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Global value chains, rising power firms and economic and social upgrading

Joonkoo Lee (School of Business, Hanyang University, Seoul, South Korea)
Gary Gereffi (Department of Sociology, Duke University, Durham, North Carolina, USA)

Critical Perspectives on International Business

ISSN: 1742-2043

Article publication date: 6 July 2015

5296

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

Citation

Lee, J. and Gereffi, G. (2015), "Global value chains, rising power firms and economic and social upgrading", Critical Perspectives on International Business, Vol. 11 No. 3/4, pp. 319-339. https://doi.org/10.1108/cpoib-03-2014-0018

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited

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