Countering Overseas Power in Global Value Chains: Information Asymmetries and Subcontracting in the Plastics Industry

Journal of International Management, Volume 24, Issue 2, June 2018, Pages 123-136

35 Pages Posted: 6 Sep 2018

See all articles by Michael Murphree

Michael Murphree

University of South Carolina

John Anderson

University of Northern Iowa

Date Written: Septmber 15, 2017

Abstract

Resource Dependency Theory (RDT) and Global Value Chain (GVC) theory have been deployed in the strategic and international management literatures to address questions of power in dyadic relationships and global production networks, respectively. This paper integrates the two theoretical approaches in order to expand RDT. Using the relationship between buyers and contract manufacturers from GVC analysis, we find a correlation between firm size and choice of strategic action in response to contract manufacturers’ dependence on buyers. Large firms follow an acquiesce strategy while small manufacturers follow an avoid strategy. Enabled by scale or control over information, both of these approaches successfully reduce uncertainty and provide a source of sustained competitive advantage. Using a study of the global production chain in plastics manufacturing in China, we show how dependent firms are able to respond to GVC induced pressure depending on their size. This opens important insights into the role that structural characteristics of organizations (like size) play in determining responses to dependency in global value chains.

Keywords: Resource Dependency Theory, Global Value Chains, Contract Manufacturers, China

Suggested Citation

Murphree, Michael and Anderson, John, Countering Overseas Power in Global Value Chains: Information Asymmetries and Subcontracting in the Plastics Industry (Septmber 15, 2017). Journal of International Management, Volume 24, Issue 2, June 2018, Pages 123-136 , Available at SSRN: https://ssrn.com/abstract=3239483 or http://dx.doi.org/10.2139/ssrn.3239483

Michael Murphree (Contact Author)

University of South Carolina ( email )

United States

John Anderson

University of Northern Iowa ( email )

Cedar Falls, IA 50614
United States

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