Power relationships along the value chain: multinational firms, global buyers and performance of local suppliers

By C. Pietrobelli, Federica Saliola. 2008

148 citations recorded by the source corpus.

There is a growing literature exploring the role of international trade channels on economic growth, looking at the mechanisms through which import and export flows might affect productivity, technology diffusion and output growth. However, most of this literature appears to neglect an important part of the story, which is the form and the organisation of the relationships (the governance) among the various actors involved in these activities and their implications for development. The recent literature on global value chains and their governance takes this element explicitly into account, and we explore it empirically with a new dataset on Thailand. To this aim, we study global and domestic value chains in Thailand, and develop a quantitative measure of their governance, which takes into account different levels and types of buyer involvement with supplier activities. We then use this measure to explore econometrically its relationship with performance of suppliers. An important finding is that in value chains led by a multinational corporation, the relationships that the leaders have with their suppliers is multifold and generally more intense than for domestic value chains. Our estimates suggest that more intense buyer involvement with local suppliers, not only in the definition of product characteristics, design and quality, but also in technology dissemination and R&D, is generally associated with higher supplier productivity. This is consistent with other sources of evidence. However, the governance of the value chain appears to affect the productivity of suppliers in domestic value chains to a greater extent than for firms supplying multinational corporations or for exporters. We suggest that this result may be explained by the different nature of the information and knowledge being exchanged, and by the larger gaps in knowledge and capabilities between the domestic leader and its suppliers.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/45bb99a4041f93596e32aa4f699ef5001b9075bc

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Citations in the corpus

Digital labour and development: impacts of global digital labour platforms and the gig economy on worker livelihoods (2017, background): “…trade in terms of earnings is captured not by producers themselves, but by intermediaries who use geographic location, networks, and other positional advantages to mediate between buyers and sellers, potentially contributing to (and reinforcing) global inequalities (Pietrobelli and Saliola, 2008).”
Towards a typology of repositioning strategies of GVC/GPN suppliers: the case of functional upgrading and downgrading (2016, background): “These lead firms are championing the market ‘in terms of their brand names, technology, products/services, and marketing capabilities’ (Yeung, 2009, 330) and, in some cases, are eventually leaving manufacturing (Pietrobelli and Saliola, 2008), thus giving birth to ‘manufacturers without factories’ (”
An integrative typology of global strategy and global value chains: The management and organization of cross‐border activities (2020, unknown): “…and technological capabilities through learning by doing (see, for example, Kaplinsky, Morris, & Readman, 2002; Giuliani, Pietrobelli, & Rabellotti, 2005; Pietrobelli & Rabellotti, 2011; Pietrobelli & Saliola, 2008; Morrison, Pietrobelli, & Rabellotti, 2008; Ivarsson & Alvstam, 2005, 2011).”
Handbook of Innovation Systems and Developing Countries: Building Domestic Capabilities in a Global Setting (2011, methodology): “See Pietrobelli and Saliola (2008) for a recent attempt to develop a method to measure GVC governance.”
Global value chains participation and productivity gains for North African firms (2017, unknown): “Pietrobelli and Saliola (2008), analysing a sample of Thailandese firms, argue that the buyer involvement with local suppliers positively affects productivity, technology diffusion, and output growth.”
The Role of Foreign Technology and Indigenous Innovation in the Emerging Economies: Technological Change and Catching Up (2010, background): “There may also be vertical technology spillovers taking place between foreign and local suppliers and customers within the value chain through forward and backward linkages (Javorcik, 2004; Pietrobelli & Rabellotti, 2007; Pietrobelli & Saliola, 2008).”
Global Value Chains Meet Innovation Systems : Are There Learning Opportunities for Developing Countries? (2010, methodology): “See Pietrobelli and Saliola (2008) for a recent attempt to develop a method to measure GVC governance.”
Agricultural Value Chains in Developing Countries A Framework for Analysis (2011, unknown): “Building on Kaplinsky and others, Pietrobelli and Saliola (2008) define the following upgrading options: entering higher unit value market niches, entering new sectors, undertaking new productive functions and in all cases enlarging the technological capabilities of the firms.”