Governance and Upgrading in GVCs: Why does Embeddedness Matter

Fortes, Paulo Jordão de Oliveira Cerqueira; Stettiner, Caio Flavio; Okano, Marcelo T.

doi:10.7819/rbgn.v21i4.4015

Paulo Jordão de Oliveira Cerqueira Fortes

Universidade Federal do Piauí (UFPI), Chefia do Curso de Administração (CCA), Teresina, Brazil

http://orcid.org/0000-0003-3873-8396

Caio Flavio Stettiner

Fatec Sebrae, Coordenação Curso de Gestão de Negócios e Inovação, São Paulo, Brazil

http://orcid.org/0000-0002-4479-7416

Marcelo T. Okano

CEETEPS and FGV-EAESP, Master Program in Productive Systems, São Paulo, Brazil

FGV, Fundação Getúlio Vargas, EAESP, Master Program in Productive Systems, São Paulo, Brazil

http://orcid.org/0000-0003-1680-7821

1
.Paulo Jordão de Oliveira Cerqueira Fortes, PhD Student, Fundação de Ensino Inaciana (FEI), São Paulo, Brazil. E-mail: paulojordão@ufpi.edu.br.

2
. Caio Flavio Stettiner, Masters Degree in Education, Universidade Cidade de São Paulo, São Paulo, Brazil. E-mail: cstettiner@gmail.com

3
. Marcelo T Okano, Post Doctorate in Production Engineering at UNIP, Post Doctorate in Production Engineering at UNESP - Faculdade de Engenharia de Guratingueta, São Paulo, Brazil. E-mail: marcelo.okano@cps.sp.gov.br

Contribution of each author

Each author should take responsibility for at least one component of the paper. If the article is approved for publication, the authors should indicate in the diagram below, what was the contribution of each.

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Contribution Paulo Jordão de Oliveira Cerqueira Fortes Caio Flavio Stettiner Marcelo T. Okano 1. Definition of research problem √ √ 2. Development of hypotheses or research questions (empirical studies) √ 3. Development of theoretical propositions (theoretical work) √ 4. Theoretical foundation/ Literature review √ √ 5. Definition of methodological procedures √ √ √ 6. Data collection √ 7. Statistical analysis √ √ 8. Analysis and interpretation of data √ √ √ 9. Critical revision of the manuscript √ √ √ 10. Manuscript writing √ √ √ 11. Other (please specify which)

Responsible editor:

João Maurício Gama Boaventura

Tables (4)

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Contribution Paulo Jordão de Oliveira Cerqueira Fortes Caio Flavio Stettiner Marcelo T. Okano 1. Definition of research problem √ √ 2. Development of hypotheses or research questions (empirical studies) √ 3. Development of theoretical propositions (theoretical work) √ 4. Theoretical foundation/ Literature review √ √ 5. Definition of methodological procedures √ √ √ 6. Data collection √ 7. Statistical analysis √ √ 8. Analysis and interpretation of data √ √ √ 9. Critical revision of the manuscript √ √ √ 10. Manuscript writing √ √ √ 11. Other (please specify which)

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Table 1
15+GVC-framework co-word database

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Table 2
15+GVC-framework OPP and black box matrix from 2001 to 2014

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Table 3
15+GVC-framework actor-worlds unit of analysis

Co-Words	Year
	2001	2002	2005	2006	2008	2010	2012	2014	Total
Chains	155	240	402	192	286	31	48	104	1458
Global	74	194	270	96	261	43	28	282	1248
Value	50	124	321	171	155	62	27	132	1042
Governance	54	150	131	54	254	46	18	135	842
Firms	78	193	190	33	131	46	26	113	810
Standards	51	67	46	160	248	26	97	29	724
Upgrading		183	193	17	100	32	18	154	697
Markets	75	128	136	106	10		42	52	549
GVC			34	16	205	69	10	210	544
Products	49	162	149	102	24	10	24		520
Development	25	76	76	58	92	40		120	487
Industry	15	79	104	36	109	31		95	469
Suppliers		80	138	69	92	39		44	462
Production	35	69	97	82	75	26	14	60	458

Black Box	Obligatory Passage Point OPP
	Governance	Convention Theory	TCE	Trends	GVC Framework
GPN Structure	Gereffi (2001Gereffi, G. (2001). Beyond the producer-driven/buyer-driven dichotomy: The evolution of the global value chains in the internet era. IDS Bulletin, 32(3), 30-40.)
Patterns	Humphrey and Schmitz (2001Humphrey, J., & Schmitz, H. (2001). Governance in Value Chains. IDS Bulletin, 32(3), 19-29.)
Upgrading	Humphrey and Schmitz (2002aHumphrey, J., & Schmitz, H. (2002a). How does the insertion in global value chains affect upgrading in industrial clusters? Regional Studies, 36(9), 1-16.) Giuliani, Pietrobelli, and Rabellotti (2005Giuliani, E., Pietrobelli, C., & Rabellotti, R. (2005). Upgrading in global value chains: Lessons from Latin American clusters. World Development, 33(4), 549-573), Gereffi and Lee (2014Gereffi, G., Lee, J. (2014). Economic and social upgrading in global value chains and industrial clusters. Journal of Business Ethics, 133(1), 25-38.)
Governance	Humphrey and Schmitz (2002bHumphrey, J., & Schmitz, H. (2002b). Developing countries firms in the world of economy: Governance and Upgrading in Global Value Chains. INEF Report, 61, 1-35.) Gibbon, Bair, and Ponte (2008Gibbon, P., Bair, J., & Ponte, S. (2008). Governing global value chains: An introduction. Economy and Society, 37(3), 315-338.)		Gereffi et al. (2005Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The governance of global value chains. Review of International Political Economy, 1(12), 70-104.)
Quality		Ponte and Gibbon (2005Ponte, S., & Gibbon, P. (2005). Quality standards, conventions and the governance of global value chains. Economy and Society, 34(1), 1-31.)
Standards	Nadvi (2008Nadvi, K. (2008). Global standards, global governance and the organization of global Value Chains. Journal of Economic Geography, 8(3),1-21.)			Humphrey and Memedovic (2006Humphrey, J., & Memedovic, O. (2006). Global value chain in the agri-food sector. UNIDO Working Paper, 1-54. Vienna. Retrieved from https://www.unido.org/sites/default/files/2009-05/Global_value_chains_in_the_agrifood_sector_0.pdf https://www.unido.org/sites/default/file... )	Lee, Gereffi, and Beauvais, (2012Lee, J., Gereffi, G., & Beauvais, J. (2012). Global value chains and agri-food standards: Challenges and possibilities for smallholders in developing countries. PNAS, 109(31), 12326-12432.)
Tech. Capabilities					Morrison, Pietrobelli, and Rabelloti (2008Morrison, A., Pietrobelli, C., & Rabelloti, R. (2008). Global Value Chains and technological capabilities: A framework to study industrial innovation in developing countries. Oxford Development Studies, 36(1),1-27.)
Innovations					Pietrobelli and Rabellotti (2010Pietrobelli, C., & Rabellotti, R. (November 2010). Global value chains meet innovations systems: Are there learning opportunities for developing countries? Inter-American Development Bank, 232, 1-24.)
International Development					Gereffi (2014Gereffi, G., Lee, J. (2014). Economic and social upgrading in global value chains and industrial clusters. Journal of Business Ethics, 133(1), 25-38.)

Actor-World	Enrollment	Interéssement	Funnel of Interests	Problematization	Translation center
Gereffi (2001Gereffi, G. (2001). Beyond the producer-driven/buyer-driven dichotomy: The evolution of the global value chains in the internet era. IDS Bulletin, 32(3), 30-40.)	Presenting future scenarios	Describing how the internet will provide several organizational changes within the governance of production networks.	Explaining how power shifts with innovations in networks with fewer boundaries between geographical distances.	Upgrading can be better defined and implemented through the study of its central actor: governance.	Spokesperson: IDS Bulletin at the Institute of Development Studies of Sussex University
Humphrey and Schmitz (2001Humphrey, J., & Schmitz, H. (2001). Governance in Value Chains. IDS Bulletin, 32(3), 19-29.)	Describing governance control as key for positive outcomes	Offering a governance definition and expressing the importance of the GVC framework.	Lead firms strategically profit from controlling the parameters set and enforcing GVC standards	Upgrading problematization is solved with parameter setting and enforcing.	Spokesperson: IDS Bulletin at the Institute of Development Studies of Sussex University
Humphrey and Schmitz (2002aHumphrey, J., & Schmitz, H. (2002a). How does the insertion in global value chains affect upgrading in industrial clusters? Regional Studies, 36(9), 1-16.),	Upgrading is accomplished by adding value to a product	Providing a scientific framework to aid in upgrading regions and nations.	Provides a framework with x (governance), z (parameters), and y (upgrading).	Upgrading definition according to the value-added approach.	Spokesperson: IDS Bulletin at the Institute of Development Studies of Sussex University
Humphrey and Schmitz (2002bHumphrey, J., & Schmitz, H. (2002b). Developing countries firms in the world of economy: Governance and Upgrading in Global Value Chains. INEF Report, 61, 1-35.),	Setting an agenda for research and upgrading policy	Presenting a framework	International trade can spur economic upgrading, working conditions, and environmental protection.	Economic, social, and environmental standards improved by policy and research, government, and external agencies.	Spokesperson: INEF Report at the Institute of Development and Peace
Giulliani et al. (2005)	Present empirical findings using the GVC framework	Clustering and joint actions are essential for upgrading; however, knowledge can be a barrier to upgrading.	Presenting that there is a possibility for sustainable growth within GVCs.	Knowledge dissemination and the support of external agencies are called upon as one of the solutions for better sustainable upgrading.	Spokesperson: World Development at Elsevier.
Ponte and Gibbon (2005Ponte, S., & Gibbon, P. (2005). Quality standards, conventions and the governance of global value chains. Economy and Society, 34(1), 1-31.)	Articulation of convention theory and GVC	Convention theory framework to explain that governance may not be defined previously.	Convention Theory and Economy of Qualities Theory brings the consumer into the GVC framework.	Presents a solution for GVC modeling not through the lead firms, but by quality standards drawn by consumers.	Spokesperson: Economy and Society Journal at Taylor and Francis online
Gereffi et al. (2005Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The governance of global value chains. Review of International Political Economy, 1(12), 70-104.)	A framework that explains governance patterns	Governance defined by info. Complexity, codification, and suppliers’ capabilities to cope with transactions.	Suggests dynamic and overlapping governance.	Defining governance with a quantitative solution that simplifies the “degree of explicit coordination and power asymmetry.”	Spokesperson: Review of International Political Economy at Routledge
Humphrey & Memedovic (2006Humphrey, J., & Memedovic, O. (2006). Global value chain in the agri-food sector. UNIDO Working Paper, 1-54. Vienna. Retrieved from https://www.unido.org/sites/default/files/2009-05/Global_value_chains_in_the_agrifood_sector_0.pdf https://www.unido.org/sites/default/file... )	Agriculture can help poverty reduction	Insertion in GVCs can help small farmers to make profits.	Suggests that the promotion of small farmer trade is attained by GVC insertion and by GVC concentrations and standards.	Knowledge flow within the chain as one of the forms to promote upgrading for small farmers	Spokesperson: UNIDO at the United Nations translation center.
Nadvi (2008Nadvi, K. (2008). Global standards, global governance and the organization of global Value Chains. Journal of Economic Geography, 8(3),1-21.)	Provides a way to reconcile GVC and GPN by describing standards patterns	Describing standards as an actor that both affects and is affected by governance.	Standard compliance is how Developing Countries firms and farms get connected to a GVC.	Standards and governance of lead firms are embedded and also suggest the study of intra-firm governance.	Spokesperson: Journal of Economic Geography at Oxford Academic
Actor-World	Enrollment	Interéssement	Funnel of Interests	Problematization	Translation center
Gibbon, Bair, and Ponte, S. (2008Gibbon, P., Bair, J., & Ponte, S. (2008). Governing global value chains: An introduction. Economy and Society, 37(3), 315-338.)	Critical discussion to develop the governance concept	Presenting controversies: value definition is missing in GVC, and network as GVC misinterprets the network.	GVC approach uses TCE while GPN uses relational networks.	GVC as a reliable method that fits several theories, and presenting normalizing governance as a solution for the GVC/GPN divide.	Spokesperson: Economy and Society at Taylor and Francis
Morrison et al. (2008Morrison, A., Pietrobelli, C., & Rabelloti, R. (2008). Global Value Chains and technological capabilities: A framework to study industrial innovation in developing countries. Oxford Development Studies, 36(1),1-27.)	Technological capabilities affect GVC upgrading	Presenting a view that the upgrading concept is ambiguous in GVC literature.	Linking technical capabilities literature to explanations on how LDC firms perform.	Upgrading within the governance of GVC is resolved by the technological capabilities building within geographical locations.	Spokesperson: Oxford Development Studies at Taylor and Francis
Pietrobelli and Rabellotti. (2010Pietrobelli, C., & Rabellotti, R. (November 2010). Global value chains meet innovations systems: Are there learning opportunities for developing countries? Inter-American Development Bank, 232, 1-24.)	Defending GVC from GPN critics	Describing the embeddedness of institutional and local firms context interacting with GVCs.	Presenting IS as compatible with the GVC framework.	It uses the relational network concept from geography to describe that proximity matters both geographically and relationally.	Spokesperson: IDB Working Paper located at Inter-American Development Bank
Lee et al. (2012Lee, J., Gereffi, G., & Beauvais, J. (2012). Global value chains and agri-food standards: Challenges and possibilities for smallholders in developing countries. PNAS, 109(31), 12326-12432.)	Presenting GVC agri-food governance structure	Description of challenges and opportunities for agri-food GVC upgrading.	Questioning if a standard hinders poverty as it is set as a barrier for small producers.	Describing that the local structural context should be accounted for in policy and research.	Spokesperson: PNAS in Agriculture development and Nutrition Security
Gereffi (2014Gereffi, G., Lee, J. (2014). Economic and social upgrading in global value chains and industrial clusters. Journal of Business Ethics, 133(1), 25-38.)	Governance of global industries changes with globalization advancements	Describing economic globalization as a byproduct of international production and trade networks.	Describing that it may soon be a new globalization form.	Governance of lead firms aided by the change in political EOI development as evidenced in BRICS, among others countries.	Spokesperson: International Political Economy at Routledge
Gereffi and Lee (2014Gereffi, G., Lee, J. (2014). Economic and social upgrading in global value chains and industrial clusters. Journal of Business Ethics, 133(1), 25-38.)	Presenting a framework	Describing that industrial clusters are shaped by their relationship with the international economy.	“Synergistic governance” within the GVC framework pressures lead firms to upgrade within CSR.	Vertical and horizontal governance, or governance within the GVC or cluster, to resolve the aimed focus on a lead-firm problem.	Spokesperson: Journal of Business Ethics at Springer

[1] 1
.Paulo Jordão de Oliveira Cerqueira Fortes, PhD Student, Fundação de Ensino Inaciana (FEI), São Paulo, Brazil. E-mail: paulojordão@ufpi.edu.br.

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Governance and Upgrading in GVCs: Why does Embeddedness Matter

Abstract

Purpose

Design/methodology/approach

Findings

Originality/value

Contribution	Paulo Jordão de Oliveira Cerqueira Fortes	Caio Flavio Stettiner	Marcelo T. Okano
1. Definition of research problem	√	√
2. Development of hypotheses or research questions (empirical studies)	√
3. Development of theoretical propositions (theoretical work)	√
4. Theoretical foundation/ Literature review	√	√
5. Definition of methodological procedures	√	√	√
6. Data collection	√
7. Statistical analysis	√	√
8. Analysis and interpretation of data	√	√	√
9. Critical revision of the manuscript	√	√	√
10. Manuscript writing	√	√	√
11. Other (please specify which)