'lere katılarak ekonomik ve sosyal gelişmenin nasıl sağlanabileceğini açıklamaktadır. Her ne kadar literatürdeki çalışmalar yükseltme kavramını anlamayı amaçlamış olsa da bunlar çoğunlukla dar bir yaklaşım uygulamış ve çoğunlukla ekonomik yükselmeye odaklanmıştır. Bununla birlikte, KDZ'deki son olumsuz olaylar (örn. Rana Plaza'nın çöküşü), iyileştirmede bütünsel bir yaklaşım olması gerektiğini ve sosyal iyileştirmenin de katılımcı firmaların iyileştirme hedeflerinin ön saflarında yer alması gerektiğini göstermiştir. Önceki çalışmalar ekonomik gelişmenin nasıl ve hangi koşullarda sağlanabileceğini gösterse de sosyal gelişme ve ayrıca ekonomik ve sosyal gelişme arasındaki etkileşim konusunda sınırlı bir anlayış vardır. Ayrıca, önceki çalışmalar çoğunlukla KDZ'lerin iç dinamiklerine (yani yönetişime) odaklanmış ve yükseltmeyi etkileyen dış faktörlerin önemini gözden kaçırmıştır. Yukarıda bahsedilen araştırma boşluklarından yola çıkan bu çalışma, KDZ'lerde ekonomik ve sosyal gelişmenin nasıl ve hangi bağlamlarda sağlanabileceğini açıklayan kavramsal bir model geliştirerek literatüre anlamlı bir katkı sağlamaktadır. KDZ katılımı, ekonomik ve sosyal gelişme ve kurumlar arasındaki etkileşimler altı önermeyle eleştirel bir şekilde açıklanmış ve kavramsallaştırılmıştır. Küresel değer zincirleri, küresel ticaretin önemli bir bileşeni haline gelirken, bu çalışma, ekonomik ve sosyal gelişmenin nasıl ve hangi koşullar altında sağlanabileceğini anlamayı amaçlayan gelecekteki çalışmalar için fırsatlar yaratmaktadır.

Ethical Statement

Yazar herhangi bir çıkar çatışması olmadığını deklare etmektedir.

Supporting Institution

Çalışmada herhangi bir kurum ya da kuruluştan destek alınmamıştır.

References

  • Aguiar de Medeiros, C., & Trebat, N. (2017). Inequality and income distribution in global value chains. Journal of Economic Issues, 51(2), 401-408.
  • Barrientos, S., Gereffi, G., & Rossi, A. (2011). Economic and social upgrading in global production networks: A new paradigm for a changing world. International Labour Review, 150(3‐4), 319-340.
  • Barua, U., & Ansary, M. A. (2017). Workplace safety in Bangladesh ready-made garment sector: 3 years after the Rana Plaza collapse. International Journal of Occupational Safety and Ergonomics, 23(4), 578-583.
  • Blažek, J. (2016). Towards a typology of repositioning strategies of GVC/GPN suppliers: the case of functional upgrading and downgrading. Journal of Economic Geography, 16(4), 849-869.
  • Boschma, R. (2022). Global value chains from an evolutionary economic geography perspective: A research agenda. Area Development and Policy, 7(2), 123-146.
  • Gehl Sampath, P., & Vallejo, B. (2018). Trade, global value chains and upgrading: What, when and how?. The European Journal of Development Research, 30(3), 481-504.
  • Gereffi, G. (2005). The global economy: Organization, governance and development. In N. J. Smelse, & R. Swedberg (Eds.), The handbook of economic sociology (2nd edition, pp. 160-182). Princeton University Press.
  • Gereffi, G. (1994). The organization of buyer-driven global commodity chains: How US retailers shape overseas production networks. In Gereffi, G., & Korzeniewicz, M. (Eds.), Commodity chains and global capitalism (pp. 95-122). Greenwood Press.
  • Gereffi, G. (1999). International trade and industrial upgrading in the apparel commodity chains. Journal of International Economics, 48(1), 37-70.
  • Gereffi, G., & Fernandez-Stark, K. (2011). Global value chain analysis: A primer. Center on Globalization, Governance & Competitiveness at the Social Science Research Institute. Duke.
  • Gereffi, G., & Lee, J. (2012). Why the world suddenly cares about global supply chains. Journal of Supply Chain Management, 48(3), 24-32.
  • Gereffi, G., & Lee, J. (2016). Economic and social upgrading in global value chains and industrial clusters: Why governance matters. Journal of Business Ethics, 133, 25-38.
  • Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The governance of global value chains. Review of International Political Economy, 12(1), 78-104.
  • Gibbon, P. (2008). Governance, entry barriers, upgrading: A re-interpretation of some GVC concepts from the experience of African clothing exports. Competition & Change, 12(1), 29-48.
  • Gibbon, P., Bair, J., & Ponte, S. (2008). Governing global value chains: An introduction. Economy and Society, 37(3), 315-338.
  • Goerzen, A., Iskander, S. P., & Hofstetter, J. (2021). The effect of institutional pressures on business-led interventions to improve social compliance among emerging market suppliers in global value chains. Journal of International Business Policy, 4(3), 347-367.
  • Hansen, M. W., Langevang, T., Rutashobya, L., & Urassa, G. (2018). Coping with the African business environment: Enterprise strategy in response to institutional uncertainty in Tanzania. Journal of African Business, 19(1), 1-26.
  • Henderson, J., Dicken, P., Hess, M., Coe, N., & Yeung, H. W. C. (2002). Global production networks and the analysis of economic development. Review of International Political Economy, 9(3), 436-464.
  • Hernández, V., & Pedersen, T. (2017). Global value chain configuration: A review and research agenda. BRQ Business Research Quarterly, 20(2), 137-150.
  • Humphrey, J., & Schmitz, H. (2002). How does insertion in global value chains affect upgrading in industrial clusters?. Regional Studies, 36(9), 1017-1027.
  • Johnson, R. C. (2018). Measuring global value chains. Annual Review of Economics, 10, 207-236.
  • Kan, D., Lyu, L., Huang, W., & Yao, W. (2022). Digital economy and the upgrading of the global value chain of China’s service industry. Journal of Theoretical and Applied Electronic Commerce Research, 17(4), 1279-1296.
  • Kano, L., Tsang, E. W., & Yeung, H. W. C. (2020). Global value chains: A review of the multi-disciplinary literature. Journal of International Business Studies, 51(4), 577-622.
  • Kaplinsky, R., Memedovic, O., Morris, M., & Readman, J. (2003). The global wood furniture value chain: What prospects for upgrading by developing countries. UNIDO Sectoral Studies Series Working Paper.
  • Khanna, T., & Palepu, K. G. (2010). Winning in emerging markets: A road map for strategy and execution. Harvard Business Press.
  • Kummritz, V., Taglioni, D., & Winkler, D. E. (2017). Economic upgrading through global value chain participation: Which policies increase the value-added gains?. World Bank Policy Research Working Paper, (8007).
  • Lee, J., & Gereffi, G. (2015). Global value chains, rising power firms and economic and social upgrading. Critical Perspectives on International Business, 11(3/4), 319-339.
  • Lee, J., Gereffi, G., & Barrientos, S. (2011). Global value chains, upgrading and poverty reduction. Capturing the Gains Briefing Note, NO. 3. https://dx.doi.org/10.2139/ssrn.1990232
  • Li, X., Zhou, W., & Hou, J. (2021). Research on the impact of OFDI on the home country's global value chain upgrading. International Review of Financial Analysis, 77, 101862.
  • Locke, R., Kochan, T., Romis, M., & Qin, F. (2007). Beyond corporate codes of conduct: Work organization and labour standards at Nike's suppliers. International Labour Review, 146(1‐2), 21-40.
  • Marcato, M. B., & Baltar, C. T. (2021). Economic upgrading in global value chains: Concepts and measures. Revista Brasileira de Inovaçao, 19, 1-25.
  • McDermott, G. A., & Corredoira, R. A. (2010). Network composition, collaborative ties, and upgrading in emerging-market firms: Lessons from the Argentine autoparts sector. Journal of International Business Studies, 41(2), 308-329.
  • Milberg, W., & Winkler, D. (2011). Economic and social upgrading in global production networks: Problems of theory and measurement. International Labour Review, 150(3‐4), 341-365.
  • Ndubuisi, G., & Owusu, S. (2021). How important is GVC participation to export upgrading?. The World Economy, 44(10), 2887-2908.
  • Ndubuisi, G., & Owusu, S. (2022). Wage effects of global value chains participation and position: An industry-level analysis1. The Journal of International Trade & Economic Development, 31(7), 1086-1107.
  • Nguyen, C. P., Su, T. D., & Nguyen, T. V. H. (2018). Institutional quality and economic growth: The case of emerging economies. Theoretical Economics Letters, 8(11), 1943-1956.
  • North, D. C. (1990). Institutions, institutional change, and economic performance. Harvard University Press.
  • Peng, M. W., Wang, D. Y., & Jiang, Y. (2008). An institution-based view of international business strategy: A focus on emerging economies. Journal of International Business Studies, 39(5), 920-936.
  • Pietrobelli, C., & Rabellotti, R. (2007). Upgrading to compete. Clusters and value chains in Latin America. Harvard University Press.
  • Pietrobelli, C., & Rabellotti, R. (2011). Global value chains meet innovation systems: Are there learning opportunities for developing countries?. World Development, 39(7), 1261-1269.
  • Polaski, S. (2006). Combining global and local forces: The case of labor rights in Cambodia. World Development, 34(5), 919-932.
  • Ponte, S., & Sturgeon, T. (2014). Explaining governance in global value chains: A modular theory-building effort. Review of International Political Economy, 21(1), 195-223.
  • Ponte, S., Kelling, I., Jespersen, K. S., & Kruijssen, F. (2014). The blue revolution in Asia: Upgrading and governance in aquaculture value chains. World Development, 64, 52-64.
  • Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. The Free Press.
  • Puppim de Oliveira, J. A. (2008). Social upgrading among small firms and clusters. In Puppim de Oliveira, J. A (Ed.) Upgrading clusters and small enterprises in developing countries: Environmental, labor, innovation and social issues (pp. 1-22). Ashgate Publishing.
  • Raworth, K. (2004). Trading away our rights: Women working in global supply chains. Oxfam.
  • Redding, G. (2005). The thick description and comparison of societal systems of capitalism. Journal of International Business Studies, 36(2), 123-155.
  • Reinecke, G., & Posthuma, A. (2019). The link between economic and social upgrading in global supply chains: Experiences from the Southern Cone. International Labour Review, 158(4), 677-703.
  • Ring, P. S., Bigley, G., D’Aunno, T., & Khanna, T. (2005). Perspectives on how governments matter. Academy of Management Review, 30(2), 308-320.
  • Schmitz, H. (2004). Local upgrading in global chains: Recent findings. Institute of Development Studies. Sussex, 6, 1-7.
  • Scott, W. R. (1995). Institutions and organizations. Sage.
  • Selwyn, B. (2013). Social upgrading and labour in global production networks: A critique and an alternative conception. Competition & Change, 17(1), 75-90.
  • Stringer, C., & Michailova, S. (2018). Why modern slavery thrives in multinational corporations’ global value chains. Multinational Business Review, 26(3), 194-206.
  • Sturgeon, T. J., & Kawakami, M. (2011). Global value chains in the electronics industry: Characteristics, crisis, and upgrading opportunities for firms from developing countries. International Journal of Technological Learning, Innovation and Development, 4(1-3), 120-147.
  • Uddin, M. T., Goswami, A., Rahman, M. S., & Dhar, A. R. (2019). How can governance improve efficiency and effectiveness of value chains? An analysis of pangas and tilapia stakeholders in Bangladesh. Aquaculture, 510, 206-215.
  • World Bank. (2020). World development report 2020: Trading for development in the age of global value chains. World Bank.
There are 56 citations in total.

Details

Primary Language Turkish
Subjects Strategy
Journal Section Conceptual Articles
Authors

Yusuf Kurt 0000-0002-7511-6329

Publication Date October 25, 2023
Submission Date September 5, 2023
Published in Issue Year 2023 Volume: 4 Issue: Current Issues in Management Research

Cite

APA Kurt, Y. (2023). Küresel Değer Zincirlerinde Tedarikçi Firmaların Ekonomik ve Sosyal Yükselmesi: Kurumsal Bir Yaklaşım. Sosyal Mucit Academic Review, 4(Current Issues in Management Research), 156-177. https://doi.org/10.54733/smar.1355795