Global value chains: A review of the multi-disciplinary ......REVIEW ARTICLE Global value chains: A...

REVIEW ARTICLE

Global value chains: A review of the multi-

disciplinary literature

Liena Kano1, Eric W. K. Tsang2

and Henry Wai-chung Yeung3

1Haskayne School of Business, University ofCalgary, Calgary, AB T2N 1N4, Canada; 2Naveen

Jindal School of Management, University of Texas

at Dallas, 800 W Campbell Rd., SM43,

Richardson, TX 75080-3021, USA; 3Departmentof Geography and GPN@NUS Centre, National

University of Singapore, 1 Arts Link,

Singapore 117570, Singapore

Correspondence:L Kano, Haskayne School of Business,University of Calgary, Calgary, AB T2N 1N4,Canadae-mail: [email protected]

AbstractThis article reviews the rapidly growing domain of global value chain (GVC)

research by analyzing several highly cited conceptual frameworks and thenappraising GVC studies published in such disciplines as international business,

general management, supply chain management, operations management,

economic geography, regional and development studies, and internationalpolitical economy. Building on GVC conceptual frameworks, we conducted the

review based on a comparative institutional perspective that encompasses

critical governance issues at the micro-, GVC, and macro-levels. Our resultsindicate that some of these issues have garnered significantly more scholarly

attention than others. We suggest several future research topics such as

microfoundations of GVC governance, GVC mapping, learning, impact of lead

firm ownership and strategy, dynamics of GVC arrangements, value creationand distribution, financialization, digitization, the impact of renewed

protectionism, the impact of GVCs on their macro-environment, and chain-

level performance management.

Journal of International Business Studies (2020).https://doi.org/10.1057/s41267-020-00304-2

Keywords:: global value chains; global production networks; global commodity chains;global factory; comparative institutional analysis

The online version of this article is available Open Access

INTRODUCTIONDuring the last few decades, the gradual liberalization and dereg-ulation of international trade and investment, coupled with therapid development and spread of information and communicationtechnologies (ICT), have fundamentally changed how multina-tional enterprises (MNEs) operate and compete in the globalizingworld economy. A clear and yet sophisticated pattern of organiza-tionally fragmented and spatially dispersed international businessactivity has emerged, whereby offshore production sites located inlow-cost developing countries are closely linked with lead firmbuyers and MNEs from major consumer markets in North Americaand Europe (Coe & Yeung, 2015; Dicken, 2015; Gereffi, 2018). NewMNEs have also emerged from developing economies, particularlythose in East and Southeast Asia, as major strategic partners andmanufacturing service providers for traditional MNEs from

Received: 31 January 2019Revised: 1 December 2019Accepted: 29 December 2019

Journal of International Business Studies (2020)ª 2020 The Author(s) All rights reserved 0047-2506/20

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advanced industrialized economies (Yeung, 2016).This pattern signals a new divide in industrialorganization on a worldwide scale: a transitionfrom hierarchically organized MNEs, with theirtraditional focus on managing internalized over-seas investments, to MNEs as international leadfirms. These firms work with and integrate theirgeographically dispersed strategic partners, special-ized suppliers, and customer bases into complexstructures, referred to variously as global commod-ity chains (GCCs), global value chains (GVCs),global production networks (GPNs), or globalfactories.

Since Gereffi and Korzeniewicz’s (1994) collec-tion in the early 1990s, this phenomenon oforganizationally fragmented international produc-tion has been subject to investigation in a widerange of academic disciplines, including economicsociology, international economics, regional anddevelopment studies, economic geography, inter-national political economy, supply chain manage-ment, operations management, and internationalbusiness (IB) (Buckley, 2009a, b; Coe & Yeung,2015, 2019; Funk, Arthurs, Trevino, & Joireman,2010; Gereffi, 1994, 2018; Gereffi, Humphrey, &Sturgeon, 2005; Henderson, Dicken, Hess, Coe, &Yeung, 2002). In economic sociology and develop-ment studies, the earliest work was concerned withglobal commodity trade and the governance struc-ture of such commodity chains in labor-intensive andhigh-tech industries (Bair, 2009; Gereffi,1999, 2018; Gereffi & Korzeniewicz, 1994). Thisliterature has developed a simple typology of buyer-driven and producer-driven GCCs on the basis ofthe power and control exerted by buyers (retailersand brand name firms) or producers (originalequipment manufacturers [OEMs]) in governingtheir international suppliers and service providers.

In 2000, the Rockefeller Foundation funded alarge-scale GVC convention, which marked thebeginning of a rapid growth of GVC research(Gereffi, Humphrey, Kaplinsky, & Sturgeon, 2001).By the early 2000s – near the beginning point of ourreview – the GCC literature moved away from itsearlier focus on commodities (e.g., clothing, foot-wear, automobiles) to examining value chains thatconnected spatially dispersed production activities.In their introduction to a special issue of IDBBulletin on globalization, value chains, and devel-opment, Gereffi et al. (2001) identified severalpressing challenges for value chain researchersand pushed for the use of GVC as a commonterminology. Since then, GVC has become the

primary focus of research and analytical attentionin the social sciences and, lately, internationalpolicy communities. The economic sociology viewof GVC remains concerned mainly with the socialconsequences of economic exchange, and withmapping the governance structures/developingtypologies of GVCs and their consequences forlocal upgrading (Gereffi, 2018; Gereffi et al., 2005;Humphrey & Schmitz, 2002). The study of GVCswithin the international economics literaturefocuses on efficiency of contractual organizationand economic exchanges in GVCs, and on map-ping the geography of international trade flows andvalue creation (Aichele & Heiland, 2018; Antras &Chor, 2013; Grossman & Rossi-Hansberg, 2008;Johnson & Noguera, 2012; Lee & Yi, 2018). IBresearchers are interested mainly in how firms canprofitably strengthen and exploit their unique firm-specific advantages, and create value by forgingbusiness relationships across national bordersthrough MNE activity in GVCs (Buckley, 2009a;Kano, 2018; Laplume, Petersen, & Pearce, 2016;Mudambi, 2008).Closely related to the GVC concept is the GPN

construct. The GPN concept was developed in thelate 1990s by a group of researchers in economicgeography, and emerged from a growing dissatis-faction with existing theories of economic devel-opment that failed to account for the increasinglycomplex, networked nature of production activi-ties, which spanned across national borders and ledto uneven development in different regions andcountries (Coe & Yeung, 2015, 2019; Hendersonet al., 2002; Hess, 2017; Yeung, 2009, 2018). Theidea of a GPN goes beyond the simple notions oftrading and outsourcing, and highlights firm-speci-fic coordination and cooperation strategies throughwhich such relational networks are constructed,managed, and sustained, as well as the networks’geographical reach in specific territories, such assub-national regions and industrial clusters. It alsoconsiders the strategic responses of other corporateand non-corporate actors within the GPN, such asthe state and business associations. This centralfocus on economic actors, such as MNEs and theirstrategic partners, and territorialized institutions,such as state agencies and business associations,also distinguishes GPN thinking from GCCresearch’s focus on a particular commodity orGVC research’s concern with the aggregation ofdifferent value chains into industries.While the term ‘‘GPN’’ accurately reflects the fact

that the firms involved often form intricate intra-

Global value chains Liena Kano et al

Journal of International Business Studies

and inter-firm networks (rather than linear chains),we propose to use the term ‘‘GVCs’’ in an inclusivefashion throughout this review, to reflect the factthat disaggregation and geographic dispersion pre-sently occurs in various parts of the value chain andencompasses both primary and support activities,with increasingly sophisticated knowledge-inten-sive processes being offshored and outsourced(Gereffi & Fernandez-Stark, 2010). The term‘‘GVC’’ thus not only refers to manufacturing firmsbut also characterizes a variety of modern MNEs,including service multinationals and the so called‘‘digital MNEs,’’ (i.e., firms that use advanced tech-nologies to generate revenues from dispersed for-eign locations without investing in production in aconventional sense) (Coviello, Kano, & Liesch,2017). Since the 2010s, the concept and terminol-ogy of GVCs have also resonated very well with thedevelopment practice and policy communities inmany international and regional organizations. A2010 World Bank report on the post-2008 worldeconomy, for example, claims: ‘‘given that produc-tion processes in many industries have been frag-mented and moved around on a global scale, GVCshave become the world economy’s backbone andcentral nervous system’’ (Cattaneo, Gereffi, & Star-itz, 2010: 7). To most observers in these interna-tional organizations, GVCs are now recognized asthe new long-term structural feature of the globaleconomy (Elms & Low, 2013; UNCTAD, 2013;World Bank, 2019, 2020).

While we draw on the above complementaryresearch streams and theoretical lenses, we conductour review from an IB-centric perspective. FollowingMudambi (2007, 2008) and Buckley (2009a, b), wedefine a GVC as a governance arrangement thatutilizes, within a single structure, multiple gover-nance modes for distinct, geographically dispersedand finely sliced parts of the value chain. In otherwords, a GVC is the nexus of interconnectedfunctions and operations through which goodsand services are produced, distributed, and con-sumed on a global basis (Coe, Hess, Yeung, Dicken,& Henderson, 2004; Coe & Yeung, 2015; Hender-son et al., 2002). IB scholars have recently acknowl-edged that the rapid rise of GVCs represents one ofthe most salient features of today’s economy(Turkina & Van Assche, 2018), and great strideshave been made within mainstream IB literature tounderstand GVCs (Buckley, Craig, & Mudambi,2019; Gereffi, 2019). Yet, surprisingly, there has notbeen, to the best of our knowledge, a paper thatsystematically reviews the social scientific and

management literatures on GVCs and suggestspointers for future research, specifically for IBscholars. Our review aims to fill this importantvoid.The rest of the paper is organized as follows. We

start by developing an organizing framework toguide our systematic review of multidisciplinaryliterature. This framework is premised on an inclu-sive theoretical coverage of the seminal works onGVC governance, upgrading, competitive dynam-ics, and territorial outcomes, and follows compar-ative institutional analysis logic. We then discussour review methodology, and present the results ofthe review of 87 empirical and conceptual studies,organized according to the framework developed.We conclude by assessing the body of literaturereviewed, identifying knowledge gaps, and suggest-ing avenues for future research.

A COMPARATIVE INSTITUTIONALFRAMEWORK FOR GUIDING LITERATURE

REVIEWGiven the complexity of GVC-related phenomenaand the resultant multifarious nature of publishedstudies, a guiding conceptual framework is neededto help us systematically categorize and analyzethese studies. We have adopted an IB-centric com-parative institutional perspective, embodied ininternalization theory/transaction cost economics(TCE) (Buckley & Casson, 1976; Hennart, 2009;Verbeke, 2013), as the foundation of our frame-work. We consider this approach particularly suit-able for systematizing our review for two reasons.First, it focuses on comparative efficiency of varioustypes of governance, and therefore explains underwhat circumstances GVC governance is preferableto other alternatives. Second, a comparative insti-tutional approach incorporates and links togetherdifferent levels of analysis, such as micro/individ-ual, transaction/a class of transactions, firm, net-work, and macro environment; such an integrativeapproach to governance accurately reflects themultifacetedness and complexity of the GVC phe-nomenon. However, before we elaborate on thisorganizing framework for reviewing GVC studies, itis useful and necessary to revisit some of theseminal theoretical works on GVC governanceand upgrading (Gereffi, 2018; Gereffi et al., 2005;Humphrey & Schmitz, 2002), and network organi-zation and territorial development outcomes (Coeet al., 2004; Coe & Yeung, 2015; Henderson et al.,2002). These social science studies provided



content for designing our IB-centric organizingframework.

Seminal Theoretical Works on GVCs and GPNsin the Social Sciences: From GVC to GPN 2.0In the early 1990s, Gereffi (1994, also 2018: Chap-ter 2) developed the first original framework forexplaining the organization of international pro-duction networks on the basis of the economicpower of giant buyers (e.g., largest retailers, super-markets, and brand-name merchandisers) and pro-ducers (e.g., OEMs in automotive and other high-tech industries) in driving these commodity chains.Attempting to move beyond the then nationalstate-centric modes of analyzing the global econ-omy, Gereffi, Korzeniewicz, and Korzeniewicz(1994: 2) defined commodity chains as ‘‘sets ofinterorganizational networks clustered around onecommodity or product, linking households, enter-prises, and states to one another within the worldeconomy. These networks are situationally specific,socially constructed, and locally integrated, under-scoring the social embeddedness of economicorganization.’’ Their idea was to promote a mesoscale of analysis that could probe ‘‘above and belowthe level of the nation-state’’ and reveal the‘‘macro–micro links between processes that aregenerally assumed to be discretely containedwithin global, national, and local units of analysis.’’

To operationalize these conceptual ideas and theoverall ‘‘drivenness’’ (buyer- or producer -driven) ofparticular commodity chains, Gereffi (1994)expanded on three main dimensions of commoditychains and networks: (1) an input–output structurethat refers to a set of products and servicesconnected together in a sequence of value-addingeconomic activities; (2) a territoriality that refers tothe spatial configuration of the various actorsinvolved, such as spatial dispersion or concentra-tion of production and distribution networks; and(3) a governance structure that reflects the authorityand power relationships within the chain, whichdetermine the allocation and flows of materials,capital, technology, and knowledge therein.Despite this early theoretical development, manyof the subsequent empirical studies suffered from a‘‘theoretical deficit.’’ As argued by Dussel Peters(2008: 14), ‘‘most research on global commoditychains approaches the GCC framework as a‘methodology’ and not a ‘theory’. The result ofthis is vast quantities of empirical work on partic-ular chains and the experiences of particular firmsand regions in them, and relatively little theoretical

work attempting to account for these findings in asystematic and integrated way.’’Since Gereffi (1994), nevertheless, much of GVC

theory work in the next decade has been focused onthe third dimension of commodity chains – inter-firm governance – through mapping GVC gover-nance structures as independent variables anddeveloping typologies of these structures in orderto postulate their consequences for industrialupgrading, as dependent variables, at the firm leveland in local/regional development (see recentreviews in Coe & Yeung, 2015, 2019; Gereffi,2018: Chapter 1).1 In their important theoreticalformulation following Gereffi’s (1999) influentialempirical work on East Asian apparel upgradingtrajectories and Kaplinsky and Morris’s (2001)highly cited handbook for value chain research,Humphrey and Schmitz (2002) conceptualized fourtypes of GVC-related upgrading in industrial clus-ters: process upgrading, whereby the productionsystem is made more efficient, perhaps throughsuperior technology; product upgrading, in whichfirms move into more sophisticated product lines;functional upgrading, in which they acquire newfunctions to increase their value added; and chainor inter-sectoral upgrading, whereby firms move intonew categories of production altogether. Morerecently, Pietrobelli and Rabellotti (2011) furthertheorized the relationships between these upgrad-ing possibilities and different learning mechanismsembedded in local and regional innovationsystems.The most significant theorization of GVC gover-

nance, as an independent variable shaping local andregional upgrading outcomes, was Gereffi et al.’s(2005, also in 2018: Chapter 4) conceptual typologythat came a decade after Gereffi’s (1994) work. Inthis most cited conceptual GVC study, Gereffi et al.(2005) drew upon earlier theoretical work onproduction fragmentation in international businessand trade economics, coordination problems intransaction cost economics (TCE), and networks ineconomic geography and economic sociology. Tothem, the then recent work by geographers, such asDicken, Kelly, Olds, and Yeung (2001) and Hen-derson et al. (2002), ‘‘has emphasized the complex-ity of inter-firm relationships in the globaleconomy. The key insight is that coordinationand control of global-scale production systems,despite their complexity, can be achieved withoutdirect ownership’’ (Gereffi et al., 2005: 81). Totheorize this complexity of inter-firm relationships,Gereffi et al. (2005) constructed a typology of value



chain governance by intersecting the three supply-chain variables of complexity of transactions, cod-ifiability of transactions, and the capabilities withinthe supply base. By ascribing only two values – highor low – to these three variables, they identified afivefold typology of governance within GVCs. Inaddition to the pure forms of market and hierarchy,the authors distinguished modular, relational, andcaptive forms of governance that rely on interme-diate levels of coordination and control. Whilehighly influential, this conceptual typology is stillarguably somewhat limiting, and underplays theextent to which governance is also shaped by place-specific institutional conditions and intra- andextra-firm dynamics (Coe & Yeung, 2015). Furthertheoretical work mobilized convention theory tofocus on the different modes and levels of gover-nance operating within GVCs, distinguishingbetween overall drivenness, different forms ofcoordination (the five types of governance notedabove), and the wider normalization and standards-setting processes that operate along the value chain(e.g., Gibbon & Ponte, 2008; Ponte & Gibbon,2005).

As noted in the Introduction, a parallel theoret-ical development in the social sciences was the GPNframework developed by Dicken et al. (2001) andHenderson et al. (2002). Table 1 offers a compar-ison between GVC and GPN theoretical approachesthat enable the ‘‘modular’’ theory-building effortsproposed by Ponte and Sturgeon (2014). As part ofthese efforts, Henderson et al.’s (2002) GPN 1.0schema emphasized the complex intra-, inter-, andextra-firm networks involved in any economicactivity, and elaborated on how these are structured

both organizationally and geographically. Thistheoretical framework for analyzing the globaleconomy was intended to delimit the globallyorganized nexus of interconnected functions andoperations of firms and extra-firm institutionsthrough which goods and services are produced,distributed, and consumed. The central concern ofany GPN analysis therefore should not simply beabout considering the networks in their own terms,but should reveal the dynamic developmentalimpacts on locations and territories interconnectedthrough these networks. GPN 1.0 thus extendsbeyond the above-mentioned GVC governanceapproach by (1) bringing extra-firm actors, such asstate agencies, non-governmental organizations,and consumer groups, into GPNs; (2) consideringfirm–territory interactions at multiple spatial scales,from the local and the sub-national to the macro-regional and the global; (3) examining intersectingvertical (intra-firm) and horizontal (inter-firm)connections in production systems; and (4) takinga more complex and contingent view of how GVCgovernance is shaped by the wider regulatory andinstitutional contexts.The most recent and comprehensive theorization

of GVCs is found in Coe and Yeung’s (2015)monograph. This work seeks to develop a dynamictheory of GPNs by specifying the causal mecha-nisms that explicitly link earlier conceptual cate-gories of value, power, and embeddedness to thedynamic configurations of GPNs and their unevendevelopment outcomes. In this GPN 2.0 frame-work, the aim is to conceptually connect thestructural capitalist dynamics that underpin GPNformation/operation to the on-the-ground

Table 1 Theoretical approaches in global value chains and global production networks. Source: Adapted from Coe and Yeung (2015:

Table 1.1)

Global commodity/value chain (GCC/GVC) Global production network (GPN)

Disciplinary

background

Economic Sociology Economic Geography

Development Studies International Political Economy

Industry Studies Innovation Studies

Object of enquiry Inter-firm networks in global industries Global configurations of intra-, inter- and extra-firm networks

Uneven regional development trajectories

Orienting concepts Value-adding chains Value creation, enhancement, and capture

Governance models Corporate, collective, and institutional power

Organizational learning Societal, network, and territorial embeddedness

Industrial upgrading and rents Strategic coupling

Development policies Competitive dynamics and technological innovations

Intellectual influences World systems theory Relational economic geography

International business GCC/GVC studies

Trade economics



development outcomes for local and regionaleconomies. The underlying capitalist dynamicsencompass key dimensions such as drivers oflowering cost-capability ratios, market develop-ment, financialization and its disciplining effectson firms, and risk management; together, thesedimensions distil the inherent imperatives of con-temporary global capitalism. These dynamics arekey variables driving the strategies adopted byeconomic actors in (re)configuring their GPNs,and consequent value capture trajectories anddevelopmental outcomes in different industries,regions, and countries. Interestingly, these com-petitive dynamics are not well theorized in theexisting GVC literature, which is much moreconcerned with governance aspects of the operationof such chains and networks after they are formed.Coe and Yeung (2015) considered how these causaldrivers shaped the strategies of different kinds offirms in GPNs. These firms organize their activitiesthrough different configurations of intra-, inter-,and extra-firm network relationships. Conceptu-ally, these network configurations are shaped bydifferent interactions of the underlying dynamics.The authors then examined the consequences ofthese causal mechanisms – comprising varyingdynamics and strategies – for firms in GPNs.

Fuller and Phelps (2018) further explained howparent–subsidiary relationships in MNEs can signif-icantly influence the way that these competitivedynamics shape their network embeddedness in andstrategic coupling with specific regional economies(Yeung, 2009, 2016). Departing from the industrialupgrading literature that often takes on a unidirec-tional pathway to upgrading (from process to valuechain upgrading in Humphrey and Schmitz(2002)), Coe and Yeung (2015) further developedthe concept of ‘‘value capture trajectories’’ to framein dynamic terms whether firms are able or not tocapture the gains from strategic coupling in GPNs.Ultimately, this GPN 2.0 work seeks to understandthe impacts on territorial development by explor-ing how firm-specific value capture trajectories cancoalesce in particular places and locations intodominant modes and types of strategic coupling,with different potential for value capture in theregional and the national economies.

Similar to other theories in the social sciences,the GVC/GPN frameworks discussed above areprimarily explanatory rather than predictive innature. The validity of predictions depends uponceteris paribus conditions, which do not apply inopen systems where social phenomena occur.

Hence, ‘‘it is unrealistic to assume that all relevantdata will be consistent with a theory even if thetheory is correct’’ (Lieberson, 1992: 7). As such, thepredictive power of social science theories is cur-tailed (see Bhaskar, 1998 for a detailed discussion).

A Comparative Institutional Framework on GVCsThe above brief review of foundational works inGVCs and GPNs has clearly pointed to the generaltendency in the social science literature to examineGVC governance, upgrading dynamics, and terri-torial outcomes. Still, there is a limited conceptu-alization of how different actors – from MNE leadfirms to their strategic partners, key suppliers andcustomers, and other related firms – (1) structurallyorganize their business transactions to exercisecontrol and coordination, determine locationalchoices, and configure networks; and (2) strategi-cally manage their firm-specific activities to enhancelearning and knowledge accumulation, createadvantageous impacts, and orchestrate GVCs forbetter performance outcomes. These firm-specificconsiderations fall within the core premise andcompetence of IB research that can add much valueto the existing GVC theoretical frameworks. Inparticular, we suggest that comparative institu-tional analysis can help link social science and IBapproaches in GVC research. Comparative institu-tional analysis, as applied in firm-level studies,builds on the premise that economic actors willmake decisions about the most efficient governancemechanisms to conduct economic exchange or toorganize a given set of transactions. For example,they may choose between organizing productionactivities within the firm or through the market,and select coordination and control methods, suchas the market system versus managerial hierarchyversus socialization (Gereffi et al., 2005; Hennart,1993). Comparative institutional analysis has anumber of branches, including internalization the-ory (Buckley & Casson, 1976), which is mostrelevant for exploring GVCs. Internalization theoryapplies the economic essence of comparative insti-tutional analysis in an international setting, argu-ing that economic actors will select and retain themost efficient governance mechanisms to conductcross-border transactions (Verbeke & Kenworthy,2008).From a comparative institutional perspective, a

GVC represents a distinct form of governance,which is likely to emerge and thrive only if itenables superior efficiency when compared to otherreal-world alternatives (e.g., vertical integration or



market contracting). Efficiency is served by aligninggovernance systems (both structural and strategic)with the attributes of transactions in a cost-econ-omizing way (Hennart, 1993). Ultimately, compet-itive advantage arises from the firm’s ability tochoose the most efficient, economizing mix ofinternal and external contracts as a function ofvarious micro- and macro-level characteristics oftransactions – decisions made by economic actorsat the micro level and demand/technological/insti-tutional characteristics at the macro level (Antras &Chor, 2013; Gereffi et al., 2005; Hennart, 1994).The most efficient governance forms are those thatare comparatively superior in terms of enabling thefirm to: (1) economize on bounded rationality; (2)economize on bounded reliability2; and (3) createan organizational context conducive to innovationin its entirety (Verbeke & Kenworthy, 2008).Further, the firm must adjust its economizing mixof contracts over time as a function of changes inthe micro- and macro-environments. Finally, thefirm continually impacts both its micro-level andmacro-level environments through changes in gov-ernance. Such changes evolve in a continuous,mutually reinforcing cycle (Williamson, 1996).

We combine comparative institutional logic withfoundational GVC work discussed in the previoussection to build an organizing framework, whichfacilitates our subsequent review of a large numberof empirical and conceptual studies of GVCs. Thisframework, presented in Figure 1, arranges extantstudies along the three main layers impacting thefunctioning of GVCs, and conceptually connectsthese layers with each other and, ultimately, withGVC governance and performance outcomes.While incorporating some of the key conceptualvariables in Gereffi et al.’s (2005) governancetypology and Coe and Yeung’s (2015) GPN 2.0theory, this integrative framework seeks to high-light IB-specific issues in relation to not only GVC-level variables, but also, crucially, micro- andmacro-level influences that shape the organizationand performance outcomes of MNEs and otherfirms in GVCs.

First, at the micro-level, we identify studies thatexplore specific assumptions about the behavior ofdecision-makers in both the lead firm and periph-eral units, and ways in which these assumptionsexplain processes within the GVC; that is, howknowledge is exchanged and processed, how thehazards of reliability are managed, and how newcapabilities are developed and obsolete ones arediscarded. Second, at the GVC level, we discuss

studies that focus on governance and performanceof the GVC. Here, we identify six broad dimensionsthat constitute critical elements of GVC gover-nance: control, location, network structure, learn-ing, impact of the lead firm, and GVCorchestration. GVC performance outcomes, to theextent that they are explored in the reviewedstudies, are also addressed at this level. In accor-dance with comparative institutional analysis prin-ciples, and consistent with conceptual foundationsof much GVC research, we view overall GVCperformance in terms of sustainability of GVC asa governance form or its success in delivering valueto participants, including capability developmentand upgrading. Third, at the macro-level, we focuson studies exploring the relationships between theGVC and its environment, including cultural,institutional, geographic, and economic make-upsof both home and host locations. Studies thatconstitute this group address both macro-levelimpacts on GVC configurations and the GVCs’impact on macro-environments within which theyoperate. In the following sections, we use thisintegrative framework to review 87 conceptual andempirical studies of GVCs.

METHODOLOGYWe focused on published journal articles andexcluded books, because more often than not,authors of books also published journal articlesthat contained much of the reported results (e.g.,Gereffi, 2018). We also excluded book chapters,which usually went through a less rigorous reviewprocess than journal articles and were less accessi-ble digitally. We conducted a multi-disciplinaryliterature search that covered IB, general manage-ment, supply chain management, operations man-agement, and a selected group of social sciencejournals that published GVC research, namelyeconomic geography, economic sociology, regionaland development studies, and international polit-ical economy3. This extensive scope should covermost of the key GVC studies published in academicjournals. We included leading journals of eachdiscipline that attracted researchers to submit theirbest-quality GVC studies.For each journal, we searched articles published

in the past 20 years – the period characterized byrapid growth and increased sophistication of GVCresearch, as discussed in the Introduction. We usedfour search terms: global value chain, global com-modity chain, global production network, and



global factory. We shortlisted conceptual articleswith GVCs as their major foci, and empiricalarticles, whether qualitative or quantitative, thathad at least one of the search terms as a majorvariable. That is, we excluded articles that casuallycited or had any of the four terms serving as acontrol variable. Moreover, shortlisted studies tar-geted at the firm or network level, instead of otherunits of analysis, such as international organiza-tions (e.g., Haworth’s (2013) case study of the AsiaPacific Economic Cooperation), industries, orlocations.

Since the social science journals have a very largenumber of publications on GVCs that amounted toseveral hundreds, we applied additional criteria tonarrow down this considerable volume of literatureto a proportionate number of articles. We startedwith identifying nine theoretical pieces that con-stituted the foundation of the theory section above.For empirical papers, we implemented three addi-tional screening criteria. First, we included morerecent papers published after 2005. Second, wefocused on papers that were closest to the researchinterests of IB scholars. Third, we ensured that ourselection covered a reasonable mix of authors from

different disciplines, institutions, and geographicallocations, and that selected studies included bothGVC and GPN approaches with a variety of researchmethods, industry coverage, and empirical loca-tions in both developed and developing countries.Based on the above criteria, a total of 21 journals

publishing 22 theory papers (including the ninefoundational pieces mentioned above) and 65empirical articles were included in our review, aslisted in Table 2. Notably we also searched theAcademy of Management Journal, AdministrativeScience Quarterly, Journal of Management and Man-agement Science (all commonly regarded as leadingmanagement journals), but failed to find anyrelevant articles. The same applies to the leadingjournals in sociology (e.g., American Journal ofSociology and American Sociological Review) andpolitical sciences (e.g., American Political ScienceReview and International Organization).The 33 shortlisted articles in mainstream IB

journals (i.e., GSJ, IBR, JIBS, JWB, and MIR) providethe most comprehensive picture of our field’scurrent state of knowledge on GVCs. Articlespublished in these journals, however, constituteabout 58% of the group of non-social science

2. Location: GVC mapping

• Location choice for discrete activities

• Regional versus global governance

• Emerging versus developed markets

• Clusters and local linkages

1. Control

• Make, buy or hybrid decisions for each value

chain activity

Macro-level influencesCultural, institutional, geographic, economic characteristic/dynamics of home/host locations

• Quality and cost of production input, level of specialization of labour

• Technological environment, IP protection regime

• Institutional quality, political stability

• Economic development, growth/decline, stasis

• Norms and value systems

4. Learning

• Knowledge acquisition, creation and diffusion

• Innovation and absorptive capacity

• Catch-up and upgrading

6. GVC orchestration

• Specific contractual choices to manage GVC

• Entrepreneurial guidance

• Social mechanisms/relational governance

• Value distribution

Governance &performance outcomes

Micro-level influencesBehavioural assumptions re: decision-makers in lead firms and peripheral units

• Bounded rationality and bounded reliability

• Cognitive capabilities

• Managerial capabilities, etc.

3. Network structure

• Power relations/hierarchy/degree of coordination

• Centrality and density

• Linkage heterogeneity

• Openness

• Embeddedness

5. Impact of lead firm

• Size/age/ownership

• Location/industry sector

• Strategy

• Capabilities

Structural governance Strategic governance

GVC level

• Firm-specific upgrading

• Firm-specific

performance

• Chain-level

stability/durability

Figure 1 A comparative institutional framework of GVC governance.



journals, indicating that GVC is an importantresearch topic attracting the attention of research-ers working in disciplines beyond the IB turf. In thegroup of social science journals during the reviewperiod, GVC and GPN research has been particu-larly influential in the fields of economic geogra-phy, economic sociology, and regional anddevelopment studies. Here, we included only asmall selection of 30 articles published in theleading journals, based on the criteria discussedabove.

We studied each article and extracted two tothree key GVC-related findings with respect to ourorganizing framework presented in Figure 1.Table 3 lists these 87 articles’ key information (yearof publication, authors, journal abbreviation,research method, and sample characteristics) andtheir most significant findings. The sample spansthe time period from 1999 to the end of July 2019;however, for the non-social science journals, themore recent articles published after 2010 representthe bulk of the sample, reflecting a broad upwardtrend in GVC publications in the last decade. Thereis almost an equal split of research methods

between qualitative case studies and quantitativestudies based on archival or survey data. There areboth single-country and multi-country studies,together covering a wide geographic scope. Mostof the studies analyze firms, networks or clusters inmanufacturing industries. It is not surprising thatthe automotive industry is the most popular con-text for these studies, given the industry’s require-ment for many suppliers, large and small,manufacturing various components of an automo-tive. The studies as a whole investigate a variety ofIB-related issues, as described in the next section.

REVIEW OF GVC LITERATURE

Micro-level: Microfoundational Assumptionsand Their Impact on GVCMicrofoundations refer to generic human behav-ioral conditions that impact firm-level (and, in thecase of GVCs, network-level) outcomes (Kano &Verbeke, 2019). Scholars have argued that individ-ual-level characteristics, such as bounded rational-ity, bounded reliability, cognitive biases, and

Table 2 Journals included in the review

Journal Abbreviation No. of articles

General management

Academy of Management Review AMR 1

Journal of Management Studies JMS 2

Organization Science OS 1

Strategic Management Journal SMJ 1

International business

Global Strategy Journal GSJ 1

International Business Review IBR 10

Journal of International Business Studies JIBS 9

Journal of World Business JWB 7

Management International Review MIR 6

Supply chain/operations management

International Journal of Operations and Production Management IJOPM 10

Journal of Operations Management JOM 2

Journal of Supply Chain Management JSCM 3

Supply Chain Management: An International Journal SCM 4

Economic geography/economic sociology/regional studies

Economic Geography EG 8

Environment and Planning A EPA 2

Global Networks: A Journal of Transnational Affairs GN 4

Journal of Economic Geography JEG 5

Regional Studies RS 3

Review of International Political Economy RIPE 3

Transactions of the Institute of British Geographers TIBG 1

World Development WD 4

Total 87



Table

3Summary

ofco

nceptualandempiricalresearchonglobalvaluech

ainspublishedin

1999–2019**

Reference

Journal

Method

Sample

Keyfindings

Gen

eral

managem

ent

journ

als

Chen(2003)

JMS

Qualitative,case

study

10electronicsfirm

sin

Taiw

an

FDIoftenstartsatalocationclose

tothehomebase

where

resourcesfrom

domestic

netw

orkscanbedrawn,andsubsequentlymovesonto

more

distant

locationsaftertheMNEhasaccumulatednew

netw

ork

resources.

FDIenables

theMNEto

developaregional,orevenglobal,subnetw

ork

forsupplyingaset

ofwide-ranging,differentiatedandlow-cost

productsin

aflexible

manner

Taplin

,Winterton,&

Winterton(2003)

JMS

Quantitative,survey

754clothingmanufacturers

in

theUK

Most

firm

sare

inasubordinate

positionin

buyer-drivenvaluech

ains.

Assuch

,

costpressuresforcethem

tominim

izewageexpenditures.Giventheprevalence

ofmanyoverseaslow-cost

productionoptionsin

theglobalapparelindustry,

these

firm

sfinditdifficu

ltto

payworkers

awagepremium

commensurate

with

theirskill

level,leadingto

problemsofhighlaborturnoverandlow

worker

commitment

Levy

(2008)

AMR

Conceptual

N/A

Theauthordevelopsaframework

thatthrowslig

htonthenature

ofpowerand

hegemonyofGPNs,

whichare

regardedasasetofstructuredyetco

ntested

relations.

GPNsare

notonly

arenasformarketco

mpetitionbutalsoco

mplex

politicale

conomicsystemsin

whichmarketandpoliticalp

owersare

intertwined

asactors

form

ulate

anddeployeco

nomic,discu

rsive,andorganizational

strategies

Lipparini,Lo

renzo

ni,

&Ferriani(2014)

SMJ

Quantitative,archival

andinterview

data

892Italianmotorcycleindustry

projectsenactedvia184dyads

ofbuyers

andsuppliers

Core

firm

sthatare

inch

argeoftheprocessesofinterfirm

learningfrom

firm

to

dyad,andfrom

dyadto

netw

ork,andofkn

owledge-enhancingpracticesneed

tocu

ltivate

thetransfer,reco

mbinationandcreationofspecializedkn

owledge.

Successfullearningprocessesaccruein

dyadsandnetw

orkswhere

both

the

sourceandtherecipientpossess

therequisitekn

owledgetransfercapacity

Jaco

bides&

Tae

(2015)

OS


data

Firm

sandsegments

intheUS

computerindustry

Thepresence

of‘‘kingpins’’–firm

swithsuperiormarketcapitalizationand

disproportionately

highR&D

expenditures–in

asegmentisco

rrelatedwitha

highershare

oftotalsectorvaluebythesegment.Kingpinsgenerate

apositive

externalityfortheirdirect

competitors,buttheirsegments

displayincreasing

internalinequalityin

valueovertime

Inte

rnati

onal

busi

nes

sjo

urn

als

Griffith

&Myers

(2005)

JIBS

Quantitative,survey

92USim

porters

engagedin

business

withJapanese

andUS

supply

chain

partners

Firm

scanach

ieve

perform

ance

gainswhenrelationalstrategiesforgoverning

supply

chainsare

fittedto

culturalexpectationsofglobalsupply

chain

partners

(e.g.,relatedto

thelevelofinform

ationexch

angein

relationships).When

relationalstrategiesbeco

mestandardizedacross

partners,perform

ance

dim

inishesorremainsunch

anged

Strange&

Newton

(2006)

IBR

Conceptual

N/A

Firm

satthecentreofGCCscanexploittheirownership

advantageswithout

internalizingproduction,while

retainingco

ntrolo

vertheessentialaspectsofthe

productionprocess.These

arguments

are

consistentwithStephenHymer’s

insights

ontheexternalizationofproduction,whichpredatedmodern

GCC

analysis.

Thearguments

are

illustratedbytheexample

oftheglobalgarm

ent

industry



Table

3(C

onti

nued

)

Reference

Journal

Method

Sample

Keyfindings

Asm

ussen,Pedersen,

&Petersen(2007)

MIR

Quantitative,survey

420Danishfirm

swith

internationally

dispersedvalue

chains

Thestudydevelopsanindexformeasuringhow

leadfirm

sco

nfigure

theirvalue

chains–specifically,whetherfirm

slocate

valuech

ain

activitiesin

globally

specializedunitsto

exploitinternationaldivisionoflabor.Thisglobal

specializationindexwastestedempirically

onasample

ofDanishleadMNEs

Buckley(2009a)

IBR

Conceptual

N/A

Thearticle

developstheco

nceptof‘‘theglobalfactory’’,

basedon

internalizationthinking.Theglobalfactory

isadynamic

andflexible

structure

thatco

mbinesinternalizedandexternalizedgovernance

across

geographically

dispersed,fine-slicedactivities,

wherebyflexibility

providesresilience,andthe

totalsum

oftransactionco

stsacross

activitiesisminim

ized.Theheadquarters

are

more

importantthanin

conventionalhierarchies,

because

oftheneedto

determ

ineownership

andco

ntrolmodesforeach

specializedactivity.Thisrole

demandsnew

managementskills,

includingtheability

tofine-slice,co

ntrol

inform

ation,andco

ordinate

externalorganizationsinto

thestrategyofthefocal

firm

s

Buckley(2009a,b)

JWB

Conceptual

N/A

Therise

oftheglobalfactory

system

constrainsdevelopmentoptionsin

developingco

untries,

where

firm

sparticipatingin

theglobalfactory

netw

ork

are

most

oftenlim

itedto

beingsuppliers

oflabor-intensive

manufacturingor

services.

There

are

twooptionsforbreakinginto

thesystem:(1)incremental

upgradingwithin

establishedglobalfactories;

and(2)developingnew

global

factoriesunderlocalco

ntrol.Both

optionsare

difficu

ltin

thattheyrequire

mobilizingentrepreneurialabilitiesanddevelopingmanagerialskills

Eng&

Spickett-Jones

(2009)

JWB

Quantitative,survey

268electronicsmanufacturers

inHongKongandmainland

China

Threedynamic

marketingcapabilities–product

development,marketing

communication,andch

annelmanagement–are

crucialformanufacture

upgradein

buyer-drivenco

mmoditych

ains

Hatani(2009)

JWB

Qualitative,case

study

13productionunitsofJapanese

auto

partssuppliers

inChina

Intheco

ntextofemergingeco

nomies,excessiveinward

FDIstructurally

inhibits

tech

nologyspilloversfrom

MNEsevenatthelowertiersofthesupply

chain

due

tolim

itedinteractionsbetw

eenlocalfirm

sandMNEs

Funk,

Arthurs,

Trevino,&

Joireman

(2010)

JIBS

Quantitative,survey

319USco

nsumers

Consumers’willingness

topurchase

‘‘hybridproducts’’(i.e.,products

manufacturedthroughdispersedGVCs)

isnegatively

affectedbypartial

productionshifts

toanim

osity-invo

kingco

untries.

Thisim

pact

isless

pronouncedin

consumers

exhibiting‘‘o

penness’’(versus‘‘conservation’’)

values

McD

erm

ott

&

Corredoira(2010)

JIBS

Quantitative,survey

90autopartsmanufacturers

in

Argentina

Afew

direct

socialtiesto

internationalassemblers

appearto

bemost

beneficial

forlocalsuppliers,althoughthese

tiesmaynotbesufficientto

make

upforthe

negative

effect

ofbeinglocatedin

lowertiers

ofthevaluech

ain.Supplier–

customerrelationshipsthatpromote

regular,disciplin

eddiscu

ssionsabout

product

andprocess

improvements

are

especially

beneficialforsuppliers’

upgrading



Table

3(C

onti

nued

)

Reference

Journal

Method

Sample

Keyfindings

Buckley(2011)

MIR

Conceptual

N/A

Thenew

form

oforganizationofbusiness

activitiesin

theglobaleco

nomyisbest

conceptualizedas‘‘theglobalfactory’’–adynamic

system,wherebythefocal

firm

actsastheco

ntrollingintelligence

oftheglobalnetw

ork

bymakingtw

o

core

analyticaldecisionsforeach

activity:locationandco

ntrol.Controlof

inform

ation(asopposedto

controlofphysicalassets)iscentralto

thesuccess

of

theglobalfactory,asare

extrafreedom

inlocationofactivities,andtheability

to

manageaninternationally

distributednetw

ork

ofactivities

Yamin

(2011)

MIR

Conceptual

N/A

Globalfactory,asanorganizationalform

,isvu

lnerable

because

ofits

embeddedness

inthenetw

ork

andover-emphasisonoperationalefficiency,

whichpotentially

comesattheexpense

ofinnovation.Theglobalfactory

exerts

notonly

organizational,butalsopoliticalpower.While

itmayim

prove

world

welfare,itcanalsoco

nstrain

eco

nomic

development

Azm

eh&

Nadvi

(2014)

IBR

Qualitative,case

study

FourlargeAsiangarm

ent

manufacturingMNEs

Asiangarm

entmanufacturers

(tier1suppliers

tolargemultinationalbuyers)

tendto

disintegrate

theirownvaluech

ains,

andbeco

meMNEsin

theirown

rightbyshiftingproductionto

differentlocations,andco

ordinatingthedivision

oflabor/valuedistributionbetw

eenthese

locations.

Thisrepresents

adifferent

typeofupgrading,wherebysuppliers

donotmove

into

branding/retailing,but

ratherach

ieve

competitive

gainsbybeco

mingeffectiveco

ordinatorsofmultiple

productionlocations,

thusincreasingly

shapingthegeographyofGVCs

Corredoira&

McD

erm

ott

(2014)

JIBS

Quantitative,survey

59autopartsmanufacturers

in

Argentina

Process

upgradingbysuppliers

locatedin

emergingmarkets

isaidedby

multiple,strongtiesto

focalMNEsandnon-m

arketinstitutions,

whichact

as

knowledgebridgers

tohelp

firm

stapinto

knowledgeembeddedin

isolated

industrialdistricts.MNEsalonedonothelp

process

upgrading,butaddvalue

only

whenMNEtiesare

combinedwithtiesto

geographically

diversenon-

marketinstitutions

Eriksson,Nummela,&

Saarenketo

(2014)

IBR

Qualitative,case

study

Asm

allICTsystem

providerin

Finland

Smallfocalfirm

sneedto

developdynamic

capabilitiesto

manageGVCs,

that

help

them

overcomeliabilitiesofsm

alln

ess

andnewness.These

include

individual-levelcapabilities(cognitiveandmanagerial),andorganizational-level

capabilitiesthatbuild

upontheindividuallevelones(flexibility

andabsorptive

capacity)

Jean(2014)

IBR


data

633new

tech

nologyventuresin

China

Firm

sparticipatingin

tradeshowsare

more

likely

topursueupgradingin

GVCs

from

OEM

toODM,buttherelationship

decreaseswithincreasedexport

activity.Firm

sengagingin

Internet-basedB2Btransactionsare

less

likely

to

pursueupgrading,butthose

withstrongqualityco

ntrolp

racticesare

more

likely

todoso.Nodirect

relationship

betw

eenR&D

andupgradingisobserved:

inadequate

homeinstitutionshindertransform

ingR&Dinto

innovative

products

andprocesses



Table

3(C

onti

nued

)

Reference

Journal

Method

Sample

Keyfindings

Kumarasw

amy,

Mudambi,Saranga,&

Tripathy(2012)

JIBS


andinterview

data

Indianauto

components

firm

sCatch-upandupgradingbyGVC

suppliers

locatedin

emergingmarkets

isa

dynamicprocess

thatmirrors

theevo

lutionofthelib

eralizationprocess

inhome

countries.

Atthebeginningofmarketlib

eralizationprocess,catchingup

throughupgradingtech

nicalco

mpetenciesisthedominantstrategy,with

short-runnegative

impactsonperform

ance.Aslib

eralizationprogressesto

allo

w

greaterownership/controlbyMNEs,

developmentofstrongcu

stomer

relationshipsandupgradinginternalR&D

beco

medominantstrategies,

with

positive

impactsonperform

ance

Liu&

Zhang(2014)

IBR

Qualitative,case

study

Six

Taiw

anese

tech

nologyfirm

sLo

calsupplier’sability

todevelopnew

capabilitiesdependsonstrategic

characteristicsoflearningpartners,thepresence

ofspecifictacticsto

enhance

trustwithin

differentcu

lturalcontexts,andkn

owledgech

aracteristics.Itiseasier

forsuppliers

toaccumulate

tech

nologicalthanmarketingcapabilitiesthrough

alliances;

successfulupgradingfrom

OEM

toODM

ismore

commonthanto

OBM

Wang,Wei,Liu,

Wang,&

Lin(2014)

MIR


data

357,641manufacturingfirm

sin

China

Thepresence

offoreignMNEshasanegative

impact

onindigenousfirm

s’

domestic

salesbutapositive

impact

ontheirexports.

MNEsfrom

HongKong,

MacauandTaiw

anare

more

likely

toproduce

thispattern

ofim

pact

thanMNEs

from

otherco

untries

Khan,Lew,&

Sinko

vics

(2015)

GSJ

Qualitative,case

study

50Tier1Pakistanisuppliers

and

threeIJVsofJapanese

automotive

assemblers

and

Pakistanipartners

IJVsbetw

eenJapanese

MNEsandPakistanifirm

splayaboundary-spanningrole

infacilitatingtech

nologicalkn

owledgetransferanddevelopmentofcross-

culturalsocio-tech

nicaltiesforPakistanico

mponentsuppliers,bylin

kinglocal

firm

swithtier1suppliers

inJapanandelsewhere

intheworld

Suder,Liesch,

Inomata,Mihailo

va,&

Meng(2015)

JWB


data

AsianInternationalInput–

Outputtablesrepresentingnine

East-Asianco

untriesandthree

industries

Regionalintegrationin

East

Asiaisalig

nedwithvalue-addingproduction

netw

ork

activities.

ThisintegrationismotivatedbythedecisionsofMNEsto

internationalizein

searchofproductivecapabilitiesobtainedthroughGVCs.

Countrieswithmore

advancedproductiontech

nologiesare

engagedmore

in

theupstream

segments

oftheverticalproductionprocess,andbeco

mekey

suppliersofco

mponentsto

otherco

untriesin

theregion.Thispattern

evo

lvesas

countriesmove

throughstagesofindustrialdevelopment

Gooris&

Peeters

(2016)

JIBS

Quantitative,survey

581offshore

serviceproduction

unitsco

vering59host

countries

and19homeco

untries

Whenthehostco

untryoffersweaklegalIP

protection,andwheninternalization

ofactivitiesisnotthemost

efficientgovernance

mode,MNEsmayoptto

fragmentglobalbusiness

processesacross

multiple

serviceproductionunits,

ratherthanco

-locatingprocesses.

Firm

scanuse

ITC

toexploit

complementaritiesbetw

eenthedispersedfragments

ofaprocess,while

reducingthemisappropriationhazard

ofindividualfragments

Hillemann&

Gestrin

(2016)

IBR


data

OECD

data

onFD

Iandcross-

borderM&As

Core

hypothesisoftheglobalfactory

paradigm

–thatMNEsincreasinglych

oose

controloverownership

ofphysicalassets

inGVCs–issupported.Cross-border

financialflowsrelatedto

intangible

assets

increase

relative

toflowsrelatedto

tangible

assets.Fo

reignassets

are

increasingly

revertingto

domestic

ownership



Table

3(C

onti

nued

)

Reference

Journal

Method

Sample

Keyfindings

Laplume,Petersen,&

Pearce(2016)

JIBS

Qualitative,case

study

3D

printing

Impact

of3Dprintingtech

nologyisthegreatestin

industrieswithlow

minim

um

efficienttech

nicalscales,shortproductionrunsandlow

degreesofautomation.

Diffusionof3D

printingin

these

industriesislikely

tomake

GVCsshorter,more

dispersed,more

local,andcloserto

end-users.These

GVCswill

engageawider

variety

offirm

s,aswellashouseholds,

inmanufacturing

Buckley&

Tian(2017)

MIR


data

Top100non-financialMNEsin

theworldandtop100non-

financialMNEsfrom

emerging

eco

nomies

ControloftheGVC

isin

thehandsoftech

nologyleaders.Emerging-m

arket

MNEsextract

monopoly-basedrents

from

internationalization,butare

constrainedto

theperiphery

positionin

GVCsunless

theycanlearn

global

orchestrationkn

ow-how.Thisability

isco

nstrainedbyhomeinstitution.

Advanced-m

arketMNEs,

inco

ntrast,ach

ieve

profitability

throughglobal

orchestrationcapabilities

Lojaco

no,Misani,&

Tallm

an(2017)

IBR


data

261internationalalliancesin

thehomeappliancesindustry

More

complextransactionsin

aGVC,whichrequiregreaterco

ordination,are

more

likely

tobegovernedthroughequityparticipation.Offshore

production-

orientedalliancesare

more

likely

tobegovernedthroughco

ntractualalliances,

wherebyindividualtransactionsare

governedthroughspecifiedco

ntracts.

Alliancesthatare

likely

toplayamore

strategic

role

locally

(i.e.,withthe

objectiveto

produce

forlocalm

arkets)are

more

likelyto

begovernedthrougha

JV

Enderw

ick(2018)

IBR

Conceptual

N/A

Inaglobalfactory

system,theco

rporate

socialresponsibility

foractionsof

netw

ork

participants

isassumedbytheleadfirm

,irrespectiveofownership

and

directness

oflin

kages–atleast

inthemindsofstakeholders.Thefullextentof

thisresponsibility

islikely

tobedeterm

inedbywhetherindirect

partners

are

exclusive

ornon-exclusive

He,Khan,&

Shenkar

(2018)

JWB

Qualitative,case

study

Acq

uisitionofUK-basedDynex

byChina’s

Tim

esElectric

Anemerging-m

arketMNEacq

uiringadevelopedco

untryfirm

can‘‘impel’’

capability

upgradingandenco

urage‘‘co-learning’’in

theacq

uiredsubsidiary,by

leveragingtheMNE’sGVCleadfirm

position,itsco

mplementary

assets,andthe

uniquepowerrelationship

betw

eentheMNEandthesubsidiary

Kano(2018)

JIBS

Conceptual

N/A

AGVC

canonly

besustainedovertimeifitismore

efficientthanalternative

governance

(e.g.,fullintegration)in

term

sofeco

nomizingonbounded

rationalityandreliability,andfosteringinnovationandcapability

development

throughoutthech

ain.Theorchestratingfirm

inaGVC

canenhance

these

efficiency

outcomebydeployingsixsocialmech

anismsidentifiedin

thestudy:

selectivity,inclusionofnon-business

interm

ediaries,jointstrategizing,relational

capital,multilateralfeedback,andrulesforequitable

valuedistributionamong

GVC

participants



Table

3(C

onti

nued

)

Reference

Journal

Method

Sample

Keyfindings

Khan,Rao-N

icholson,

&Tarba(2018)

JWB

Qualitative,case

study

12Pakistanimotorcycleparts

suppliers

toJapanese

and

Chinese

assemblers

Intheco

ntextofweakinstitutionalsupport,Pakistanimotorcyclepartssuppliers

developexploitative

innovationcapabilitiesbasedonkn

owledgeco

mingfrom

MNEs.

Asabalancingstrategy,these

suppliers

developinternationalnetw

orks

withglobaltier1suppliers,internationaltradefairs,

andinternational

institutions.Thisstrategyenablesthem

tocircumventthenegative

influence

of

homeinstitutionalfactors

onexploratory

innovation

Turkina&

VanAssch

e

(2018)

JIBS


data

154clusters

intheaerospace,

biopharm

a,andICTindustries

Innovationin

knowledge-intensive

clusters

disproportionately

benefits

from

strengtheningtheirco

nstituentfirm

s’horizo

ntalco

nnectionsto

foreign

knowledgehotspots,whereasinnovationin

labor-intensive

clustersmainlygains

from

strongerverticalconnectionsbytheirfirm

sto

centralvaluech

ain

members

abroad

Ancarani,DiM

auro,&

Mascali(2019)

JWB


data

495relocationinitiativesin

Europe

Backshoringinitiatives(relocationofproductionback

tohigh-cost

regions)

are

tiedto

firm

s’strategic

priorities.

Backshoringisassociatedwithadoptionof

advance

labor-savingtech

nologieswhenfirm

sco

mpete

onquality.Backshoring

initiativesthatprioritize

cost

reductionorresponsiveness

are

nottiedto

tech

nologyadoption

Khan,Lew,&

Marinova

(2019)

IBR

Quantitative,survey

155auto

partsmanufacturers

in

Pakistan

Localsuppliers’learningintentallo

wsthem

tomove

from

potentialabsorptive

capacity

(ability

toacq

uirekn

owledge)to

realizedabsorptive

capacity

(ability

to

transform

andexploitacq

uiredkn

owledge).Realizedabsorptive

capacity

is

critically

importantin

spurringexploitative

andexploratory

innovation,which,

interm

,im

provessuppliers’value-addedpositionin

GVCs

Sinko

vics,Choksy,

Sinko

vics,&

Mudambi(2019)

MIR

Qualitative,multiple

case

study

12Pakistanioffshore

service

providers

Build

ingkn

owledgeco

nnectivityin

aGVC

isatw

o-sideddecision.Leadfirm

s’

willingness

tobuild

connectivitydependsontheco

mplexityoftransactions,the

codifiability

ofinform

ation,andsuppliercapabilities;individualcharacteristicsof

managersmoderate

thisrelationships.Suppliersmayoffsetleadfirm

s’hesitation

byinvestinginto

connectivitybuild

ing,however,theextentofthisinvestment

dependsonsuppliers’intent,thatis,whethertheyintendto

step-upthe

relationship,orto

eventually

breakoutofthesupplierrole

intheGVC

Supply

chain

/oper

ati

ons

managem

ent

journ

als

Akkerm

ans,Bogerd,&

Vos(1999)

IJOPM

Qualitative,policy-

Delphistudy

30Dutchsupply

chain

managers

Theresultsindicate

agloomypicture

ofviciouscyclesfrustratingthe

implementationofeffectiveinternationalsupply

chain

management(ISCM)

strategies.

Theauthors

developanexploratory

causalmodelofgoals,barriers,

andenablers

relatedto

effectiveISCM

strategiesbyapplyingthegeneric

mech

anismsofviciouscyclesto

create

avirtuouscycle

vanHoek(1999)

SCM

Qualitative,case

study

16food,electronics,

automotive

andclothing

manufacturers

inthe

Netherlands,

Belgium,and

Germ

any

Infoodsupply

chains,

both

postponementandoutsourcingare

appliedto

a

lesserextentthanin

supply

chainsofotherindustries.

Theauthordevelopsa

framework

topositionsupply

chainsin

term

sofdegreeofoutsourcing,levelof

postponementandspatialco

nfiguration



Table

3(C

onti

nued

)

Reference

Journal

Method

Sample

Keyfindings

Colotla,Shi,&

Gregory

(2003)

IJOPM

Qualitative,case

study

Twointernational

manufacturingnetw

orks

comprisingeightfactoriesin

six

countries

Factory

andnetw

ork

levelcapabilitiessimultaneouslyaffect

asetofdim

ensions

ofoperationalperform

ance.Decisionsco

ncerningfactory

andnetw

ork

issues

are

oftentakenindependentlyofeach

other,althoughtheymaybeheavily

interdependent

Karlsson(2003)

IJOPM

Conceptual

N/A

Theauthordiscu

ssesnew

challengesfacedbyco

mpaniesthatorganizemore

andmore

activitiesexternalto

theirtraditionalboundariesandasaresulthave

todealw

ithexternaln

etw

orks.Heidentifiespatternsoforganizationalp

rinciples

andco

nsequencesfororganizingandmanagingsuch

operations

Chiarvesio&

DiMaria

(2009)

IJOPM

Quantitative,survey

630firm

sin

Italy

Industrialdistrictfirm

srely

more

onlocalsystemsin

term

sofsubco

ntracting

netw

orksto

exploitflexibility,while

non-districtfirm

salsoinvestin

nationallevel

subco

ntractingnetw

orks.Industrialdistrictfirm

ssearchforefficiency

andvalue-

addedco

mpetenceswhenexpandingsupply

netw

orksglobally.In

contrast,

non-districtfirm

sadoptamore

hierarchicalapproach

tointernationalization.

Differencesbetw

eenthese

twotypesoffirm

sdecrease

asfirm

size

increases

Zhang&

Gregory

(2011)

IJOPM

Qualitative,case

study

Ninefirm

sin

engineering

focu

sedsectors

Theauthors

developaframework

thatdemonstratesdifferentvaluecreation

mech

anismsofglobalnetw

ork

operationsalongtheengineeringvaluech

ain

in

term

sofefficiency,innovationandflexibility.Operationsfocu

singondifferent

stagesofthevaluech

ain

prioritize

thethreekindsofvaluecreationmech

anisms

differently

Gereffi

&Lee(2012)

JSCM

Conceptual

N/A

Theauthorshighlig

htsomeofthemain

featuresofGVCanalysisanddiscu

ssthe

relationship

betw

eentheco

reco

ncepts

ofgovernance

andupgrading

Casson(2013)

JSCM

Conceptual

N/A

TheauthoranalyzesGVCsfrom

aninternalizationtheory

perspectiveby

consideringhow

adivisionoflaborisco

ordinated.Heco

mparesco

ordination

bymanagementwithco

ordinationbythemarket

Lampel&

Giach

etti

(2013)

JOM


andinterview

data

38automakers

with

headquarters

in15co

untries

There

isaninvertedU-shapedrelationship

betw

eeninternationalm

anufacturing

diversificationandfinancialperform

ance.Twofactors,namely

product

diversificationandco

-locatingproductionandsalesin

foreignmarkets,

positively

moderate

thisrelationship

Carnovale

&Yeniyurt

(2014)

JSCM


data

1158firm

sand509JVsin

global

automotive

industry

Egonetw

ork

size

andegonetw

ork

betw

eenness

centralityofthefocalOEM

have

significantandpositive

effectsonnew

JVform

ations,so

doesegonetw

ork

size

ofitspotentialpartner.There

isadim

inishingreturn

toegobetw

eenness

centralityofthefocalOEM

innew

JVform

ations

Seppala,Kenney,&

Ali-Yrkko

(2014)

SCM

Qualitative,case

study

Oneprecisionmach

inery

firm

in

Finland

Transferpricingisacriticalfactorforunderstandingthegeographic

distribution

ofvalueaddedin

anMNE’sglobalsupply

chain.TheMNE’saccountingsystem

andtransferpricingmech

anism

maynotreflect

where

itsmost

valuable

assets

are

located

Chen,Wei,Hu,&

Muralid

haran(2016)

IJOPM

Qualitative,case

study

Eightfirm

sin

Chinese

toy

industry

Whenfacingrisinglaborco

sts,

someOEMsmove

theiroperationsto

low-cost

regions,

while

others

entertheODM

business

byinvestingin

R&D,andsome

gradually

developfurtherto

beco

meOBMsbyinvestingin

marketingand

brand-build

ing



Table

3(C

onti

nued

)

Reference

Journal

Method

Sample

Keyfindings

Ferdows,

Vereecke,&

DeMeyer(2016)

JOM

Qualitative,case

study

ThreeEuropeanfirm

sandtw

o

EuropeandivisionsofUSfirm

s

Theauthorspropose

amodelthatdelayerstheglobalp

lantnetw

ork

into

asetof

subnetw

orksbasedontheco

mplexityofproprietary

inform

ationin

theproducts

theymanufacture

andproductionprocessestheyemploy.Theauthors

illustrate

theusefulness

ofthemodelbyapplyingitto

analyze

theglobalproduction

netw

orksoffive

companies

Golin

i,Deflorin&

Sch

errer(2016)

IJOPM

Quantitative,survey

441manufacturingplants

in17

countries

Ahigherlevelofautonomyofplantsin

anetw

ork

isassociatedwithvery

limited

effectsonoperationalperform

ance.Thislack

ofeffect

isdueto

twodim

ensions

ofmanufacturingnetw

ork

embeddedness

(manufacturingnetw

ork

integration

andsupply

chain

integration),whichenhance

perform

ance,butare

themselves

reducedbyhigherautonomy

MacC

arthy,Blome,

Olhager,Srai,&

Zhao

(2016)

IJOPM

Conceptual

N/A

Theauthorstrace

theGVClifecycleandidentify

sixfactorsthatmayaffect

aGVC

overitslifecycle–(1)tech

nologyandinnovation,(2)eco

nomics,

markets

and

competition,(3)policyandregulation,(4)procu

rementandsourcing,(5)

supply

chain

strategiesand(6)re-engineering

Benstead,Hendry,&

Stevenson(2018)

IJOPM

Actionresearch

Amulti-billionpoundturnover

companyin

thetextilesand

fashionindustry

Successfulhorizo

ntalco

llaborationamongGVCmembersisdependentonboth

relationalcapitalandeffective(form

alandinform

al)governance

mech

anisms.

Throughco

llaborating,firm

sbuild

new

capabilitiesthatim

prove

social

sustainability

perform

ance

bygeneratingrelationalrents

interm

softhe

organizations’

reputationforrespondingto

modern

slavery

legislation

Golin

i&

Gualandris

(2018)

IJOPM

Quantitative,survey

471manufacturingplants

in

theUS,Europe,andAsia

Adoptionofsustainable

productionpracticesattheplantlevelissignificantly

andpositively

relatedto

theintegrationandglobalizationoffirm

-wide

manufacturingnetw

orks.In

contrast,adoptionofsustainable

sourcingpractices

ismore

strongly

affectedbytheintegrationofexternalsupply

chainsand

benefits

from

manufacturingnetw

orksonly

indirectly,throughtheassociation

withsustainable

productionpractices

Kumar,Bak,

Guo,

Shaw,Colicch

ia,

Garza-Reyes,

&

Kumari(2018)

SCM

Quantitative,survey

andinterview

data

103surveyresponsesandsix

interviewsin

theChinese

manufacturingindustry

Supply

risk

andmanufacturingrisk

managementare

both

vitalforbusiness

perform

ance.Supply

orientationiseffectivein

managingsupply

risk,butsupply

dependency

hasnosignificantinfluence

onit.Customerorientationhaspositive

effectsonmanufacturingandsupply

risk

Treiblm

aier(2018)

SCM

Conceptual

N/A

Theauthordiscu

ssesthepotentialim

plicationsofblockch

ain

tech

nologyfor

supplych

ain

managementbypresentingaframework

basedonfourestablished

eco

nomic

theories,

namely,principal-agenttheory,transactionco

stanalysis,

resource-basedview,andnetw

ork

theory

Soci

al

scie

nce

journ

als

Dicken,Kelly,Olds,

&

Yeung(2001)*

GN

Conceptual

N/A

Theauthors

adoptanetw

ork

methodologyanddifferentiate

betw

eenthe

analyticalstrengthsofco

mmoditych

ainsandproductionnetw

orksin

understandingco

ntemporary

globaleco

nomy.Theyprovideindicationsofthe

utilityofsuch

amethodology



Table

3(C

onti

nued

)

Reference

Journal

Method

Sample

Keyfindings

Henderson,Dicken,

Hess,Coe,&

Yeung

(2002)*

RIPE

Conceptual

N/A

Theauthorsexplain

thecriticald

imensionsofvalue(creation,enhancementand

capture),power(corporate,co

llectiveandinstitutional),andembeddedness

(territorialandnetw

ork).Firm

sandinstitutionsare

interw

ovenin

different

netw

ork

structuresandindustrialsectorsto

accountfordevelopmentoutcomes.

AstylizedmappingofGPNsisoffered

Humphrey&

Sch

mitz

(2002)*

RS

Conceptual

N/A

Clusters

are

insertedinto

GVCs,

andthishasco

nsequencesforenablin

gor

disablin

glocal-levelupgradingefforts.

Firm

s’insertioninto

GVCsaffectstheir

upgradingstrategiesbecause

ofgovernance

relations.

Variationsin

GVC

governance

accountfordifferenttypesofupgrading,rangingfrom

process

and

product

tofunctionalandinter-sectoralupgrading

Coe,Hess,Yeung,

Dicken,&

Henderson

(2004)*

TIBG

Conceptual

N/A

Theauthors

delim

itthe‘‘strategic

couplin

g’’ofGPNsandregionaleco

nomies,

whichultim

ately

drivesregionaldevelopmentthroughtheprocessesofvalue

creation,enhancementandcapture.Theydevelopaframework

foranalyzing

regionaldevelopmentandGPNs

Gereffi,Humphrey,&

Sturgeon(2005)*

RIPE

Conceptual

N/A

Thispaperdevelopsatheoreticalframework

toexplain

governance

patternsin

GVCs,

anddiscu

ssesfive

typesofGVC

governance

–hierarchy,captive,

relational,modular,andmarket–thatrangefrom

highto

low

levelsofexplicit

coordinationandpowerasymmetry.There

are

threevariablesthatplayalarge

role

indeterm

ininghow

GVCsare

governedandch

ange:theco

mplexityof

transactions,theability

toco

difytransactions,andthecapabilitiesin

thesupply-

base

Liu&

Dicken(2006)*

EPA

Qualitative,case

study

16automotive

IJVsChina

TheFD

Iofautomotive

MNEsin

Chinashowsclearfeaturesofoblig

ated

embeddedness

oftheiroperations(includingtheirsupplierrelationships)

in

term

softheiroptimalorganizationofGPNs.

TheChinese

governmenthas

exertedvirtually

complete

controloverentriesbythese

MNEsthrough

determ

iningtheform

thattheirinvestmentcantake.Thestate’s

unique

bargainingpositionhasenableditto

playoffoneMNEagainst

another

Sturgeon,Van

Biesebroeck,&

Gereffi

(2008)

JEG

Qualitative,case

study

MajorAmericanandJapanese

automotive

leadfirm

sandover

150suppliers

inNorthAmerica

Nationalpoliticalinstitutionscreate

pressure

forlocalco

ntent,driving

productionclose

toendmarketsandto

beorganizednationally

orregionally.In

term

sofGVC

governance,risingproduct

complexity,low

codifiability

anda

paucity

ofindustry-levelstandardstogetherdrive

buyer–supplierlin

kages

toward

therelationalgovernance

mode,whichismore

compatible

with

Japanese

thanAmericansupplierrelations.

Thesm

allnumberofpowerfullead

firm

sthatdominate

theautomotive

industry

contributesto

thedifficu

ltyof

developingindustry-levelstandardsthatco

uld

underpin

amore

loosely

articulatedspatialarchitecture

ofGVC

Yeung(2009)*

RS

Conceptual

N/A

Thispaperdevelopsfurthertheco

nceptof‘‘strategicco

uplin

g’’in

analyzingthe

impact

ofGVC

activitiesin

high-growth

East

AsianregionsofmainlandChina,

Taiw

an,South

Korea,Thailand,andMalaysia.Threetypesofstrategic

couplin

g

–internationalpartnership,indigenousinnovation,andproductionplatform

s–

are

theorizedto

accountforgrowth

inthese

regionaleco

nomies



Table

3(C

onti

nued

)

Reference

Journal

Method

Sample

Keyfindings

Brown,Derudder,

Parnreiter,Pelupessy,

Taylor,&

Witlox

(2010)

GN

Qualitative,case

study

Leadfirm

sin

coffeeco

mmodity

chain

andfinancialservices

chain

Mappingoftheforw

ard

linkagesofproducerservicefirm

sandthe(service)

backward

linkagesoffirm

sin

commoditych

ainscanbeusefultounderstandthe

geographicalreach

ofoperationsthatemanate

inworldcities.

Thismapping

explainsthespatialstretchingofGVCstowardsspecificworldcitiesinputting

producerservices

Ivarsson&

Alvstam

(2011)

JEG

Qualitative,case

study

IKEAand23suppliers

inChina

andSoutheast

Asia

Suppliersuse

IKEA’stech

nologicalsupportto

improve

notonly

theiroperational

andduplicative

capabilitiesbutalsoadaptive

andinnovative

capabilities.

TypologiesofGVC

governance

structuresneedto

includea‘‘d

evelopmental’’

category,where

buyer-drivenvalue-chainsare

coordinatedbypowerfulretailers

withaglobalsourcingorganization.Such

structuresare

aim

edatfacilitating

close,localandlong-term

interaction,andenable

leadfirm

sto

efficientlysource

low-cost,finishedproducts.

Theyalsoenable

tech

nologicalupgradingamong

suppliers

Pietrobelli

&Rabello

tti

(2011)*

WD

Conceptual

N/A

Learningmech

anismscanvary

widely

within

thevariousform

sofGVC

governance.Whentheco

mpetencesoftheactors

inthevaluech

ain

are

complementary,learningismutualandisbasedonintense

face-to-face

interactions.

Therelationship

betw

eenGVCsandinnovationsystemsis

nonlin

earandendogenous,

andmutually

affecting.Awell-structuredand

efficientinnovationsystem

would

help

toreduce

transactionco

mplexityand

enable

transactionsbasedonrelationalform

sofGVC

governance

Werner(2012)

EG

Qualitative,case

study

Alargegarm

entfirm

inthe

DominicanRepublic

Theeffortsoffirm

sto

repositionthemselvesthroughupgradingin

GPNsare

conditionedbyanew

genderdivisionoflaborbetw

eenthemasculin

izationof

skilledsewingandthefeminizationofnew

serviceengineeringfunctions

Morris&

Staritz

(2014)

WD

Qualitative

case

interviewsand

seco

ndary

data

18leadfirm

sand27branch

plants

Ownership

characteristicsofsupplierfirm

sshapetheability

toshiftbetw

een

differentendmarkets,respondto

leadfirm

requirements,andpursueupgrading

inGVCs.

WithMadagascar’sloss

oftheAfricanGrowth

andOpportunityAct

status,

locally

embeddedEuropean/French

diaspora-ownedapparelsupplier

firm

sandregionally

embeddedMauritian-ownedfirm

swere

ableto

shiftmarket

channelsandupgrade,whereasAsian-ownedfirm

slargely

exitedtheapparel

industry

Taylor,Derudder,

Faulconbridge,

Hoyler,&

Ni(2014)

EG


data

175advancedproducerservice

firm

sacross

526cities

Activitiesbyadvancedproducerservicefirm

sin

inter-firm

netw

orksdefinethe

‘‘netw

ork

strategicness’’ofglobalcitiesonthebasisofamodelofinterlocking

netw

ork

specification.Combinationsofco

mmandcapacity

andgenerationof

innovationswithin

these

firm

sindicate

strongerstrategic

presence

innetw

orks

Dallas(2015)

RIPE


data

439ofChina’slargest

exporters

in18subsectors

ofthe

electronicsandlig

htindustries

Sector-specificorganizationandthespecificvaluech

ain

strategiesoffirm

sare

importantindependentdrivers

oftradepatterns.

Tradeis‘‘g

overned’’by

powerfulleadfirm

sandch

annelizedwithin

exclusive

buyer–supplier

relationships.

Evenbeyondhigh-tech

industries,

China’sexport-led

manufacturingstrength

heavily

reliesongovernance

channelsdevelopedby

MNEs



Table

3(C

onti

nued

)

Reference

Journal

Method

Sample

Keyfindings

Lund-Thomsen&

Coe

(2015)

JEG

Qualitative,case

study

Nike’s

main

footballsupplier

factory

inPakistan

Corporate

socialresponsibility

initiativescanfacilitate

and/orco

nstrain

labor

agency

inGPNs.

Butthispotentialagency

isshapedbywidereco

nomic

forces

within

theglobaleco

nomyandbyrelationshipswithlocalo

rnationalactorsand

regulatory

frameworks.Nationalco

ntexts

forwork

andemploymentmayplace

clearlim

itsonwhatstakeholders

canach

ieve

interm

soffacilitatingmore

responsible

form

sofGPN

governance

Yeung&

Coe(2015)*

EG

Conceptual

N/A

Thispaperfocu

sesonco

mpetitive

dynamicsin

GPNs,

such

asco

st-capability

ratios(e.g.,labor,tech

nology,kn

ow-how,andcapital),sustainingmarket

development(e.g.,reach

andaccess,dominance,time-to-m

arket,cu

stomer

behavior,andpreferences),andworkingwithfinanciald

isciplin

e(e.g.,access

to

finance,andinvestorandshareholderpressure)thatserveasthecausal

mech

anismsin

shapingfirm

strategieswithin

broaderrisk

environments

Ascani,Crescenzi,&

Iammarino(2016)

EG


data

6888greenfield

investment

projectsoriginatingfrom

the

old

15EU

members

MNEs’

preferencesfortheeco

nomic

institutionsoftheco

untrieshostingtheir

investmentare

highly

heterogeneous.Im

portantlocationalfactorsare

favo

rable

business

regulationandtheprotectionofpropertyrights,buttheheterogeneity

ofthese

preferencesseemsto

belargely

linkedto

themost

sophisticated

activitiesin

sectoral(high–medium

tech

nologysectors)andfunctional

(headquarters

andinnovation)term

s.Intrafirm

organizationofdifferent

segments

ofGVCsisalsosubject

toMNEheterogeneouspreferenceswith

respect

tothelocalinstitutionalenvironment

Barrientos,

Knorringa,

Evers,Visser,&

Opondo(2016)

EPA

Qualitative,case

study

Regionalretailers

andlocal

suppliers

inSouth

Africa,Kenya

andUganda

Expansionofglobalandregionalsuperm

arkets

providesnew

opportunitiesfor

strategic

diversificationbysomehorticulturalproducers

andworkers.Strategic

diversificationin

turn

offers

opportunitiesforeco

nomicandsocialupgradingby

more

capable

suppliers

andskilledworkers,butthepersistence

ofeco

nomic

downgradingpressuresexcludessomeworkersandproducers

from

both

global

andregionalvaluech

ains

Kleibert

(2016)

RS

Qualitative,case

study

18offshore

servicefirm

sin

the

Philippines

Theoffshore

servicesectorisch

aracterizedbyverticalinvestments,withthe

locu

sofpowerremainingoverseas.Fo

reignownership,co

ntrolanddependency

characterize

most

ofthebranch

office

positionsin

GPNs,

whichare

controlled

byheadquarters

locatedabroad.Afunctionalandspatialseparationoflower-

endtaskshasemerged

Brancati,Brancati,&

Maresca(2017)

JEG

Quantitative,survey

About25,000Italianfirm

sHeterogeneitiesinfluence

how

GVC

participants

faredduringthe2008/2009

crisis.High-skillrelationalsuppliers

tendto

engagein

innovative

activitiesand

R&Dprojects.OthermodesofGVCparticipationdisplaynosignificantpremium

comparedto

domestic

firm

s.Thisheterogeneityisalsoreflectedin

differential

productivityandsalesgrowth

infavo

rofrelationalGVC

participation

Havice

&Camplin

g

(2017)

EG

Qualitative,case

study

Cannedtunaindustry

in18

countries

Moments

ofch

angein

thevaluech

ain

offeradynamic

understandingofhow

a

leadfirm

gainsandreproducesitspower,andstrategiesthatsubordinate

firm

s

deployto

counterthepowerofleadfirm

s.Thisdynamicisinextricable

from

the

environmentalco

nditionsoftunaproductionthroughwhichgovernance

relationshipsin

GVCsare

madepossible



Table

3(C

onti

nued

)

Reference

Journal

Method

Sample

Keyfindings

Pipkin&

Fuentes

(2017)

WD

Qualitative,case

study

Representative

sample

of45

case

studiesofprimary

product

andlig

htmanufacturing

industriesin

developing

countries

Advanced-countrybuyers

are

notthemain

forcein

initiatingindustrial

upgrading.In

mostcases,developing-countryfirm

sinitiate

upgradesin

theface

ofmarketvu

lnerability,usually

producedbystate

policies,

thatforcethem

to

seekto

changetheirexistingoperations.

Once

initiated,upgradingprocesses

canproduce

awidespectrum

ofresults–from

littleto

noadvancementin

marketposition(‘treadmilling’)to

jumpingto

theforefrontofaglobalindustry

(‘leapsforw

ard’).These

processesare

dependentonthesourcesoflearning

presentin

thelocalinstitutionalenvironment,such

asstate

agenciesand

business

associations

Foster,Graham,

Mann,Waema,&

Friederici

(2018)

EG

Qualitative,case

study

Thetea,tourism

,andbusiness-

process

outsourcingsectors

in

KenyaandRwanda

Digitalco

nnectivitycanleadto

furthermarginalizedpositionsin

GVCs

controlledandco

ordinatedbygloballeadfirm

sdueto

shiftingmodesofvalue

chain

governance

facilitatedbydigitalinform

ationplatform

sanddata

standards.

Africanfirm

scanbenefitmore

from

GVC

participationwithbetter

support

forco

mplementary

capacity

andco

mpetitive

advantages

Fuller&

Phelps

(2018)*

JEG

Conceptual

N/A

Theagency

role

ofMNEsin

GPNsisshapedbythevariety

ofparent–subsidiary

relationshipswithin

MNEs,

thedynamic

capabilitiesin

underpinningco

rporate

change,andthemicropoliticsofMNEsandsubsidiariesthatim

pact

onfirm

-

institutionalch

angewithin

regionaleco

nomies.Theagency

exercisedbyMNEs

influencesthe‘‘selection’’ofinvestmentlocations,‘‘couplin

g’’processes,andthe

depth

andpace

ofhost

institutionalch

ange

Horner&

Murphy

(2018)

GN

Qualitative,case

study

Eighttradingand57

manufacturingfirm

sin

India’s

pharm

aceuticalindustry

ThestructuresandprocessesassociatedwithSouth–South

GPNsare

different

from

those

withaSouth–Northorientation,in

term

softhepracticesto

meet

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entrepreneurial orientation, impact GVC gover-nance (Denicolai, Strange, & Zucchella, 2015;Kano, 2018; Levy, 1995; Verbeke & Kano, 2016),in terms of how transactions are organized andorchestrated. Therefore, systematic attention tomicrofoundations is necessary in order to mean-ingfully advance the GVC research agenda. How-ever, few empirical studies directly observe ormeasure individual-level variables. Further, whilecertain behavioral assumptions are frequentlyimplied – e.g., the nature of individual-level knowl-edge and capabilities is inherent in the idea oflearning and upgrading; the need for knowledgesharing across units implies bounded rationality ofindividual actors and associated information asym-metries; the notions of power balance and the needfor intellectual property (IP) protection assume acertain level of bounded reliability of actorsinvolved – these assumptions are, for the mostpart, neither articulated explicitly nor examinedempirically.Only seven studies in our sample directly address

the impact of microfoundations (either stated orimplied) on GVC geographic configurations,knowledge acquisition and dissemination withinthe GVC network, and efficient functioning andorchestration of the network. In an early qualitativestudy of supply chain management, Akkermans,Bogerd and Vos (1999) discuss how boundedrationality, as expressed in supply chain partners’diverging beliefs and goals, contributes to func-tional silos and erects barriers to effective valuechain management. Lipparini, Lorenzoni and Fer-riani (2014) argue that GVC networks that benefitthe most from knowledge transfer among partnersare those where partners share common identityand language. These features serve as safeguardsagainst the potential threat of opportunism andallow participating firms to learn from partnerswith reduced risk of proprietary knowledge spil-lover outside of the immediate network. Eriksson,Nummella and Saarenketo (2014) suggest thatindividual-level cognitive and managerial capabil-ities of lead firm managers, such as cultural aware-ness, entrepreneurial orientation, global mindset,interface competences and analytical capabilities,constitute a critical building block for firm-levelability to successfully orchestrate cross-bordertransactions in a GVC. Seppala, Kenney and Ali-Yrkko (2018) focus on boundedly rational account-ing decisions in lead MNEs, and argue that leadfirms’ accounting systems may misrepresent wherethe most value is created in a GVC. This mismatchT

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implies that GVC activities to which value isallocated may be selected somewhat arbitrarily,and this further impacts location decisions. Kano(2018) argues that bounded rationality and relia-bility of decision-makers in participating firmsimpact the efficiency of the GVC; as such, the roleof lead firm managers is to control boundedrationality and reliability through a mix of rela-tional mechanisms, so as to improve the likelihoodthat the GVC will be sustainable over time.Treiblmaier (2018) theoretically predicts structuraland managerial changes introduced into GVCs byblockchain technologies, by analyzing four behav-ioral assumptions of major economic theories:bounded rationality, opportunism, goal conflict,and trust. Finally, Sinkovics, Choksy, Sinkovics andMudambi (2019: 151) explore the relationshipbetween three variables – information complexity,information codifiability, and supplier capabilities– and knowledge connectivity in a GVC, andconclude that individual characteristics of lead firmmanagers – specifically, their risk perceptions andassociated ‘‘comfort zones’’ – moderate thisrelationship.

GVC Level: Components of GVC GovernanceThe term ‘‘governance’’ refers to the organizationalframework within which economic exchange takesplace, including the processes associated with theexchange (Zaheer & Venkatraman, 1995). In thecontext of a GVC, governance includes the overar-ching principles, structures and decision makingprocesses that guide the ‘‘checks and balances’’ innetwork functioning, so as to make sure that theinterests of the entire network (and broader soci-etal/environmental interests where relevant) areserved above and beyond localized interests ofparticipating firms and individual decision-makerswithin these firms. These principles, structures andprocesses encompass considerations related toboundaries of the network and its geographicmake-up, control and orchestration mechanismsfor economic activities performed within the GVC,value distribution, relationship management, anddirection of knowledge flows. Outcomes of success-ful governance include meeting of individual par-ticipants’ performance goals, as well as, ultimately,long-term sustainability of the GVC as a whole.

Here, a distinction can be made between struc-tural and strategic governance of the GVC, as shownin Figure 1. The former refers to the actual structuregoverning economic activities, e.g., make versusbuy decisions, organizational structure of the

network (number of players, power balance, bound-aries, etc.), geographic and functional allocation ofactivities, level of centralization of decision-mak-ing, and so on. In contrast, strategic governance isconcerned with dynamics of actors’ behavior inrespect to strategic decision making (Schmidt &Brauer, 2006; Zaheer & Venkatraman, 1995). In thecontext of GVCs, strategic governance is aboutorchestrating the usage of resources, through cod-ified and uncodified routines and managerial prac-tices, to ensure smooth functioning of the entirenetwork (Kano, 2018). Our review identified sixbroad, interrelated conceptual dimensions (Fig-ure 1) that constitute critical elements of structuraland strategic governance of a GVC. These dimen-sions, as well as outcomes of governance practices,are discussed below.

ControlControl decisions establish the governance struc-ture of the GVC, that is, whether each value chainactivity should be internalized, outsourced, orcontrolled through hybrid forms such as jointventures (JVs) (Buckley et al., 2019). It has beenargued that in a GVC, control of critical knowledgeand intangible assets (e.g., brand names and tech-nological platforms) takes precedence over owner-ship of physical assets (Buckley, 2011, 2014;Mudambi, 2008), and ownership advantages canbe exploited without internalizing operations(Strange & Newton, 2006). This core premiseunderlying the GVC is supported in Hillemannand Gestrin’s (2016) analysis of OECD data onforeign direct investment (FDI) and cross-bordermergers and acquisitions (M&As), which showsthat cross-border financial flows related to intangi-ble assets continue to increase relative to thoserelated to tangible assets. An analysis of about25,000 Italian firms also suggests that control ofGVC activities, as compared to ownership, yieldsbenefits in terms of greater propensity towardinnovation, increased productivity, and faster salesgrowth (Brancati, Brancati, & Maresca, 2017). Thepreference for control without ownership isenabled by increasing digital connectivity, whichallows lead firms to influence various units in theGVC without directly managing them (Foster,Graham, Mann, Waema, & Friederici, 2018).To some extent, control decisions are impacted

by host countries’ regulatory environments, partic-ularly when national political institutions createpressure for local content on MNEs that are tryingto gain access to large downstream markets in



emerging economies (Lund-Thomsen & Coe, 2015;Morris & Staritz, 2014; Sturgeon, Van Biesebroeck,& Gereffi, 2008). This is the case with ‘‘obligatedembeddedness’’ (Liu & Dicken, 2006: 1238) ofautomotive MNEs in China, where the govern-ment’s industrial policy dictates that inward FDIshould take a JV form. Further, control decisionsare linked to sectoral and functional factors – forexample, lead MNEs operating in high- andmedium-technology sectors and/or locating knowl-edge-intensive functions (e.g., innovation) in hostmarkets are more likely to pursue ownership injurisdictions that offer weaker IP protection (As-cani, Crescenzi, & Iammarino, 2016). Ownershipallows the MNE to have better control over thecreation, transfer and leakage of propriety knowl-edge, and is thus a pre-emptive measure forknowledge protection.

However, considerable heterogeneity in controldecisions exists among lead firms operating in thesame geographic regions and industry sectors,which suggests that firm-level strategic considera-tions, and not only macro-level forces, are powerfuldrivers of control patterns in GVCs (Dallas, 2015;Sako & Zylberberg, 2019). These considerationsinclude lead firms’ levels of specialization, thenature of their relationships with partners, theneed for flexibility versus stability in offshoreoperations, and the value of the operations to thelead firm (Amendolagine, Presbitero, Rabellotti, &Sanfilippo, 2019; Dallas, 2015; Kleibert, 2016).Control decisions can be also driven by the levelof local adaptation required, whereby the lead MNEmay need to source external expertise in order toperform the desired degree of customization. Here,a carefully designed mix of internalized and exter-nalized, yet managerially or technologically linked,activities is argued to allow the lead firm to achievethe ultimate balance between integration andresponsiveness (Buckley, 2014).

LocationLocation decisions determine the most advanta-geous geographical configuration of the GVC,namely, where activities should be located, andhow they should be distributed in order to maxi-mize the value created in and captured through theGVC. Location decisions encompass such consid-erations as the regional effect (Rugman & Verbeke,2004), the nature of industrial clusters (Turkina &Van Assche, 2018), and the links between GVCsand local clusters. Location decisions are tightlyintertwined with control decisions discussed

earlier. For example, FDI (as opposed to marketcontracting) enables the MNE to construct aregional, or even global, network under its controlto supply wide-ranging, differentiated and low costproducts in a flexible manner. Chen’s (2003) studyof electronics firms in Taiwan indicates that FDIoften starts at a location close to the home base,where resources from domestic networks can bedrawn, and subsequently moves on to more distantlocations, after the lead firm has developed aregional sub-network to support its furtherexpansion.Location considerations are linked to macro-level

characteristics of host and home countries, includ-ing level of economic development and corre-sponding factors such as cost of labor,technological environment, and institutional qual-ity. Among these factors, favorable business regu-lations, IP protection, and significant educationspending typically attract technologically and func-tionally sophisticated activities (Amendolagineet al., 2019; Ascani et al., 2016; Pipkin & Fuentes,2017). Control of the GVC resides in the hands oftechnology and/or market leaders, which are typ-ically (although not always) located in developedeconomies and extract value from their GVCsthrough global orchestration capabilities (Buckley& Tian, 2017). Countries with more advancedproduction technologies are naturally engagedmore in the upstream segments of the GVC, andbecome key suppliers to other countries in theregion, thus supporting regional integration ofproduction (Amendolagine et al., 2019; Suder,Liesch, Inomata, Mihailova, & Meng, 2015).Most empirical studies address location of pro-

duction activities, whereby labor cost emerges asone of the core determinants for GVCs led by bothadvanced economy MNEs (AMNEs) and emergingeconomy MNEs (EMNEs). For example, Asian tier 1suppliers to MNEs and OEMs become GVC leadfirms in their own right by shifting production tolower cost locations in the region (Azmeh & Nadvi,2014; Chen, Wei, Hu, & Muralidharan, 2016). Yetefficiency-seeking offshoring may create strategicissues, particularly when inefficient local institu-tions fail to prevent unwanted knowledge dissipa-tion. Issues can also emerge on the demand sidedue to sustainability and ethical breaches in largeMNEs’ value chains, as evidenced in multiple,recent instances of public backlash in response topoor working conditions in manufacturing facto-ries in South and Southeast Asia (Malesky &Mosley, 2018). Funk et al.’s (2010) survey of US



consumers suggests that developed economy con-sumers’ willingness to purchase is negativelyaffected by partial production shifts to animosity-invoking countries (countries with poor humanrights records/with poor diplomatic relationshipswith the home country). As the wave of consumermovement spreads to less developed countries, it isin the best interest of the lead firm to evaluatecarefully the undesirable attributes of a potentialhost country when making FDI decisions (Amen-dolagine et al., 2019; Morris & Staritz, 2014).

Desire to access large and fast-growing consumermarkets drives production activities close to endmarkets, for example, when host country govern-ments in emerging markets pressure MNEs for localoperations (Sturgeon et al., 2008). Co-location ofmanufacturing and sales also allows lead firms to bemore responsive to customer demands, and to off-set the costs of globally dispersed activities byreducing investment in transportation and logistics(Lampel & Giachetti, 2013).

Strategic asset seeking by lead firms and suppliersexplains much of the geographic configuration ofGVCs, whereby MNEs locate value chain activitiesin globally specialized units to exploit internationaldivision of labor (Asmussen, Pedersen, & Petersen,2007). This is particularly pronounced in knowl-edge-intensive industries, where lead firms oftenlocate operations in innovation hubs and globalcities (Taylor, Derudder, Faulconbridge, Hoyler, &Ni, 2014). In their analysis of clusters in theaerospace, biopharma, and ICT industries, Turkinaand Van Assche (2018) demonstrate that innova-tion in knowledge-intensive clusters benefits fromhorizontal connection to global hotspots, asopposed to labor-intensive clusters where innova-tion gains from vertical GVC connections.

While much has been written about fine-slicingand fragmentation of value chain activities in aGVC (Buckley, 2009a, b), few empirical studiesmeasure the costs and benefits of geographicdiversification of operations within the same partof the value chain. Lampel and Giachetti (2013)address a relationship between international diver-sification of manufacturing and financial perfor-mance in the context of the global automotiveindustry, and find an inverted U-shaped relation-ship, whereby advantages of diversified manufac-turing (i.e., greater flexibility and access tointernationally dispersed strategic resources) areeventually off-set by increased organizational com-plexity and managerial inefficiencies. Further, loca-tion decisions are tied to firms’ strategic priorities

beyond cost reduction – for example, increasedneeds for customer responsiveness and/orenhanced quality control. Focus on such prioritiesmay prompt backshoring initiatives (Ancarani, DiMauro, & Mascali, 2019). Yet, geographic diversifi-cation may serve strategic purposes such as IPprotection. Gooris and Peeters’ (2016) survey ofoffshore service production units demonstrates thatlead firms may opt to fragment their global busi-ness processes across multiple service productionunits, rather than co-locating processes, with theexplicit purpose of reducing the hazard of knowl-edge misappropriation.Finally, technological advances continue to

shape geographic make-up of GVCs (MacCarthy,Blome, Olhager, Srai, & Zhao, 2016). Few studies inour sample measure the impact of digital technolo-gies on location choice, but several studies addresscurrent and potential influences of technologyindirectly and/or conceptually. Ancarani et al.(2019) suggest that adoption of labor-saving tech-nologies leads to backshoring in instances whenlead firms compete on quality, rather than on cost.While digital connectivity enables exploiting com-plementarities between geographically dispersedprocesses (Gooris & Peeters, 2016), it may limitparticipation by suppliers located in technologi-cally underdeveloped regions (Foster et al., 2018).Further, the latest technology, such as 3D printing,is likely to impact GVCs of relevant industries bymaking them shorter, more dispersed, more local,and closer to end users (Laplume et al., 2016;Rehnberg & Ponte, 2018).

Network structureNetwork structure refers to the structural make-upof a GVC and has been well theorized in some ofthe most cited GVC conceptual frameworks (e.g.,Coe & Yeung, 2015; Gereffi, 2018; Gereffi et al.,2005; Henderson et al., 2002). While a GVC cantypically be conceptualized as an asymmetrical orhigh centrality network with a lead firm at itscentre (Kano, 2018), these networks can also beheterogeneous in terms of such characteristics asdepth, density, openness, and the presence ofstructural holes (Capaldo, 2007; Rowley, 1997).These characteristics affect power relations in theGVC, the level of control afforded to the lead firm,and innovation and business performance. Notsurprisingly, a large number of empirical studies inour review address various dimensions of thenature and/or role of network structures in GVCgovernance and performance outcomes.



The network structure in a typical GVC can bedyadic or multi-actor in nature, and can affectknowledge flows (Lipparini et al., 2014), newventure formation (Carnovale & Yeniyurt, 2014),and operational performance (Golini, Deflorin, &Scherrer, 2016). A firm with high centrality (i.e.,most links in a network) has greater power overother firms in a dyadic or multi-actor network,whereby control can be exerted by the lead firmbeyond its legal boundaries over independent – butcaptive – suppliers (Yamin, 2011). In supply chainmanagement, Carnovale and Yeniyurt’s (2014)study of automotive OEMs and automotive partssuppliers shows that manufacturing JV formationbetween lead firms and potential partners can beenhanced by higher network centrality of either thelead firm or the potential JV partner. This networkcentrality is seen as a proxy for greater legitimacyand credibility within the network. However, thestudy found mixed outcomes in relation to networkdensity. High network density is not necessarilyfavorable to new JV formation due to ‘‘lock-in’’effects through structural homophily. This networkstructure in turn limits access of lead firms to adiverse set of potential partners and hinders learn-ing and innovation. Similarly, the studies of man-ufacturing plants in various countries by Goliniet al. (2016) and Golini and Gualandris (2018)demonstrate that a higher level of external supplychain integration (e.g., through GVC activities) canimprove the operational performance of and theadoption of sustainable production by manufactur-ing MNEs due to information sharing, learning,and innovation through supply chain partners.

The density of network structure in GVCs, how-ever, may change over time in relation to theemergence of new technologies and platforms,some of which may favor greater density in local-ized networks. In their perspective article on 3Dprinting and GVCs, Laplume et al. (2016) questionif technological advancements can influence therelative density of globally dispersed and localizedproduction networks. As more local firms canparticipate in the production of high-value com-ponents through 3D printing, their need for tech-nological acquisition and/or specializedcomponents through MNE lead firms in GVCsmay be reduced, leading to what Rehnberg andPonte (2018) call ‘‘unbundling’’ and ‘‘rebundling’’of GVC activities towards regionalized or evenlocalized GVCs. In this scenario for decentralizedGVC network structure, local producers can engage

in more transactions with each other, and thuslocalized production networks may get denser overtime.In addition to centrality and density, network

structures in GVCs can also be distinguished bylinkage heterogeneity – the mix of horizontallinkages (between firms with similar value chainspecialization) and vertical MNE-supplier linkages(with different value chain specialization). Thisstructural mix has significant influence on theinnovation performance of firms in different indus-tries (Amendolagine et al., 2019; Brancati et al.,2017). Drawing on a social network approach,Turkina and Van Assche’s (2018) study of industrialclusters shows that network structures underpinnedby dense horizontal linkages among local firmstend to enhance innovation performance in knowl-edge-intensive industries, whereas strong verticallinkages between local firms and MNEs can pro-mote innovation in labor-intensive clusters. Theformer network structure tends to promote inno-vation through intra-task knowledge capabilitydevelopment among horizontally linked firms. Asto the latter case of local suppliers in labor-inten-sive industries, inter-task capability developmentcan be better served through vertical and interna-tional linkages with global lead firms.Finally, power relations among GVC actors play

out very differently in different network structures(Dallas, Ponte, & Sturgeon, 2019; Grabs & Ponte,2019). In one of the earliest studies of industrialupgrading through GVC participation, Humphreyand Schmitz (2002) observed that network struc-tures characterized by quasi-hierarchical powerrelations in favor of one party – often global leadfirms or global buyers – were generally not con-ducive to the upgrading of local firms. Sturgeonet al. (2008) followed up with this line of researchby examining major American and Japanese auto-motive lead firms and over 150 suppliers in NorthAmerica. They found that upgrading of local sup-pliers was more likely if the GVC network structuremoved towards a relational form of power dynam-ics. Such a relational form of network structuretends to favor inter-firm cooperation and crediblecommitment (e.g., IKEA and its suppliers inIvarsson & Alvstam, 2011 and tuna canning firmsin Havice & Campling, 2017). Similarly, Khan, Lewand Sinkovics’s (2015) study of the Pakistani auto-motive industry shows that local firms are morelikely to acquire technological know-how anddevelop new capabilities by participating in geo-graphically dispersed rather than locally oriented



networks. Through international JVs (IJVs) withglobal lead firms, these local firms can accessdifferent knowledge base and know-how in thoseinternational networks.

As noted earlier, network structures are embed-ded in different national and institutional contexts.Pipkin & Fuentes (2017) find that domestic insti-tutional environment, such as state policies andsupport from business associations, is more signif-icant than lead firms’ influence in shaping networkdynamics in developing countries. Horner andMurphy’s (2018) study of manufacturing firms inIndia’s pharmaceutical industry shows that net-work structures characterized by firms from similarnational contexts (e.g., the Global South) can bemore open and cooperative in relation to produc-tion and quality standards, market access, andinnovation. This greater openness in South–SouthGVCs entails different business practices towardtheir end markets due to lower entry barriers, lowermargins, and higher volumes. The opportunities forlearning in these GVCs are also different from thosetightly controlled and coordinated by lead firmsfrom the Global North. Another study of chocolateGVCs in Indonesia by Neilson, Pritchard, Fold andDwiartama (2018) also points to the importance ofcontextual heterogeneity in shaping the influenceof different network structures on lead firm behav-ior and relationships with suppliers and distribu-tors. Drawing upon Yeung and Coe’s (2015) GPN2.0 theory, Neilson et al. (2018) argue that networkstructures differ significantly between brandedchocolate manufacturing and cocoa farming/pro-cessing in agrofood manufacturing. Owing todomestic industrial policy and international busi-ness lobbying, the role of national context is muchmore pronounced in the network structure of cocoafarming/processing that favors inter-firm partner-ship and cooperative learning.

LearningConceptual studies have identified knowledge dif-fusion and transfer as an important aspect ofnetwork governance (Ernst & Kim, 2002; Inkpen& Tsang, 2005). Empirical studies take note of thistopic and examine various dimensions of learningin a GVC. Most of such studies in our sample focuson interfirm learning in the context of capabilitydevelopment, technological catch-up and upgrad-ing by peripheral GVC actors – that is, emergingeconomy suppliers’ progression from OEM to orig-inal design manufacturing (ODM) and to ownbrand manufacturing (OBM). As touched upon in

the previous section, macro-level conditions suchas market forces and state policies, rather than leadfirm initiatives, are argued to be the main force inspurring supplier upgrading (Pipkin & Fuentes,2017). Upgrading initiatives can produce a widerange of results, from incremental to significantleaps in market position (Pipkin & Fuentes, 2017),depending on a number of factors. Eng and Spick-ett-Jones (2009) argue that upgrading hinges onsuppliers’ ability to simultaneously develop threesets of marketing capabilities: product develop-ment, marketing communication, and channelmanagement. Wang, Wei, Liu, Wang and Lin’s(2014) study of manufacturing firms in Chinaindicates that the presence of MNEs alone doesnot guarantee knowledge spillovers, and may infact have a negative impact on indigenous firms’domestic performance due to increased competi-tion. Hatani (2009) describes barriers to learning byemerging market GVC suppliers. Her study ofautoparts suppliers in China suggests that excessiveinward FDI limits interactions between lead firmsand local suppliers and thus creates structuralobstacles to technology spillovers to lower GVCtiers. Also researching the autoparts industry (butin Argentina rather than China), McDermott andCorredoira (2010) suggest that supplier upgradingis facilitated by regular, disciplined discussions withthe lead firm about product and process improve-ment; in this context, a limited amount of directsocial ties to international assemblers appears to bethe most beneficial.In a follow-up study, Corredoira and McDermott

(2014) find that lead firms alone do not helpprocess upgrading, but add value particularly whenemerging market suppliers’ ties to MNEs are aug-mented with multiple, strong ties to non-marketinstitutions (e.g., universities and business associa-tions), which act as knowledge-bridgers and helpsuppliers tap into knowledge embedded in thehome country. These types of ties are particularlyuseful for accessing knowledge for the developmentof exploitative innovation, while exploratory inno-vation is best achieved through participation intrade fairs and collaboration with international(rather than domestic) institutions, according tothe study of Pakistani motorcycle part suppliers byKhan, Rao-Nicholson and Tarba (2018). Similarly,Jean’s (2014) study of new technology ventures inChina indicates that firms that participate in tradeshows and have strong quality control practices aremore likely to develop requisite knowledge topursue upgrading, while firms engaging in



Internet-based business-to-business transactions areless likely to upgrade. Based on their studies of thegarment and toy industries, Azmeh and Nadvi(2014) as well as Chen et al. (2016) describealternative paths to upgrading: some OEMs investin R&D to enter the ODM business, or invest inmarketing and branding and move toward thedownstream end of the value chain to becomeOBMs. Others achieve competitive gains by shiftingproduction to different locations and learning howto effectively coordinate multiple production loca-tions (see also detailed case studies of ODMs fromTaiwan and Singapore and OBMs from South Koreain Yeung, 2016). Buckley (2009b) suggests that bothoptions – incremental upgrading within the estab-lished GVC and developing a new GVC under localcontrol – are difficult in that they require mobi-lization of entrepreneurial abilities and develop-ment of sophisticated managerial skills. Successfulupgrading hinges not only on suppliers’ acquisitionof knowledge, but also on their ability to absorb itand transform it into innovation, which ultimatelyimproves suppliers’ position in GVCs (Khan et al.,2019).

Specific knowledge acquisition strategies requiredfor upgrading vary depending on the nature ofhome institutions and labor markets (Barrientos,Knorringa, Evers, Visser, & Opondo, 2016; Pipkin &Fuentes, 2017; Werner, 2012). Weak home institu-tions hinder the transformation of knowledge intoactual innovative products and processes (Jean,2014). This explains why catch-up and upgradingby GVC suppliers often mirrors the evolution ofhome institutions (Kumaraswamy, Mudambi, Sar-anga, & Tripathy, 2012): as institutions evolvetoward liberalization, upgrading strategies changefrom upgrading technical competencies throughlicensing and collaborations, to upgrading internalR&D and developing strong relationships with leadfirms. The weakness of local institutions can beovercome by gaining knowledge through partici-pation in international networks and collaborationwith global suppliers (Khan et al., 2018).

The nature of relationship among parties inGVCs matters for technological knowledge transfer,as network ties are channels through which knowl-edge flows. Khan et al.’s (2015) above-mentionedstudy indicates that IJVs represent a governancevehicle that facilitates the creation of social capitalbetween focal MNEs and automotive parts supplierslocated in emerging economies, and thus facilitatedevelopment and acquisition of complex techno-logical knowledge by local firms.

Learning and knowledge accumulation and dif-fusion in the lead firm, as well as lead-firm initiatednetwork-wide learning, garnered significantly lessscholarly attention, with one notable exception.Through analyzing Italian motorcycle industryprojects carried out via dyads of buyers and suppli-ers, Lipparini et al. (2014) develop a framework thataddresses multi-directional, multilevel and multi-phase knowledge flows in a GVC, and describepractices implemented by lead firms to successfullycultivate creation, transfer and recombination ofspecialized knowledge to facilitate network-widelearning. In such a dynamic and somewhat opencontext of knowledge sharing, the threat of oppor-tunism is likely to be outweighed by the advantagesof learning from other network members.There appears to be consensus in the literature

that strong linkages within the GVC – frequentlyreferred to as embeddedness of actors in thenetwork (Henderson et al., 2002) – are conduciveto transferring various types of knowledge, includ-ing production processes, sourcing practices, tech-nological knowledge, and innovation capabilities(Golini et al., 2016; Golini & Gualandris, 2018;Ivarsson & Alvstam, 2011). Such linkages are themost effective when purposefully facilitated bystrong lead firms. Lead firms can impel capabilityupgrading on peripheral units by leveraging theircentral positions and complementary assets, asindicated by the acquisition of UK-based Dynexby China’s Times Electric (He, Khan, & Shenkar,2018). Ivarsson and Alvstam’s (2011) case study ofIKEA and its suppliers in China and Southeast Asiasimilarly shows that lead firms can contribute toperipheral units’ upgrading by fostering close, long-term interactions, and by offering technologicalsupport. Conversely, weak strategic couplingbetween lead firms and peripheral units hurtsknowledge transfer and capability development(Yeung, 2016). For example, Pavlınek’s (2018) studyof automotive firms in Slovakia suggests that weakand dependent supplier linkages between MNEsand domestic firms undermine the potential fortechnology and knowledge transfer from theformer to the domestic economy.Lead firms are often motivated to drive their

suppliers’ capability upgrading, because they them-selves benefit from suppliers’ enhanced capabilitiesthrough improved sourcing efficiency, higher-qual-ity inputs, and more generally valuable knowledgediffusion throughout the GVC. In the next section,we discuss how characteristics of the lead firmimpact its position and role in the GVC.



Impact of lead firmExtant conceptual research has acknowledged thatsmooth and efficient functioning of the GVC iscontingent on the lead firm’s ability to establish,coordinate and lead the network (Kano, 2018;Yamin, 2011; Yeung, 2016; Yeung & Coe, 2015).Buckley (2009a) argues that the role of headquar-ters is more important in a GVC than in a conven-tional hierarchical MNE, because leading a GVCdemands specific management capabilities such asthe ability to fine-slice the value chain, controlinformation, and coordinate strategies of externalorganizations. Yet few studies directly investigatethe specific impact of lead firm characteristics onthe boundaries, configurations and performance ofthe GVC. The studies that do use lead firm featuresas independent variables focus on such aspects ofthe lead firm as size (small versus large), industrysector (and associated sector-specific value chainstrategies), location (headquarters location in aparticular region/in emerging versus developedmarkets, and proximity to clusters), and techno-logical leadership.

Lead firm size appears to be seen as a proxy forpower and influence in a network. Eriksson et al.(2014), in a case study of a Finnish high-tech SMEat the centre of a globally dispersed value chain,argue that SMEs face additional liabilities of small-ness and newness when managing a GVC, andsuggest that in order to manage successfully a GVCover the long term, the SME must develop threedistinct yet related sets of dynamic capabilities:cognitive, managerial, and organizational. Dallas(2015) takes a finer-grained view of firm size as adeterminant of GVC management strategy. Whilehis analysis of transactional data of Chinese elec-tronics/light industry firms uses size as a control,rather than independent, variable, he concludesthat ways in which GVCs are organized vary notsimply by lead firm size and productivity, but alsoby other heterogeneous firm level features, such asdistinct governance channels available to leadfirms. Dallas (2015) thus cautions GVC researchersnot to make assumptions about the distinctivenessof large lead firms as a group, and to focus on otherpotential sources of heterogeneity, which can belinked to sector-specific features as well as firm-levelstrategies.

One of such sources of heterogeneity appears tobe the level of economic development of homecountry, dichotomized in some GVC papers asemerging versus advanced. Two studies exploredifferences in GVCs led by EMNEs versus AMNEs.

He et al. (2018), based on a case analysis of China’sTimes Electric-led GVC, argue that power relation-ships in the GVC seem to be more balanced whenEMNEs, rather than AMNEs, are in lead positions.Buckley and Tian (2017) compare internationaliza-tion patterns of top non-financial EMNEs andAMNEs, and find that AMNEs are more likely toachieve profitability through global GVC orches-tration, while EMNEs’ ability to develop orchestra-tion know-how is restricted by home institutions.Therefore, EMNEs are more likely to extract mono-poly-based rents from internationalization, but toremain constrained to the periphery position inGVCs.It follows, then, that control of the GVC is likely

to remain in the hands of technology leaders(Buckley & Tian, 2017). Jacobides and Tae (2015)describe such technology leaders as ‘‘kingpins,’’operationalized as firms with superior market cap-italization and comparatively high R&D invest-ment. In their study of firms active in varioussegments in the US computer industry, the authorsshow that ‘‘kingpins’’ impact value distribution andmigration through the value chain. Technologicaland R&D capabilities, however, need to be accom-panied by global orchestration know-how in orderfor lead firms to achieve profitability from frag-mented, globally dispersed operations (Buckley &Tian, 2017). We address GVC orchestration in thenext section.

GVC orchestrationOrchestration refers to decisions and actions bylead firm managers – a managerial toolkit – aimedat connecting, coordinating, leading, and servingGVC partners, and ultimately shaping the net-work’s strategy (Rugman & D’Cruz, 1997). Orches-tration encompasses such elements as, inter alia,formal and informal components of each relation-ship within the network, the entrepreneurial ele-ment of resource bundling, interest alignmentamong parties achieved through strategic leader-ship by the lead firm, knowledge management4,and value distribution.Formal orchestration tools – that is, codified

rules, specific contractual choices to manage part-ner relationships, and price-like incentives andpenalties – are typically easier to observe andoperationalize than informal tools such as socialmechanisms deployed by lead firms to governrelationships. Yet, only a few studies in our sampleinvestigate contractual choices in a GVC. Lojacono,Misani and Tallman (2017) examine nuances of



cooperative governance in the dispersed valuechain of the home appliances industry, and findthat more complex transactions requiring greatercoordination are more likely to be governedthrough equity participation. Specifically, non-equity contracts are more efficient for coordinatingoffshore production, while equity JVs are preferablefor managing local strategic relationships, such asproduction alliances whose primary objective is toserve local markets. Chiarvesio and Di Maria (2009)explore differences in GVC orchestration betweenlead firms located within industrial districts versusthose located outside. Their quantitative study ofItalian firms active in the country’s four dominantindustries – furniture, engineering, fashion, andfood – shows that there are subtle differences inways district and non-district lead firms managetheir GVCs to achieve optimal efficiency: while leadfirms located within industrial districts rely moreon local systems through subcontracting networks,non-district firms invest in national level subcon-tracting. Here, local subcontracting networks allowlead firms to exploit flexibility, and national sub-contracting facilitates greater efficiency and acqui-sition of value-added competences through theGVC. Of note, these differences decrease as firm sizeincreases. Finally, Enderwick (2018) conceptuallystudies responsibility boundaries in a GVC, andargues that the full extent of lead firm responsibil-ity for actions of indirect GVC participants dependson whether indirect partners’ contracts are exclu-sive or non-exclusive.

Entrepreneurial guidance by the lead firm is animportant component of GVC orchestration (Buck-ley, 2009a), as it serves to redirect GVC resourcesand tasks toward creating innovation. While mostresearch in our sample implicitly assumes the leadfirm’s entrepreneurial role in generating value, twoempirical studies take a close look at the process ofentrepreneurial resource recombination in a GVC,initiated by the lead firm. In a multiple case studyof engineering firms, Zhang and Gregory (2011)identify mechanisms of value creation in globalengineering networks: efficiency, innovation, andflexibility. The efficacy of these mechanismsdepends on which part of the engineering valuechain is the core focus of the operations: productdevelopment/production, design/idea generation,or service/support. Ivarsson and Alvstam (2011)discuss how IKEA manages resources to generategreater value and stimulate innovation capabilities

in its supply chain. Their case study reveals thatIKEA provides access to inputs through globalsourcing, shares business intelligence, implementsmanagement systems and business policies acrossthe network, and fosters informal R&D collabora-tions with suppliers.Relational governance, as perhaps the most

important of the five types of GVC governance inGereffi et al.’s (2005) typology, emerged as a keytool for network orchestration. There appears to bea broad consensus in our sample that cultivatinginformal relationships, as a means of networkorchestration, has a potential to facilitate knowl-edge transfer, secure commitments, enhance inno-vation, respond to legislation, and improve overallGVC efficiency. In fact, Brancati et al. (2017) show,based on a survey of about 25,000 Italian firms, thatGVCs comprised of firms with strong relationshipsand active decisional roles in the value chain have a4-6% higher probability of engaging in innovationand R&D, and display greater productivity and salesgrowth. Benstead, Hendry and Stevenson (2018)argue that relational capital facilitates successfulhorizontal collaboration among GVC members,which allows participating firms to respond moreeffectively to modern slavery legislation in thetextiles and fashion industry, and consequentlyimprove reputation and performance. In a casestudy of major American and Japanese automotivelead firms and their suppliers, Sturgeon et al. (2008)find that relational governance is necessitated byrising product complexity, low process codifiabilityand a paucity of industry-level standards. Theserelational links explain continued dominance ofregional structures in the industry.Studies have described specific relational strate-

gies deployed by lead firms. These include promot-ing regular communication between suppliers andbuyers (McDermott & Corredoira, 2010), adaptingcommunication strategies to cultural contextswhere GVC partners are embedded (Griffith &Myers, 2005), involving multiple actors in estab-lishing functioning principles for the GVC, facili-tating shared identity and common language(Lipparini et al., 2014), extending the network toinclude non-market institutions (Corredoira &McDermott, 2014; Kano, 2018; Pipkin & Fuentes,2017), investing into image building (Horner &Murphy, 2018), and establishing a long-term hori-zon for inter-unit relationships to facilitaterepeated interactions (Ivarsson & Alvstam, 2011).



Finally, extant research identifies GVC valuedistribution as the responsibility of the orchestrat-ing firm. The lead firm must ensure that partnersreceive an equitable share of value created in theGVC, as a function of their respective contributionsto the network (Dhanaraj & Parkhe, 2006). In moststudies in our sample, a power view of the GVC isassumed, whereby value distribution is seen to be aresult of the power struggle between the lead firmand the periphery. Typically, lead firms – particu-larly those that possess valuable technologicalknowledge and/or intangibles such as brand namesand patents – are argued to capture the lion share ofthe value (Jacobides & Tae, 2015), while mostperipheral players appear in a subordinate positionand under high cost pressures (Taplin, Winterton,& Winterton, 2003), and must deploy strategies tocounter the power of the lead firm (Grabs & Ponte,2019; Havice & Campling, 2017; Pipkin & Fuentes,2017), including attempts to move up the valuechain, as discussed above. This power imbalanceappears to be more pronounced in GVCs led byAMNEs than those led by EMNEs, because leadEMNEs are likely to build their GVCs with aknowledge-seeking objective, by enlisting AMNEsthat possess desired knowledge (He et al., 2018).

Some conceptual studies in our sample approachthe issue of value distribution as a deliberateorchestration tool on behalf of the lead firm. Kano(2018) argues that equitable value distributionimproves reliability of partners and enhances sus-tainability of the GVC over time. Of note,equitable value distribution undermines potentialefficiency gains achieved through externalizationof activities; however, as argued by Yamin (2011),such sacrifice in terms of loss of efficiency may benecessary in order to ensure legitimacy and survivalof the network.

Governance and performance outcomesA significant proportion of papers in our sample isconcerned with developing typologies, mappinglinkages in GVCs, analyzing configurations, andinvestigating processes, without an explicit focuson performance. Studies that addresses perfor-mance per se conceptualize and measure perfor-mance outcomes in a variety of ways, depending onresearch questions and units of analysis. Moststudies focusing on GVC suppliers are concernedwith upgrading as a performance goal, as evidencedby suppliers’ development of technological and/orbranding capabilities, or by their ability to

reconfigure activities so as to become lead firms intheir own right (e.g., Azmeh & Nadvi, 2014;Buckley 2009b; Chen et al., 2016).Studies focusing on lead firms are more likely to

use financial performance measures as indicators ofGVC success: for example, value capture as mea-sured by comparative market capitalizations ofvarious industrial sectors (Jacobides & Tae, 2015),sales and profit growth (Griffith & Myers, 2005),and return on assets (Buckley & Tian, 2017; Lampel& Giachetti, 2013). Other conceptualizations oflead firm performance include, inter alia, its abilityto exercise control over independent partners andcoordinate division of labor (Casson, 2013; Strange& Newton, 2006), ability to minimize the total sumof transaction costs (Buckley, 2009a), capabilitydevelopment (Eriksson et al., 2014), and corporatesocial responsibility (CSR) performance (Enderwick,2018).Studies concerned with performance of the GVC

network as a whole naturally explore more complexaspects of performance, such as flexibility/dy-namism of the production process, access to a widerange of resources, operational efficiency, cohesive-ness/connectivity, innovation/ability to transformideas into commercial products, and sustainabilityof the GVC over time (Akkermans et al., 1999;Buckley, 2011; Chen, 2003; Colotla, Shi, & Gregory,2003; Kano, 2018; Karlsson, 2003; Sinkovics et al.,2019; Yamin, 2011; Zhang & Gregory, 2011).Notably, studies in the social sciences group mayfocus on development and sustainability outcomesof GVC governance, such as industrial/economicdevelopment and positive institutional change(e.g., Coe et al., 2004; Fuller & Phelps, 2018;Henderson et al., 2002; Lund-Thomsen & Coe,2015; Pavlınek, 2018; Yeung, 2016). Due to itscomplexity and multifariousness, GVC-level per-formance is difficult to operationalize quantita-tively, and is mostly addressed in qualitative andconceptual studies in our sample.

Macro-level: Interaction of Home and HostEnvironment Characteristics and GVC GovernanceGVC organization is contingent on a number oflocation characteristics, including levels of eco-nomic development (Mudambi, 2007), IP and FDIprotection regimes (Johns & Wellhausen, 2016),trade and tariff regimes (Curran, Nadvi, & Cam-pling, 2019; Kim, Milner, Bernauer, Osgood,Spilker, & Tingley, 2019), regulatory environmentsand government policy interventions, labor costs,level of technological sophistication, and societal



norms (Dunning, 1988). The role of the state, inparticular, can significantly shape the organizationand evolution of GVCs over time (Alford & Phillips,2018; Coe & Yeung, 2019; Smith, 2015; Yeung,2016). Macro-level impacts on GVC governancehave been discussed in the preceding sections, butwe summarize the key themes and findings below.

Institutional factors, such as trade regulationsand the strength of local institutions, are majordeterminants of GVC governance attributes,including geographic and structural configuration,operating mode choices, power balance, and possi-bility of upgrading by peripheral players. Hostcountry institutions can both attract investmentby lead firms through policies encouraging localcontent and promoting local supplier linkages(Amendolagine et al., 2019; Dawley, MacKinnon,& Pollock, 2019; Liu & Dicken, 2006; Sturgeonet al., 2008; Yeung, 2016), and deter such invest-ment due to insufficient IP protection and underde-veloped legal systems (Gooris & Peeters, 2016).However, the impact of host country institutionalenvironment on GVCs is heterogeneous: while it istempting to assume that lead firms are attracted byfavorable local business regulations and stronginstitutions, this impact in fact varies across GVCs,depending on specific functions/activities beingoffshored, internationalization motives, and leadfirm-level strategies and capabilities (Ascani et al.,2016; Morris & Staritz, 2014).

One conclusion that can be drawn from ourreview is that institutions greatly impact GVCs’abilities to engage in, and profit from, innovation.Inadequate local institutions prevent domesticfirms from transforming R&D into innovativeproducts and services (Buckley & Tian, 2017; Jean,2014), and thus effectively hinder supplier catch-upand upgrading. This likely explains why most GVCsare controlled by MNEs that stem from developedinstitutional environments and, consequently, dis-play technological leadership. Peripheral players inGVCs can respond to this challenge by enteringinto international collaborations, engaging withinternational institutions, and more broadlybecoming embedded in international networksthat off-set the weakness of local institutions (Khanet al., 2015, 2018; Pipkin & Fuentes, 2017). This is acrucial dimension of strategic coupling in GPN 2.0theory (Coe & Yeung, 2015; Yeung, 2009, 2016). Itis important to note that the impact of institutionsis dynamic. As trade, liberalization and economicdevelopment in emerging markets progress, so dosuppliers’ strategies. Internal R&D becomes a

dominant strategy for upgrading (Kumaraswamyet al., 2012), and suppliers with more advancedtechnologies become core players in their regionalnetworks (Suder et al., 2015).Economic factors, such as labor cost and supply,

markets and competition (MacCarthy et al., 2016),impact GVC configurations and, more recently,determine further production shifts in GVCs,whereby tier 1 GVC suppliers begin disintegratingtheir own value chains, in search of both greaterefficiency (as a response to rising labor costs) andbetter production capabilities (Azmeh & Nadvi,2014; Suder et al., 2015). In the terminology of GPN2.0 (Coe & Yeung, 2015), this simultaneous attain-ment of both cost efficiency and production capa-bilities is translated into lower cost-capability ratiosin favor of strategic partners and suppliers of globallead firms. This strategy is an alternative to func-tional upgrading discussed above (Chen et al.,2016; Humphrey & Schmitz, 2002; Sako & Zylber-berg, 2019), and represents a different type ofupgrading, where major suppliers become MNEsin their own right, e.g., leading ODMs such asQuanta and Wistron and contract manufacturerssuch as Foxconn, Flex, and Venture from East Asianeconomies (Yeung, 2016).The impact of macro-level cultural characteristics

is considered in a smaller subset of studies, andmainly in relation to the lead firm’s strategicgovernance routines. Griffith and Myers (2005)suggest that host country cultural expectationsimpact GVC performance by affecting the leadfirm’s ability to effectively deploy relational strate-gies across the network. They argue that culturaladaptation of relational governance results inimproved performance. Sturgeon et al. (2008) dis-cuss the impact of home country cultural charac-teristics on American and Japanese lead firms’abilities to successfully engage in relational gover-nance. Only one study (Funk et al., 2010) analyzesthe broader impact of home country consumers’cultural characteristics on GVC profitability, usingSchwartz’s (2006) theory of values.It is acknowledged that technology is one of the

major macro-level factors impacting a GVC over itslifecycle (MacCarthy et al., 2016). In the priorsection, we have discussed ways in which advancedtechnologies impact structural and strategic gover-nance decisions in a GVC, mostly in the context offacilitating connectivity and determining innova-tion and power loci in the network. Some studies inour sample investigate a direct impact of the latest,advanced technologies on GVC configurations.



Laplume et al. (2016) analyze potential impact of3D printing technologies on GVC structure andgeographic reach. Treiblmaier (2018) discussespotential implications of blockchain technologyfor various aspect of GVC management, includingboundaries, structures and relationships.

GVCs are not only impacted by, but also influ-ence the macro-environment; specifically, sustain-ability impacts of GVCs and associated policyimplications have to date invited much scholarlyand practitioner dialogue (Coe & Yeung, 2015;Gereffi, 2018). This interest is to some extentreflected in our sample, yet few studies explicitlyaddress ways in which GVCs affect social, economicand environmental conditions in host countries.For example, labor standards have become onecritical frontier of GVC organization (Hastings,2019; Malesky & Mosley, 2018). Lund-Thomsenand Coe (2015) studied Nike’s main football sup-plier factory in Pakistan, and investigated whetherCSR initiatives by the lead firm can facilitate orconstrain labor agency in GVCs. Their resultsindicate that lead firms are limited in their abilityto shape local labor agency, as it is impacted bywider economic forces, relationships with local andnational actors, and local regulatory frameworks;these factors can place clear limits on lead firms’efforts to facilitate responsible forms of GVC.Barrientos et al. (2016) address the impact ofdiffusion by global and regional supermarkets in‘‘global South’’ – South Africa, Kenya, and Uganda –and find that entry by large global retailers providesnew opportunities for strategic diversification tothe most skilled local horticultural producers andworkers. This facilitates economic and socialupgrading; yet, persisting economic downgradingpressures mean that many less skilled suppliers areexcluded from both global and regional valuechains. Kleibert (2016) explores local impacts ofthe Philippinean offshore service offices’ participa-tion in GVCs, and finds that the majority of theseoffshore offices are characterized by foreign owner-ship and a high degree of dependency. However,participation in the GVC increases the number andquality of jobs in the region, and creates newopportunities in the labor force – particularly foryoung college graduates, who suffer from a highlevel of unemployment in the region. Finally, in alongitudinal study of the international cannedtuna industry, Havice and Campling (2017: 309)argue that value chain governance and environ-mental governance are ‘‘mutually constituted’’: leadfirm power dynamic is inextricable from the

environmental conditions of production, and inter-firm strategies work not only with, but also through,environmental governance.

CRITICAL ASSESSMENT OF EXTANTLITERATURE AND FUTURE RESEARCH AVENUES

Conceptual Underpinnings and the Theoryof the GVCOur systematic analysis of the GVC literaturereveals the theoretical and empirical terrains thathave been covered to date, and shows that asubstantial body of work has been accumulated toadvance our understanding of the GVC phe-nomenon. One observation that emerged in ourreview is a high degree of theoretical pluralism.This is to be expected due to the multidimension-ality of the construct, and the multidisciplinarynature of the review. One of the more commontheoretical approaches deployed in IB, manage-ment, and supply chain/operations studies is basedon various forms of business network theory(Carnovale & Yeniyurt, 2014; Chen, 2003; Goliniet al., 2016; Humphrey & Schmitz, 2002; McDer-mott & Corredoira, 2010). Many studies investigat-ing capability development and upgrading rely oncapability-based theories, such as dynamic capabil-ities, resource-based view (RBV), knowledge-basedview and organizational learning (Chen et al.,2016; Corredoira & McDermott, 2014; Erikssonet al., 2014; Jean, 2014), as well as theories ofinnovation (Golini et al., 2016; Werner, 2012).Macro-level trade and development theories (Dal-las, 2015; Seppala et al., 2014), institutional theory(Hatani, 2009) as well as resource dependencytheory (He et al., 2018; Suder et al., 2015) areinvoked in several studies focusing on geographicand structural make-up of GVCs.Several IB studies, particularly those conducted

within the global factory research stream and thoseinvestigating host country governance modedynamics, adopt an internalization theory perspec-tive (Buckley & Tian, 2017; Eriksson et al., 2014;Gooris & Peeters, 2016; Hilleman & Gestrin, 2016,Kumaraswamy et al., 2012). A number of othertheoretical angles, perspectives or frameworks areused to address specific research questions. Theseinclude international entrepreneurship (Erikssonet al., 2014), cultural values and norms (Funket al., 2010; Griffith & Myers, 2005), and theoriesof clusters and cities (Brown, Derudder, Parnreiter,Pelupessy, Taylor, & Witlox, 2010; Turkina & Van



Assche, 2018). Some studies attempt to address thecomplexity of the GVC phenomenon by merginginterdisciplinary theoretical lenses: for example,Turkina and Van Assche (2018) combine insightsfrom IB theory, economic geography, and socialnetwork analysis to study innovation in knowl-edge-intensive clusters; Treiblmaier (2018) developsa framework to explain the role of blockchaintechnology in GVCs based on four theories: prin-ciple-agent theory, TCE, RBV, and network theory.

Yet, despite the impressive amount of researchinvestigating the GVC phenomenon from a varietyof theoretical angles, it appears that we do not yethave a dominant theory of GVC. A number ofstudies – particularly those in the economic geog-raphy and economic sociology research streams –refer to the GVC theory of Gereffi et al. (2005) (or,alternatively, GPN/GCC theory, see, for example,Blazek, 2015; Brancati et al., 2017; Hatani, 2009;Neilson et al., 2018; Sturgeon et al., 2008; in arecent review by Coe & Yeung, 2015). However, asmentioned above, existing GVC frameworks (e.g.,Gereffi, 1994; Henderson et al., 2002) and typolo-gies (e.g., Gereffi et al., 2005) do not providedetailed causal mechanisms (Bunge, 1997), andthus do not constitute predictive theory of GVC ina sense of offering ‘‘a statement of relations amongconcepts within a set of boundary assumptions andconstraints’’ (Bacharach, 1989: 496). Instead, theyare useful organizing frames for empirical researchon GVCs. Although Coe and Yeung’s (2015) recentbook on GPN 2.0 theory comes closer to a causalapproach to theory development, there is still a lackof empirical studies to test its generality, validity,and robustness (e.g., Coe & Yeung, 2019; Neilsonet al., 2018). Overall, GVC is a complex constructthat captures a particular empirical phenomenon,namely progressive disintegration and geographicdispersion of MNEs’ value chains. The studiesreviewed here investigate various dimensions ofthis construct and establish links among selectdimensions, but fall short of developing an overar-ching theory of GVC that can adequately explainthe phenomenon, preferably with some predictivepower. Admittedly, predictability is difficult toachieve in social science theories, where the valid-ity of predictions depends upon elusive ceterisparibus conditions (Bhaskar, 1998). Yet, in anapplied field such as IB, predictive capacity makesour theories actionable for managers, and thereforeis viewed as a desirable (though hard to attain)outcome of theory development.

Here, our comparative institutional analysis-based model (Figure 1) can be used as an eclecticframework that integrates various theoretical per-spectives in order to explain the functioning of theGVC, and, we hope, predict specific outcomes, interms of benefits accrued to GVC participants andchain-level sustainability. From the internalizationtheory perspective, a GVC will be sustained overtime only if GVC governance is comparativelymore efficient than alternative governance forms.The lead firm thus must manage inefficiencies atthe macro-level (e.g., institutional frailties, eco-nomic shifts, public push-back, technological com-plexities), at the GVC level (e.g., need for structuralchanges, shifting power dynamics among partners,unequitable value distribution), and at the micro-level (e.g., cognitive biases, information asymme-tries, commitment failures), by economizing onbounded rationality and reliability involved inGVC-related transactions, and by fostering anenvironment conducive to value creation andcapture in the GVC (Kano, 2018). The lead firmmust select and implement structural features andstrategic governance routines that best serve theseeconomizing objectives.Taken together, the studies in our sample address

all elements of our comparative institutional frame-work, although some elements have garnered morescholarly attention than others. Our review revealsa number of knowledge gaps, which indicatepromising research directions for IB, managementstudies, and the broader social sciences. We discussthese in the next section.

Knowledge Gaps and Direction for FutureResearch

Microfoundations of GVC governanceThe microfoundational aspect appears to be under-represented in our sample. While microfounda-tional assumptions are frequently made, they arerarely articulated or examined empirically. This isconcerning particularly because GVC configura-tions are essentially outcomes of managerialchoice. Our ability to predict accurately theseconfigurations hinges on our understanding ofthe individual, which is for the most part omittedin our sample. Even papers that examine learningare typically silent on the role of individual behav-ior. In particular, studies based on archival dataoften engage in what Tsang (2006: 999) calls‘‘assumption-omitted testing’’; that is, althoughkey behavioral assumptions may be made



implicitly or explicitly for the purpose of develop-ing hypotheses, such assumptions are not testedempirically.

It should be noted that this gap is particularlyevident in IB and management literatures. Sociol-ogy, development studies and economic geographyliterature does address individual motivations andbehavior, mostly through the case study and/orethnographic methods. Yet, economics-basedresearch tends to steer away from directly examin-ing such psychological factors. The fact remainsthat few narratives at the individual level arepublished in the journals represented in our review.

Future IB studies could explicate individual-levelassumptions, and examine specific links betweenthese assumptions and various components of GVCgovernance, such as ownership and control deci-sions, geographic and structural configurations,knowledge management, and network orchestra-tion. In particular, the largely under-researchedaspects of value distribution in a GVC could beadvanced by incorporating specific microfounda-tional assumptions. Current narrative on valuedistribution implies a certain level of boundedrationality and bounded reliability of decision-makers. First, managers find it difficult to identifyaccurately where the most value is generated in thenetwork (Seppala et al., 2014). Second, most studiesthat address value distribution assume the presenceof a power struggle among the players, wherebyeach actor attempts to appropriate the greatestamount of value, frequently at the expense of otherplayers – consider the proverbial case of largebuyers in Gereffi’s (1994) buyer-driven commoditychains or Gereffi et al. (2005) captive mode of GVCgovernance. Here, large buyers are assumed toopportunistically squeeze their suppliers to thepoint where relentless downward cost pressureleads suppliers to make suboptimal, environmen-tally and socially detrimental choices. However,this power view is not universally applicable, asnoted recently in Dallas et al. (2019).Inequitable value distribution may alienate criticalpartners and undermine the sustainability of theentire GVC arrangement (Levy, 2008; Yamin,2011). It is in the interest of the lead firm to sustainthe GVC over time, particularly in situations ofbilateral dependence from core suppliers. Explicat-ing and testing individual-level assumptions canhelp scholars understand mechanisms underlyingvalue distribution in a GVC.

Geographic scope of GVCs and GVC mappingLocation emerged as one of the key variables inempirical GVC studies, yet few empirical studies inour sample attempt to measure the geographicdispersion of value chains investigated, in order todetermine whether the scope of these value chainsis in fact global, in a sense of a relatively equaldistribution of activities across regions (Rugman &Verbeke, 2004). In fact, only two studies (Azmeh &Nadvi, 2014; Suder et al., 2015) directly address theregional effect in GVCs, although a larger numberof empirical studies published in economic geogra-phy journals (Table 3) focus on GVC impacts onlocation-specific upgrading and regional develop-ment. It has been argued that very few truly globalvalue chains are currently in existence, and that thelabel ‘‘global,’’ used either out of inertia or as ateaser, may in fact misrepresent the actual geo-graphic reach of MNEs’ international networks(Verbeke, Coeurderoy, & Matt, 2018). It is thereforethe responsibility of GVC scholars to measuresystematically the geographic breadth and depthof relevant value chain activities, and to arrive at anaccurate definition of what a GVC represents. Suchgoal could be accomplished through firm-levelGVC mapping, namely, linking locations withdetailed data on inputs, outputs, flows of servicesand skills, employment, revenue, and value cre-ation and capture. Unlike international economicsstudies based on value-added trade data (Escaith,2014; Johnson & Noguera, 2012; World Bank,2019, 2020), such firm-based GVC mapping notonly clarifies the geographic scope of economicactivity as global versus regional, but also serves animportant managerial purpose of specifying theprecise location of value creation and capturewithin the firm and its GVC. This potentially helpsmanagers to appraise comparative efficacy ofglobal, regional and local governance.

Learning in a GVCAs indicated in Inkpen and Tsang’s (2005, 2016)conceptual discussion of social capital, networksand knowledge transfer, the topic is surely achallenging as well as fruitful one. A number ofempirical studies have examined knowledge diffu-sion and transfer in a GVC, but knowledge man-agement is discussed mostly in the context ofupgrading, technological catch-up and moving upthe value chain by peripheral firms and strategicpartners. Reverse knowledge transfer and learning



in the lead firm are less explored (with thenotable exception of Lipparini et al., 2014). Further,while recent conceptual studies have called for acloser examination of specific mechanisms forknowledge transfer in a GVC (Pietrobelli & Rabel-lotti, 2011; Cano-Kollmann, Cantwell, Hannigan,Mudambi, & Song, 2016; Kano, 2018), few empir-ical studies have addressed this. Future studies canexamine channels through which knowledge trav-els in a GVC in multiple directions, and specificbehaviors in various parts of the network that aid orconstrain these processes. Finally, the concept oforganizational unlearning – getting rid of obsoleteknowledge or routines – points to another promis-ing research area that has been neglected. Giventhe rapid technological and environmentalchanges, knowledge possessed by members of aGVC has to be regularly updated. Organizationalroutines that used to be cost-saving may no longerbe so. The extent to that GVC members individu-ally or collectively can replace such outdatedknowledge or routines partly determines the GVC’sperformance or even long-term survival. Sinceunlearning at the organizational level and theindividual level are intricately connected (Tsang &Zahra, 2008), attention to microfoundations ofindividual behavior, as suggested above, can helpadvance this research agenda.

Impact of lead firm ownership and strategy on GVCgovernanceSeveral studies in our sample analyze the impact oflead firm features, such as size, industry, location,and capabilities, on GVC governance. However, fewstudies (with the exception of, e.g., Morris &Staritz, 2014) examined the impact of ownership,meaning potential differences among GVCs led byprivate, public, state-owned, and family-ownedMNEs. Of particular interest here is behavior offirms whose international strategy may be drivenby non-economic objectives, such as state-ownedenterprises (SOEs), government-linked corporations(GLCs) and family firms. The social and politicalgoals of SOEs and GLCs may conflict with efficiencyconsiderations (Grøgaard, Rygh, & Benito, 2019;Rugman, 1983), and may drive idiosyncratic GVCconfigurations. These idiosyncrasies may beenhanced by lead firms’ unique relationships withkey macro-level actors, such as the state, regionaland local institutions, and trade unions, and theircomparatively greater ability to influence economic

policies that govern international investment. Forexample, political transformation in developingcountries can enable the strategic coupling ofnational economic actors, such as SOEs, GLCs andeven sovereign wealth funds, with lead firms indifferent historical periods. Yeung’s (2016) compar-ative study details the politics of state transforma-tion in South Korea, Taiwan, and Singapore sincethe 1990s and explains how this transformation hasled to a strategic coupling shift of the developmentprocess from SOE-led industrialization to an assem-blage of state-firm-global production networks inwhich SOEs and GLCs work closely with lead MNEsin a variety of industries, such as personal comput-ers, semiconductors, automotive, ship building,and passenger aviation.Similarly, family-owned MNEs’ international

strategy may be driven by non-economic objectivesof the controlling family, such as keeping the firmin the family, providing jobs for future generations,cultivating connections with ‘‘chosen’’ stakehold-ers, and building a reputation in the community(Miller, Wright, Le Breton-Miller & Scholes, 2015).The prevalence of these non-economic preferencesgives rise to a dysfunctional governance featurethat family firm scholars termed ‘‘bifurcation bias’’:an affect-based decision rule, whereby family-basedassets and capabilities are given de facto preferen-tial treatment over non-family ones (Kano & Ver-beke, 2018). In the context of GVC governance,bifurcation bias can impact, inter alia, location andcontrol decisions and network composition. Leadfamily firms may be more likely to seek to protectfamily-based assets through internalization, and toascribe a commodity status to non-family assetsand govern those assets through contractualmodes, regardless of their actual value and contri-bution to the GVC. Location decisions in bifurca-tion-biased family firms are also likely to be subjectto affect logic; for example, a desire to create jobsfor the local community may drive domestic pro-duction even when more efficient options exist.This decision dynamic was evident in the well-known case of the iconic Danish toy manufacturerLEGO, where the family’s excessive loyalty to itshome community of Billund, Denmark, preventedit from achieving efficiency through offshoring(Bennedsen & Foss, 2015). The choice of networkpartners may also be unique in family firm-ledGVCs, since family firms display a strong preferencetoward partnerships with ‘‘kin-controlled’’ suppliers



(Memili, Chrisman, & Chua, 2011: 53). These, andother idiosyncratic features of GVCs led by firmswith alterative ownership, can be investigated infuture studies.

The impact of the lead firm’s internationalstrategy can also be explored further. No studiesin our sample have addressed this relationship.However, we assume that the lead firm’s interna-tional strategy (defined according to, e.g., Bartlettand Ghoshal’s (1989) integration/responsivenessframework, Ghemawat’s (2003) aggregation/adap-tation/arbitrage framework, or Verbeke’s (2013)administrative heritage framework) will influencestructural and strategic governance of the GVC,particularly because organizing operations throughthe GVC is meant to aid the lead MNE in achievingthe ultimate balance between integration andresponsiveness (Buckley, 2014).

Temporal factors and dynamics of GVC arrangementsTemporal considerations, such as assignment dura-tion and timing of changes in governance modes,have received limited attention in GVC studies todate, likely because they are typically subsumedwithin control and/or location decisions (Buckleyet al., 2019). Only two studies in our sample(Brancati et al., 2017; Havice & Campling, 2017)examined temporal factors in a targeted manner.However, time considerations represent a keyparameter of GVC governance, particularly becausemodern GVCs thrive on flexibility and adaptabilityof their governance structures. We propose thatfuture IB studies focus on such temporal elementsas optimal assignment duration for economicactivities, flexibility/stability trade-offs, and associ-ated knowledge accumulation and learning. Ana-lyzing temporal dynamics of the GVC will likelyshed light on the issue of backsourcing, inshoring,and reshoring (Bailey & De Propris, 2014; Kinkel,Rieder, Horvath, & Jager, 2016; Vanchan, Mulhall,& Bryson, 2018), which also is not sufficientlyaddressed in extant research.

Value creation, capture, and distribution in a GVCDespite significant scholarly attention to the issueof value in a GVC, the question of how lead firmsshould coordinate value creation, capture anddistribution is as of yet unresolved. Here, interdis-ciplinary differences in approach are particularlyevident. IB scholars tend to focus on lead firms askey actors responsible for value orchestration in a

GVC, viewing these firms as residual claimants ofthe network’s value proposition (Kano, 2018).Social science-based GVC scholars consider moreclosely contestation over value creation and distri-bution among lead firms and their partners, andapproach value distribution from the perspective ofvarious forms of power asymmetries between thelead firm and suppliers (Dallas et al., 2019; Strange& Humphrey, 2019). Both approaches presentconceptual and empirical challenges. First, theempirical reality is that lead firms cannot accuratelyaccount for where value is created in the GVC(Seppala et al., 2014), which complicates their roleas value distributors. Second, formal and informalconnections and arrangements in modern GVCscontinually change in response to economic, polit-ical, and technological processes (Benito, Petersen,& Welch, 2019); this dynamism impacts bothpower relationships in a GVC and loci of valuecreation. Future studies can fruitfully combine IBand social science approaches to further investigatevalue creation and distribution in a GVC (Benitoet al., 2019).

Finance and financialization in MNEs’ participationand coordination of GVCsOverall, we know little about how financial con-siderations affect MNE strategies, management ofGVCs, and competitive outcomes. Earlier studies byMilberg (2008) and Milberg and Winkler (2013)examined how financial considerations (e.g., shareprices) shaped GVC configurations. From being arelatively obscure factor in the early GCC literatureduring the 1990s, finance has come to the forefrontof accounting for the evolutionary dynamics oflead MNEs and their GPNs in the 2010s. Coe andYeung (2015) argue that the pressures and oppor-tunities associated with financial market consider-ations have compelled lead MNEs to furtherdevelop and expand their international operations.MNEs’ responses to financial dynamics producedifferent geographical and organizational configu-rations of networks. Lead firms, such as certainAmerican MNEs, that succeed in meeting thedemands of financial discipline through globalizingproduction, tend to perform well in the financialmarket in terms of stock price and executiverewards. This prompts further strategic shift towarda greater emphasis on finance-driven approach tocorporate growth and governance in lead MNEs.



GVC impact on macro-environmentExtant research has long acknowledged that GVCsare embedded in, and co-evolve with, political,socio-economic and environmental systems (Alford& Phillips, 2018; Santana, Vaccaro, & Wood, 2009;Smith, 2015; Whittaker, Zhu, Sturgeon, Tsai, &Okita; 2010; Yeung, 2016). GVCs thus have acontinued impact on these complex systems, bothpositive and negative, intended and unintended.These impacts are well documented. On the posi-tive side, they include economic upgrading,namely income and employment growth and skilldevelopment in domestic firms. GVCs’ negativeimpacts on host communities have attracted evenmore attention, and include increasing inequality,deteriorating labor standards, environmental dam-age (Kolk, 2016; Kolk, Rivera-Santos, & Rufin,2018), and, in extreme cases, large-scale crises suchas the Rana Plaza disaster in Bangladesh. LeadMNEs’ efforts to address these impacts by enforcingstrict labor standards throughout the chain andimplementing partial re-internalization are notunambiguously helpful for host communities.These initiatives limit local enterprise growth andreduce employment prospects among the mostvulnerable population, and thereby attenuate someof the above-mentioned positive effects of GVCs onlocal economies (Narula, 2019). Today, in the era ofthe rise of political populism, renewed protection-ism and the growing skepticism toward globaliza-tion, the question of whether GVCs are paragons orparasites is hotly debated in the academe, in thebusiness community, and among the generalpublic.

It is therefore surprising that few studies in oursample directly address the impact of GVCs onvarious facets of their macro-environment(although many more papers in the social scienceliterature have addressed this issue). The reasonmay be that operationalizing and measuring social,economic and environmental impact is a challeng-ing task and a rapidly moving target, even if we putaside the problem of data availability. Nevertheless,studying GVC impacts on relevant societies is animportant direction of inquiry, which presents oneof the ‘‘grand challenges’’ of IB research. To makesuch research actionable, IB scholars are encour-aged to ‘‘expand the firm-centric lens’’ (Gereffi,2019: 195) so as to incorporate broader views oninternational development. Engagement with pol-icymakers and researchers from adjacent fields such

as international economics can facilitate linkagesbetween firm-level and macro-level perspectivesand help IB researchers translate their findings intopolicy and development implications.While host country institutional environments

were factored into many investigations, few studies(e.g., Fuller & Phelps, 2018) examined feedbackeffects from GVC governance on host, home, andinternational institutions. Such impacts (e.g.,improvement to legal frameworks, changes to localbusiness institutions, development and enforce-ment of industry standards, changes to regulationsto implement protectionist measures or to promoteliberalization) present another interesting area forfuture research.

The impact of renewed protectionismProtectionism, as expressed in governments’ mea-sures to discriminate against foreign commercialinterests through trade policies, is not a newphenomenon, and has been observed over theyears through periods of crises and economicdownturns (Evenett, 2019). Yet, the issue of pro-tectionism is gaining renewed relevance today,especially in light of Brexit, President Trump’sforeign policies, and associated trade tensionsand the wide-spread backlash against globalization.These developments naturally create risks forGVCs, particularly in regards to manufacturingactivities offshored to low-cost countries. Leadfirms may respond by reconfiguring their valuechains and/or reshoring/repatriating production tohome countries (Bailey & De Propris, 2014; Van-chan et al., 2018). While renewed protectionismcertainly impacts GVC configurations and gover-nance, the nature and extent of this impact is notyet clear. First, reshoring occurs for a number ofreasons, including rising labor and transportationcosts, currency fluctuations, technological develop-ments, and strategic considerations (Ancarani et al.,2019; Vanchan et al., 2018). Second, reshoring,even in the face of, for example, US-China tradewar, is difficult and may prove inefficient. Access tospecialized skills, infrastructure, and large-scalemanufacturing facilities presents serious barriersto reshoring. Repatriation of assembly and produc-tion of commodity components from China tohigh-cost home countries may be next to impossi-ble, as no developed country can presently matchChina’s combination of scale, skill, infrastructure,and cost (Economist, 2018). The impact of renewed



protectionism is not directly addressed in oursample, likely because it will take some time tomaterialize, and the patterns and outcomes ofGVCs’ responses are still in a state of flux. Further,available data on the impact of protectionism arepresently limited (Evenett, 2019). That being said,the potential impact of various expressions of therenewed protectionism, such as Brexit and Trump-ism, on GVC governance is a major avenue forfuture research, with significant implications foracademics, practitioners, and regulators.

GVCs and digitizationExtant studies have addressed the impact of newtechnologies on GVC configurations (Laplumeet al., 2016), however, future studies can answerthe broader question of how digital technologieshave transformed the basic governance structure ofGVCs (Foster & Graham, 2017; Foster et al., 2018;Wu & Gereffi, 2019). Digital technology-enabled‘‘platformization,’’ or ‘‘the shift from individualproducts or services to platforms as the basis foroffering value’’ (Nambisan, Zahra, & Luo, 2019:1465), has considerable implications for GVCs, butthese impacts are complex. On the one hand,platform MNEs facilitate connectedness amongdifferent groups of actors around the world infundamentally new ways (Coviello et al., 2017;Stallkamp & Schotter, 2019). Digital platforms andassociated ecosystems offer new venues for multi-faceted innovation and value creation, and fortransferring value across borders with added effi-ciency and flexibility. Digitization also allowsMNEs to quickly change their business models byadding or subtracting network units, adjustingmulti-sided platforms, or modifying existing linksand interactions (Nambisan et al., 2019). For sup-pliers based in technologically advanced emergingeconomies such as China, digitization reducesbarriers to upgrading and diversification and facil-itates access to end consumers (Li, Frederick, &Gereffi, 2019). On the other hand, increasingdigitization may put at a disadvantage or evenexclude GVC actors located away from innovationhubs. Platforms and ecosystems provide young andsmall firms with access to infrastructure and oppor-tunities to quickly reach geographically dispersedcustomers (Nambisan et al., 2019), yet they alsoprompt increasing standardization of inputs, whichmakes suppliers, especially SMEs, more inter-changeable and consequently vulnerable. Lead

MNE’s orchestration task in a digital environmentis more challenging, as lead firms must coordinate,recombine resources, and establish cooperativerelationships with actors that are loosely connectedand may be situated far beyond the traditionalboundary of the lead firm’s industry and beyondthe scope of its expertise (Li, Chen, Yi, Mao, & Liao,2019). Further, the growing importance of big dataand data analytics led to the emergence of anentirely new form of value chain: a ‘‘data valuechain’’ evolving around a firm that manages world-wide acquisition, storage/warehousing, modeling,analysis, and production of insights from data(UNCTAD, 2019). This type of value chain repre-sents a fundamentally new business model, pre-sently little understood by IB scholars.The phenomenon of platformization presents a

number of novel and fascinating research opportu-nities. A platform MNE can be seen as a globalvirtual value chain, with the lead MNE possessingcritical technology, and with the flows of inputsand outputs being mostly intangible. Specificresearch questions to be explored include, interalia, power dynamics in digital value chains, busi-ness model innovation enabled by platformization,monetization of raw data and ownership of value-added data, integration of digital and brick-and-mortar scenarios within the same network, theimpact of home country Internet regulations onGVC governance (Wu & Gereffi, 2019), specializa-tion versus standardization, integration versusresponsiveness, consumer involvement in digitalGVCs, e-commerce-enabled supplier upgrading (Liet al., 2019a, b), relational governance in a digitalenvironment, and building trust in the globalvirtual teams in a GVC (Foster et al., 2018; Jarven-paa & Leidner, 1999). As technology continues toadvance, future studies can investigate potentialimpacts of artificial intelligence, internet of things,and virtual reality on both traditional and digitalGVCs (UNCTAD, 2019).

GVCs performance measurementAs discussed above, GVC-level performance mea-surement is a challenging task, due to the tremen-dous complexity of the fine-sliced, multi-layered,geographically dispersed network as well as themultiple and potentially diverging objectives of itsmembers. We proposed here that sustainability ofthe GVC over time served as an indication ofgovernance efficiency and could, therefore, be seen



as the ultimate GVC performance outcome. Futureresearch can elaborate on this measure, and pro-pose other ways in which lead firms in GVCs canassess network performance.

CONCLUSIONTo date, scholars from a range of disciplines haveaccumulated an impressive body of research onGVCs, yet this work is presently characterized by anumber of knowledge gaps and a lack of a unifyingtheory. These gaps present exciting opportunitiesfor GVC researchers, and we hope that our reviewmay contribute to an integrative GVC researchagenda. We have suggested a comparative institu-tional framework for GVC analysis, and identified anumber of under-researched issues at micro, GVC,and macro levels, which we would like to furthersynthesize into what we see as three interrelated‘‘grand challenges’’ of GVC research in IB. At themicro-level, we need to pay greater attention toindividual behavior and motivations, and ways inwhich these individual characteristics play out asMNEs expand their value chains across geographiesand product markets. At the GVC level, we need toengage in rigorous GVC mapping, by specifyingrelationships among all critical elements of struc-tural and strategic governance of the GVC. At themacro-level, we need to investigate carefully andobjectively the intermingling of GVCs and newtechnologies, and the complex impacts of GVCs ontheir surrounding societies and the natural envi-ronment. The latter point is particularly relevant inthe present political climate. With critics of glob-alization increasingly – and irrationally – blamingGVCs (and, more generally, MNEs) for the demiseof public goods and ‘‘the rise of global public bads’’(Verbeke et al., 2018: 1102), it becomes the socialresponsibility of GVC researchers to paint anaccurate picture of GVCs that demonstrates thefundamental and non-reversible interconnected-ness of today’s global economy.

We would like to conclude by suggesting thatthis task is best accomplished through interdisci-plinary research. Our review showed that eachdiscipline can contribute unique and useful angles,both theoretically and methodologically. In termsof achieving research objectives outlined above,sociology scholars can contribute their expertise inindividual-level variables and network-level analy-sis; economic geographers can enrich the

discussion through their superior command oflocation data, geographical scales of network con-figurations, and uneven development outcomes;organizational behavior researchers can enhanceour understanding of the psychological aspects ofmanagerial decision making and strategy formula-tion and execution, and IB scholars can bring to thetable theoretical rigor and sophisticated treatmentof MNEs and their cross-border networks. Weadvocate that scholars from different disciplinesshould communicate, collaborate, and gain fromthis cross-pollination of ideas, and we look forwardto seeing more cross-disciplinary GVC research.

ACKNOWLEDGEMENTSWe would like to express our sincere gratitude to Prof.Yadong Luo and three anonymous reviewers for theirvaluable guidance and support. We thank HaskayneSchool of Business at the University of Calgary and theNational University of Singapore for funding theresearch for this paper through the TransformativeResearch Grant and Strategic Grant R109000183646,respectively.

NOTES

1Gereffi (1999; also reproduced in 2018: Chap-ter 3), for example, applied his buyer- and pro-ducer-driven commodity chains framework toanalyze empirically the industrial upgrading path-ways of East Asian firms and economies in theglobal apparel commodity chains led by US buyers.Similar to Hobday’s (1995: Chapter 3) earlier workexamining East Asian electronics firms, he identi-fied four types of upgrading trajectories in the formof apparel exports based on basic assembly, OEM,OBM, and ODM roles, and introduced them intothe GVC literature. Gereffi (1999) also highlightedthe importance of organizational learning as amechanism for achieving industrial upgrading inGCCs.

2Bounded rationality implies that economicactors’ behavior is ‘‘intendedly rational, but onlylimitedly so’’ (Simon, 1961: xxiv). Bounded reliabil-ity explains failure of economic actors to makegood on open-ended promises, irrespective ofintent (Kano & Verbeke, 2018). It is an extensionof the narrower construct of opportunism – a



central behavioral assumption in the Williamso-nian version of transaction cost economics, definedas ‘‘self-interest seeking with guile’’ (Williamson,1981: 1545).

3Hereafter, we refer to this latter group of journalsas ‘‘social science journals.’’ We realize that man-agement research also falls under the social sciences

umbrella, however, we make a distinction betweenmanagement journals and other social sciencejournals for simplicity.

4Due to the significant volume of work dedicatedto examining knowledge management in a GVC,we analyzed it as a separate aspect of GVC strategicgovernance (see the section on learning above).

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ABOUT THE AUTHORSLiena Kano is an Associate Professor of Strategyand Global Management at the Haskayne School ofBusiness, University of Calgary, Canada. Herresearch interests lie at the intersection of strategicmanagement, international business, andentrepreneurship, with a particular focus on novelapplications of internalization theory, and onmicrofoundations that underlie complex interna-tional governance decisions.

Eric W. K. Tsang is the Dallas World SaluteDistinguished Professor of Global Strategy at theNaveen Jindal School of Management, Universityof Texas at Dallas. He received his PhD from the

University of Cambridge. His main research inter-ests include organizational learning, strategic alli-ances, entrepreneurship, and philosophical analysisof methodological issues.

Henry Wai-chung Yeung is Distinguished Profes-sor at the Department of Geography, NationalUniversity of Singapore, and a former editorialboard member of JIBS. His recent books are StrategicCoupling: East Asian Industrial Transformation in theNew Global Economy (Cornell University Press,2016) and Global Production Networks: TheorizingEconomic Development in an Interconnected World(Oxford University Press, 2015).

Publisher’s Note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutionalaffiliations.

Accepted by Yadong Luo, Senior Editor, 29 December 2019. This article has been with the authors for two revisions.

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