“The need to rethink global value chains has gained momentum in public debates during the COVID-19 pandemic, highlighting the vulnerability of transnational production systems to unexpected shocks. Consumption countries could be suddenly deprived of access to very basic goods, while poverty levels reached alarming thresholds in producing countries where vast numbers of unprotected workers were left without work or a basic income.
The unsustainability of global capitalism further came to the fore when the link could be made between deforestation, the decline of biodiversity, and the vulnerability of our societies to disease pandemics.”
The opening statement of our collective book entitled Rethinking Value Chains (Palpacuer and Smith, 2021), sums up the ways in which Covid-19, combined with rising political tensions between trade blocs and the soaring prices of energy and raw materials, have shaken well-established tenets on economic globalization.
Social inequalities, precarious development and ecological destruction have been longstanding issues surrounding the rise of global value chains (GVCs), but their magnitude and acuteness have now reached such a point that rethinking their premises and core dynamics has become unescapable.
Indeed, Global Value Chains (CGVs) formed by the geographical dispersion of productive activities across firms and countries have become ‘the world economy’s backbone and central nervous system’ (Cattaneo, Gereffi and Staritz, 2010, p. 7).
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 were 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 have gained momentum in international debates on Global Value Chains, stirring recent regulatory initiatives to establish binding, enforceable forms of protection for social and environmental rights. The 2017 French law on the Duty of Vigilance of Multinationals requires large firms to assess, report, and remediate social and environmental risks in the global value chains falling under their ‘sphere of control’. A similar law came into force in Germany in January 2023, and a proposal for an EU Directive on Corporate Sustainability Due Diligence was submitted to the European Parliament in 2022.
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 these impacts at both local and broader systemic levels, further call for multi-disciplinary research and teaching initiatives to address the multifaceted issue of social and environmental responsibility in value chains.
Rethinking articulations between global and local chains is emerging as an increasingly pressing issue.
As the social and environmental damages induced by GVCs are reaching new thresholds, the need to rethink value chains in view of fostering a greater embeddedness of economic activities into local territories, political actions and ecosystems is becoming more and more pressing, inviting researchers and activists alike to bridge boundaries between local and global initiatives, so as to cross-fertilize knowledges and actions and develop new forms of articulation between these two scales of value chain organization.
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.
Organisation for Economic Cooperation and Development (2007) Staying competitive in the global economy: moving up the value chain, Paris: OECD.
Palpacuer, F. and Smith, A. (2021) Rethinking Value Chains, Bristol University Press. Open access: https://policy.bristoluniversitypress.co.uk/rethinking-value-chains.
The Rethinking 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 contextualized and problematized/political perspectives on responsible management in GVCs. We seek to promote approaches that do not subordinate social and environmental concerns to the realization of economic ends, but rather see economic activities as means of serving broader societal finalities. While such research may stimulate new ways of thinking about social and environmental sustainability, our objective is also to foster changes in the education and training of current and future managers in value chains, so as to encourage a transformation of management thinking and practices in favor of greater integration of social and environmental concerns in economic activities.
In light of such objectives, the RGCV internet platform offers a vehicle for sharing resources and building networks in support of innovative research and teaching on the management of value chains.
The platform is multidisciplinary, involving academics from management, sociology, anthropology, law, economics, and history. Acknowledging the prominent role of social movements in making visible the social and environmental challenges of GVCs, and in pushing for novel forms of binding regulation on these issues, RGVC welcomes resources and initiatives stemming from the spheres of both academia and civil society movements, thus involving activists who specialize in major GVCs such as garment, electronics and agri-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
- the driving force of finance in shaping GVCs dynamics and outcomes
- the internalisation of social and environmental costs into pricing
- the regulation of social and environmental conditions through binding regulation
- the shaping of GVC governance via interactions between corporations, governments, and civil society
- trade union responses and new patterns of organising social struggles in GVCs
- shifting North-South relations and their implications for labor and environmental rights
- life experiences of working in GVCs
- gender issues in GVCs
- the effects of GVCs on local communities and territories
- the entanglements of local, regional and global value chains and their implications for sustainable development
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.
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