Global Value Chains (CGVs) formed by the geographical dispersion of productive activities across firms and countries have become dominant patterns of organisation in the global economy.
According to the United Nations Conference on Trade and Development, GVCs could account for as much as 80% of global trade, organised in complex webs of intra-firm and inter-firm trade under the governance of large transnational corporations (UNCTAD, 2013).
These chains are being actively promoted by leading international institutions, as promising ways of staying competitive in the global economy (OECD, 2007), offering “tremendous opportunities, in particular for developing and least-developed countries” (Lamy, 2012). GVCs are expected to deliver economic benefits by offering possibilities for local firms to plug into globally-dispersed but tightly coordinated production networks, and to perform increasingly sophisticated services for global buyers, so as to increase the value captured from their productive contribution.
The number of people employed in GVCs has increased from 296 to 453 millions between 1995 and 2013, providing one in five jobs in the global economy (ILO, 2015).
While GVCs grew at a fast pace in many industries, new social movements have also emerged in the form of transnational resistance networks aiming to make visible the social and environmental conditions under which productive activities were being performed in GVCs. Tight productivity pressures, low wages and erosion of social benefits, frequent repression of workers’ organizing efforts, and the continuous threat of job losses through production relocation, are making social gains both scarce and precarious in the most vulnerable segments of GVCs.
The spectacular collapse of the Rana Plaza building in Dhaka, the capital of Bangladesh, in April 2013, causing the death of over 1,100 workers and injuring twice as many, has attracted major public attention to the hazardous health and safety conditions to which workers, mostly women, were being exposed in global systems of subcontracted production.
Environmental issues are likewise paramount, in relation to the exponential growth of world transportation, accelerated rates of waste generation, depletion of national resources and weak environmental regulation in many places of production. Claiming that brands and retailers that outsource production should take responsibility for the social and environmental conditions under which their products are being manufactured, social movements have stirred the adoption by global buyers of dedicated management tools in the forms of codes of conduct, auditing and monitoring procedures, aiming to guarantee respect for core international labour and environmental standards in global supply chains. The proliferation of such initiatives, either private, public, or of varied forms of public-private partnerships, has greatly complexified the landscape of GVCs. If some local improvements can be observed, these organisational devices have proved inadequate to address systemic issues of labour violation or environmental degradation in GVCs.
The Rana Plaza accident also highlighted the lack of effectiveness of codes of conduct and monitoring systems by which global buyers were to ensure human rights protection for workers who manufactured their products in the collapsed building.
These social and environmental concerns are gaining momentum in international and national debates on Global Value Chains. They were prominently addressed at the ILO 2016 International Labour Conference, in the European guidelines for trade and investment policy (EC, 2015), and stirred the on-going discussions of the intergovernmental working group on "transnational corporations and other business enterprises with respect to human rights" of the United Nations' Human Rights Council. Likewise, a series of national laws have been passed or are being discussed to address corporate accountability for these issues in novel ways, such as the French Law on the Duty of Vigilance of Multinationals (2017), or the UK Law on Modern Slavery (2015). The need for greater consideration of the impact on social and environmental life of economic decisions made in GVCs, and the search for new ways of addressing and redressing these impacts at both local and broader systemic levels, call for multi-disciplinary research and teaching initiatives, as well as enhanced cross-fertilization between varied forms of knowledge produced in academic, NGOs, labor unions, and others circles.
European Commission (2015) Trade for All: towards a more responsible trade and investment policy, Brussels: European Union.
http://trade.ec.europa.eu/doclib/docs/2015/october/tradoc_153846.pdf accessed 11/11/15.
Lamy, P. (2012) Speech delivered at the WTO-MOFCOM-OECD-UNCTAD Seminar on Global Value Chains in Beijing on 19 September 2012.
http://www.wto.org/english/news_e/sppl_e/sppl245_e.htm, accessed 15/02/2015.
International Labour Organisation (2015) World Employment Social Outlook: the changing nature of jobs, ILO: Geneva.
Organisation for Economic Cooperation and Development (2007) Staying competitive in the global economy: moving up the value chain, Paris: OECD.
United Nations Conference on Trade and Development (2013) Global Value Chains and Development: Investment and Value Added Trade in the Global Economy, UNCTAD/DIAE/2013/1. Geneva: United Nations.
The Responsible Global Value Chains (RGVC) initiative takes account of recent developments calling for new ways of addressing social and environmental challenges in global systems of production and distribution.
It aims to enhance the visibility of research and teaching approaches that offer contextualised and problematized/political perspectives on responsible management in GVCs. We seek to promote approaches that do not systematically subordinate social and environmental concerns to the achievement of economic ends, but rather see (global) economic activities as serving broader societal ends. While such research may stimulate new ways of thinking about social and environmental sustainability in relation to economic activities, our objective is also to foster changes in the education and training of current and future managers in GVCs, so as to encourage a transformation of management thinking and practices in favour of greater integration of social and environmental concerns in economic activities.
The RGVC internet platform offers a vehicle for sharing resources and building networks in support of innovative research and teaching on the management of GVCs.
The platform is multidisciplinary, involving academics from management, sociology, anthropology, law, economics, geography and history. Acknowledging the prominent role of social movements in making visible and debatable the social and environmental challenges of GVCs, it also combines in novel ways the resources and initiatives produced by academia and NGOs, thus involving NGO experts on major GVCs such as garment, electronics, and agro-industrial food production. Core concerns to be documented, debated, and researched through the RGVC platform include :
- the distribution of wealth and power across multi-layered actors of GVCs
- assessing the social and environmental costs of GVCs
- the regulation of social and environmental conditions in GVCs
- new forms of corporate accountability
- the evolution of standards for responsible management practices
- the effects of GVCs on local communities and territories
- life experiences of working in GVC
- gender issues in GVCs
- trade union responses to the proliferation of GVCs
- new forms of organizing and community responses to GVCs
alternative ways of organizing value chains
Global Value Chains have a rich theoretical history through which the concept has undergone a number of transformations, at times changing name so as to better reflect the normative and analytical orientations of leading writers.
Commodity Chains and issues of global inequalities
The origins of the concept can be traced back to world-system theory and the work of the American sociologists Hopkins and Wallerstein (1977) who initially referred to ‘commodity chains’ (CC) to qualify the set of inputs and processes – raw materials, prior transformations, transportation, … - involved in the conception, production and commercialization of a finished product. Their interest lied in assessing the ways in which the transnational deployment of commodity chains could affect the distribution of wealth and power between ‘core’ and ‘periphery’ countries, and the unequal outcomes of the global expansion of capitalism whereby a growing part of human activities was being absorbed in a process of ‘commodification’ based on mass production and consumption. This initial vision of global chains expanded beyond productive activities to account for the social conditions under which the labour force incorporated into the chain was being sustained and reproduced. Their seminal work, expanded by Wallerstein (1983), and Arrighi and Drangel (1986) among others, pointed the tension arising from the encounter of global forces of economic integration at work in commodity chains, and the social/political fragmentation of these chains into discrete national/local contexts (see Bair, 2005).
Global Commodity Chains (GCCs): assessing prospects for suppliers’ Industrial Upgrading
A first terminological shift occurred in the influential book edited by Gerrefi and Korzeniewicz (1994), where Gereffi (1994) characterized ‘global commodity chains’ (GCC) by focusing on the set of inter-organizational relationships formed across firms and countries in the transnational production of contemporary products such as cars, computers, or clothing. Their analytical approach characterized global chains on the basis of four dimensions including (1) input-output activities, (2) governance, (3) territoriality, and (4) an institutional context. Through the notion of chain governance, encompassing both the coordination of input-output activities and the power to capture and/or distribute the economic value created within the chain, the framework captured a fundamental shift in the sources of economic power and the organization of productive activities, whereby ‘lead firms’ that controlled key branding and designing activities, could exercise significant ‘drive’ over affiliates and suppliers involved in the geographically scattered but tightly coordinated activities of material transformation. The so-called ‘buyer-driven chains’ formed by global brands and retailers to organize for the manufacture of their products in factories they did not own, became a dominant organizational pattern not only in labour intensive industries such as toys or clothing, but also in high tech or capital-intensive sectors such as electronics, aeronautics or the automotive industries where ‘lead producers’ increasingly outsourced production. A focal question of GCC research has been to determine the extend to which this transnational organization of production could offer prospects of upward mobility for suppliers entering at the bottom of global chains, i.e., in low paid labour intensive activities, to reach higher, more lucrative segments characterized by greater immaterial and technological content. Such process of ‘industrial upgrading’ implied that global chains could be used as levers for the economic development of firms and countries, and that their structure of power could be seen as a source of economic opportunity.
Global Value Chains (GVCs): a growing focus on corporate performance
As emphasized by Bair (2005, 2009) in her genealogies of the concept(s) of global chains, the shift to ‘global value chains’ occurring in the 2000s accentuated the economistic turn already taken by GCC research. By drawing inspiration from transaction cost theory, it promoted a more deterministic framework whereby the degree of complexity, codification, and competencies which characterized transactions within a given chain, would require the adoption of a specific type of governance among a variety of choices ranging from the market to internal hierarchy (Gereffi, Humphrey, Sturgeon, 2005). The more governance leaned towards the market, thanks to easy codification and switching among suppliers, the more inter-firm relationships were considered to become equal within the chain. Such view, leaning closer to basic tenets of classic economic analysis and further departing from the premises of world systems research, inspired a wealth of development research in the 2000s, on the chain patterns that could be observed or recommended in southern countries.
Global production networks (GPNs): (re)politicizing the debate
At this juncture, an alternative stream of research emerged under the banner of ‘global production networks’ (GPNs), which explicitly aimed to re-embed the analysis of global chains into their social, cultural, and political contexts. The so-called Manchester school gathered economic geographers around a ‘relational framework’ which emphasized the role of non-firm actors such as governments and civil society in the governance of global chains, as well as the fluid/dynamic nature of GPNs in contrast with what was considered as too static/monolithic typologies elaborated in GCC and GVC research (Dicken et al., 2001; Coe, Dicken and Hess, 2008). A research programme entitled ‘Capturing the Gains’ further assessed the extent to which gains made by suppliers out of industrial upgrading were being shared with workers through ‘social upgrading’ in the form of improvements in workers’ rights and entitlements, a process that proved both scarce and uneven, hence questioning the social contribution of economic activities developed in GVCs (Barrientos, Gereffi, Rossi, 2011). Phillips (2011) drew on the notion of ‘adverse incorporation’ to analyse how GPNs could generate enduring forms of poverty, marginalisation and vulnerability for workers involved in the less profitable segments of production. In critical management studies, Levy suggested that a neo-Gramscian framework, emphasizing the interplay of hegemonic and counter-hegemonic forces, could be useful to conceptualize GPNs as “contested organizational fields in which actors struggle over the construction of economic relationships, governance structures, institutional rules and norms, and discursive frames” (2008: 944).
Blurring the lines between GVCs and GPNs
In recent years, the line of distinction between GVC and GPN perspectives has become increasingly blurred, however, and the use of one or the other terminology has not been necessarily attached to either economistic or more social/political views of global chains (Bair and Palpacuer, 2015). On the one hand, some influential research on production networks has focused on issues of economic performance and competitiveness, particularly in electronics (Ernst and Kim, 2002; Sturgeon, 2001), and recent re-conceptualizations of GPNs have stressed the role of competitive dynamics in producing various organizational forms in GPNs (Yeung and Coe, 2015). On the other hand, some conceptualizations of GVCs have incorporated the role of social norms and conventions (Ponte and Gibbon, 2005; Ponte and Sturgeon, 2014) as well as labour (Selwynn, 2012), in shaping patterns of power and coordination in global chains. A GCC/GVC terminology has been used to address key social/political issues such as the forms and consequences of global integration for local territories, suppliers, and workers. Along such lines, the financialization of lead firms and their enhanced focus on delivering shareholder value have been shown to induce a decline of internal investments, an accentuation of risks and costs transfers to suppliers, and scarce improvements in the wages of production workers, hence raising questions about the sustainability of the pattern of financialization and outsourced production that became dominant in GVCs (Gibbon, 2002; Milberg and Winkler, 2013). Bair and Werner (2010) have analysed how the deployment of global chains may rely on local processes of dispossession and ‘disarticulation’ that make the integration of local territories into GCCs both highly unstable and of uncertain social outcomes. Ecological issues have also started to be more systematically addressed in GCC research. Ciccantell and Smith promoted a ‘lengthening’ of the standard image of GCCs so as to fully incorporate extractive regimes and transportation systems and to “explicitly build an understanding of the relationship between society and nature, of space and transport systems, and of the institutional structure (and often disarticulation) of extractive economies, particularly those on the periphery of today’s world-economy” (2009:377). Likewise, Kütting claimed that “the finite nature of the resources used for production and the fragile nature of the ecosytem as a recipient of waste products (…) need to be incorporated into commodity chain analysis because they are also part of the chain » (2014 : 51).
Rising concerns for social and environmental issues in GVCs
Building on these conceptual advances, a vivid stream of research has started to document and analyse in more details the extent to which economic, social and environmental concerns were being integrated into the management of global chains through initiatives of corporate social responsibility (CSR), by which lead firms responded to the rise of media campaigns and social/political contestation since the 1990s. An abundant literature has assessed the main CSR tools adopted by lead firms in the form of codes of conduct deemed to ensure compliance with core social and environmental standards in global chains, concluding to fairly mixed, deceptive results. While some localized improvements have been observed, codes of conduct have not induced a systemic amelioration of social conditions (Anner, 2012; Barrientos and Smith, 2007), most notably because they failed to enhance or guarantee workers’ capacity to organize and collectively bargain for their own rights and entitlements (Egels-Zandén & Merk, 2014). Similar weaknesses have been noticed in the uneven local implementation of the International Framework Agreements (IFAs) signed between large lead firms and international labour union federations with the objective to secure workers’ rights in GVCs (Fichter and McCallum, 2015). Scepticism has been expressed regarding the extend to which economic and moral incentives could induce lead firms to effectively engage in improving social and environmental conditions in global chains, considering both the intensity of competitive pressures and inter-firm struggles over the sharing of gains in GVCs (Acquier, Valiorgue, Daudigeos, 2015), and the limited capacity of voluntary CSR initiatives to overcome unequal power relations in global chains (Lund-Thomsen and Lindgreen, 2013; Böhm, Brei, and Dabhi, 2015). Growing attention has also been paid to the role played by NGOs in ‘politicizing’ global chains such as the ones linking Amazonia to the rest of the world (Barbosa, 2015), and to the entanglement of social and environmental issues and initiatives in GVCs (Bartley, 2007; Islam and Hossain, 2015). Issues of management responsibility are thus increasingly coming to the forefront of research on GVCs.
Acquier, A., Valiorgue, B., Daudigeos, T. (2015) Sharing the Shared Value: A Transaction Cost Perspective on Strategic CSR Policies in Global Value Chains, Journal of Business Ethics, 1-14, published online.
Anner, M. (2012) Corporate Social Responsibility and Freedom of Association Rights The Precarious Quest for Legitimacy and Control in Global Supply Chains, Politics & Society, 40(4), 609–644.
Arrighi, G., Drangel, J. (1986) The stratification of the world-economy, Review, 10(1), 9–74.
Bair, J., Palpacuer, F. (2015) CSR beyond the corporation: contested governance in global value chains, Global networks, 15(1), S1-S19.
Bair J., Werner M. (2011) The place of disarticulations: global commodity production in La Laguna, Mexico. Environment and Planning-Part A, 43(5), 998-1015.
Bair, J. (2009) Global Commodity Chains: Genealogy and Review, in Bair, J. (ed.) Frontiers of Global Commodity Chains Research, Stanford University Press.
Bair J. (2005) Global Capitalism and Commodity Chains: Looking Back, Going Forward, Coopetition and Change, 9(2), 153-180. Barbosa (2015) Guardians of the Brazilian Amazon Rainforest: Environmental Organizations and Development, Routledge. Barrientos, S., Gerrefi, G., Rossi, A. (2011) Economic and social upgrading in global production networks: A new paradigm for a changing world, International Labour Review, 150(3-4), 319-340.
Barrientos, S., & Smith, S. (2007), Do workers benefit from ethical trade? Assessing codes of labour practice in global production systems, Third World Quarterly, 28(4), 713–729.
Bartley, T. (2007), Institutional Emergence in an Era of Globalization: The Rise of Transnational Private Regulation of Labor and Environmental Conditions, American Journal of Sociology, 113(2), 297-351.
Böhm, S., Brei, V., Dabhi, S. (2015) EDF Energy's green CSR claims examined: the follies of global carbon commodity chains, Global Networks, 15(1), S87–S107.
Ciccantel, P. and Smith, D. (2009) Rethinking Global Commodity Chains : Integrating Extraction, Transport, and Manufacturing, International Journal of Comparative Sociology, 50(3-4), 361–384.
Coe, N., Dicken, Hess, M. (2008) Global production networks: realizing the potential, Journal of Economic Geography, 8, 271-295.
Dicken, P., Kelly, P., Olds, K., Wai-Chung Yeung, H. (2001) Chains and networks, territories and scales: towards a relational framework for analysing the global economy, Global Networks, 1(2), 89-112.
Islam, S., Hossain, I. (2015) Social Justice in the Globalization of Production : Labor, Gender, and the Environment Nexus, Palgrave-Macmillan.
Egels-Zandén, N., Merk, J. (2014) Private Regulation and Trade Union Rights: Why Codes of Conduct Have Limited Impact on Trade Union Rights, Journal of Business Ethics, 123(3), 461-473.
Ernst, D., Kim, L. (2002) Global Production Networks, Knowledge Diffusion and Local Capability Formation, Research Policy, 31(8-9), 1417-29.
Fichter, M., McCallum J. (2015) Implementing global framework agreements: the limits of social partnership, Global Networks, 15(1), S65–S85.
Gereffi, G., Humphrey, J., Sturgeon, T. (2005) The governance of global value chains, Review of International Political Economy, 12(1), 78-104.
Gereffi, G., Korzeniewicz, M. (1994) Commodity Chains and Global Capitalism, Westport, CT : Praeger.
Gereffi, G. (1994) The organization of buyer-driven global commodity chains: how US retailers shape overseas production networks, in G. Gereffi and M. Korzeniewicz (eds) Commodity Chains and Global Capitalism, Westport, CT : Praeger.
Gibbon, P. (2002) At the cutting edge? Financialisation and UK clothing retailers’ sourcing patterns and practices, Competition and Change, 6, 289-308.
Hopkins, T., Wallerstein, I. (1977) Patterns of development of the modern world-system, Review, 1(2), 11-145.
Kütting, G. (2014) Consumption: institutions and actors, in Harris (ed.) The Routledge Handbook of Global Environmental Politics, chap 16.
Levy, D. L. (2008) Political Contestation in Global Production Networks, Academy of Management Review, 33(4), 943-963.
Lund-Thomsen, P.Lindgreen, A. (2013) Corporate Social Responsibility in Global Value Chains: Where Are We Now and Where Are We Going ? Journal of Business Ethics, 123(1),1-12.
Milberg, W., Winkler, D. (2013) Outsourcing economics: Global value chains in capitalist development, Cambridge University Press.
Phillips, N. (2011) Informality, global production networks and the dynamics of “adverse incorporation,” Global Networks, 11(3), 380–397.
Ponte, S., Gibbon, P. (2005) Quality Standards, Conventions and the Governance of Global Value Chains, Economy and Society, 34(1), 1-31.
Ponte, S., Sturgeon, T. (2014) Explaining governance in global value chains: A modular theory-building effort, Review of International Political Economy, 21(1), 195-223.
Selwyn, B. (2012) Beyond firm-centrism: re-integrating labour and capitalism into global commodity chain analysis, Journal of Economic Geography, 12 (1), 205-226.
Sturgeon, T. J. (2002) Modular Production Networks: A New American Model of Industrial Organization, Industrial and Corporate Change, 11(3), 451-496.
Wallerstein, I. (1983) Historical capitalism, New York, Verso.