Global Value Chains, Rising Power Firms and Economic and Social Upgrading

critical perspectives on international business 11(3/4): 319-339 (2015)

21 Pages Posted: 6 Aug 2015

See all articles by Joonkoo Lee

Joonkoo Lee

Hanyang University

G. Gereffi

Duke University - Department of Sociology - Director, Center on Globalization, Governance & Competitiveness

Date Written: July 2015

Abstract

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

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

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

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

Keywords: Standards, Development, Lead firms, Regionalization, Concentration, Globalization, Multinational enterprises, Economic and social upgrading, Global value chain, Rising powers

Suggested Citation

Lee, Joonkoo and Gereffi, Gary, Global Value Chains, Rising Power Firms and Economic and Social Upgrading (July 2015). critical perspectives on international business 11(3/4): 319-339 (2015). Available at SSRN: https://ssrn.com/abstract=2639967

Joonkoo Lee (Contact Author)

Hanyang University ( email )

School of Business
222 Wangsimni-ro, Seongdong-gu
Seoul, 04763
Korea, Republic of (South Korea)
+82-2-2220-2584 (Phone)
+82-2-2220-1169 (Fax)

HOME PAGE: http://joonklee.tumblr.com/

Gary Gereffi

Duke University - Department of Sociology - Director, Center on Globalization, Governance & Competitiveness ( email )

Box 90088
Durham, NC 27708-0204
United States
919-660-5880 (Phone)
919-684-2855 (Fax)

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