Closing the gap between Business Networks and Value Chain Analysis.
| Autor | Oliveira, Luis |
1 Introduction
With longstanding roots in the world-systems literature, GVC theory had matured and assumed its current formats by the mid-1990s (Bair, 2005, 2008). "The GVC framework allows one to understand how global industries are organized by examining the structure and dynamics of different actors involved in a given industry" (Gereffi & Fernandez-Stark, 2011, p. 2). Its relevance resides precisely in its capacity to accommodate issues that demand attention in the modern global order, which is marked by growing economic interdependence and increasing dispersion of economic activities across borders (Nayyar, 2003, p. 39). Over time, GVC theory has gradually transitioned from macro-level debates, mostly shaped by developmentalist concerns, to a research agenda that also incorporates micro-level issues such as firm strategy (Gereffi, 2014a). In spite of this, concepts and constructs which could be useful to such an agenda and have already been studied in the business network literature remain underexplored in GVC research (Sako & Zylberberg, 2017).
Since its early days, GVC theory has developed away from mainstream management research, drawing instead on a rich background encompassing international economics, sociology, political economy, and studies of clusters and industries (Bair, 2005; Morrison, Pietrobelli, & Rabellotti, 2008). With such a background, GVC theory has evolved mostly around two complementary concepts: governance and upgrading. The former is related to top-down dynamics that focused on powerful firms in the chain and on the organization of global industries, while the latter gives rise to strategies that economic actors can use to achieve better positions in the value generation process (Gereffi, 1999; Gereffi & Lee, 2012; Morrison et al., 2008; Ponte & Sturgeon, 2014). The governance concept usually receives more attention because of its utility in discussing how firms are included in or excluded from GVCs, and its importance in shaping upgrading opportunities (Gereffi, 2014b; Ponte & Sturgeon, 2014).
Pending issues create a pressing need to advance the connection between GVC and business network research. For instance, GVC theory is recurrently criticized for privileging linear dynamics over network analyses, despite GVC authors defending their chain metaphor as being a useful simplification of reality (e.g., Coe, Dicken, & Hess, 2008; Henderson, Dicken, Hess, Coe, & Yeung, 2002; Yeung & Coe, 2015). With the evolution of digitalization and ecosystem-based industries, studies of modern firms require theoretical frameworks capable of capturing phenomena that occur at the network level--and which could be ignored or difficult to grasp within linear relationships (Jacobides, Cennamo, & Gawer, 2018; Moller & Halinen, 2017). Moreover, GVC theory's treatment of concepts such as governance, power, upgrading, and value may come across barriers to entry in mainstream journals if it does not connect with conventional management and strategy theories. In fact, GVC theory is already isolated from the main management journal outlets (Sako & Zylberberg, 2015).
By visiting business network research, GVC theory could improve its capacity to cope with modern empirical challenges, communicate better with scholars from mainstream disciplines, and establish smoother connections with alternative network-based frameworks. Moreover, an improved connection between GVC theory and network research may unveil possibilities for leveraging the multi-level nature of business network theory in studies of GVC-related phenomena, thus opening up a way to formally connect macro-level issues (such as national policy-making and industry-level dynamics) with those at the micro-level (such as firm strategy and consumer behavior) (Zaheer, Gozubuyuk, & Milanov, 2010). We aim to contribute to this conversation by discussing alternative ways to bridge the gap between the GVC literature and the literature focused on business network management and strategy. Our research question is: How could business network research contribute to the advancement of GVC research, in particular the debate about GVC governance?
We address our question with a bibliometric analysis of the management and strategy research on business networks and by discussing possible contributions to the GVC literature, with a focus on GVC governance. We use the typology that Provan et al. (2007) put forward for the organization of business network research to make the connections between the outcomes of the bibliometric analysis and the GVC literature, identifying which communities of business network scholars have developed knowledge that is relevant to the different branches of GVC research, thus disclosing conceptual bridges.
After this introduction, we review the literature on GVCs and GVC governance, followed by an assessment of how the literature on business networks may be associated with the dimensions of GVC governance. Methodological concerns are discussed in the following section, after which we illustrate the connection between the research on business networks and GVC governance with an example of how the former can inject dynamism into the latter.
2 theoretical Background
2.1 GVC governance and network dynamics in GVC research
The GVC literature adopts the chain metaphor as an intentional simplification and systematization of empirical network processes (Sturgeon, Biesebroeck, & Gereffi, 2008). The chain metaphor enables a focus on sequences of value-added processes while preserving awareness of their broader institutional and industrial contexts, as well as the existence of various external sources of critical resources (Sturgeon, 2001). This metaphor was already present in Gereffi's (1994) conceptualization of the governance of what he still called "commodity chains", identifying governance as the "authority and power relationships that determine how financial, material, and human resources are allocated and flow within a chain" (p. 94). Drawing attention to the firms holding the most powerful positions in their chains (the so-called "lead firms"), Gereffi distinguished between "producer-driven" and "buyer-driven" chains, depending on whether the lead firms' power was associated with production or design/marketing capabilities, respectively. Because of its focus on global buyers' capacity to dictate the direction of entire chains, Gibbon, Bair, and Ponte (2008) called Gereffi's (1994) approach to governance "governance as driving".
Limitations in the producer- and buyer-driven categories, coupled with the increasing importance of chains led by global buyers, soon required new interpretations of the concept of governance. At that time, the emergence of alternative network- and chain-based frameworks also led the research community to adopt "Global Value Chains" as the most inclusive label to represent "the relative value of those activities that are required to bring a product or service from conception through the different phases of production (...), delivery to final consumers, and final disposal after use" (Gereffi, Humphrey, Kaplinsky, & Sturgeon, 2001, p. 3). Gereffi, Humphrey, and Sturgeon (2005) acknowledged that value chains may exhibit a broad range of network forms, varying according to suppliers' capabilities and the complexity and codifiability of transactions. Represented as a continuum between market and hierarchies, modular networks operate based on standards and codification, while relational ones rely on trust and reputation, and those of the captive type depend on lead firms' buying power (Ponte & Sturgeon, 2014).
Given that Gereffi et al.'s (2005) typology focuses on attributes of specific value chain linkages to better explain variations in the structure of network forms, it is called "governance as coordination" (Gibbon et al., 2008). The 2005 governance typology is often associated with transaction costs economics, but in fact it constituted a multidisciplinary effort combining "transaction costs economics, production networks, and technological capability and firm-level learning" (Gereffi et al., 2005, p. 78). It established a dialogue between economic and social arguments, outlining conditions for the use of particular coordination mechanisms to facilitate exchanges between value chain members (Bair, 2008). The locus of power for exercising such coordination is derived from firms' strategic capabilities (whether related to marketing/design or production expertise), their control over distribution channels, and their scale economies, for instance (Gereffi, 1994; Sturgeon, 2009).
Besides governance as driving and coordination, a perspective of "governance as normalizing" has been defended to explain the role of standards and norms in enabling aggregate GVC governance dynamics (Gibbon et al., 2008; Ponte & Sturgeon, 2014). According to this perspective, the governance of whole value chains/networks is affected by commonly agreed norms and conventions that promote alignment across the different linkages of these value chains/networks (Ponte & Gibbon, 2005; Ponte & Sturgeon, 2014). These norms or conventions imply different criteria for dealing with uncertainty in interfirm exchanges, with different transmission potential along value chains. The "governance as normalizing" approach is rooted in Convention theory, whose arguments are close to neo-institutional economics and focus on the common language adopted by market participants to qualify products' attributes in contexts of information asymmetry (Bazzoli, Kirat, & Villeval, 1994; Raikes, Jensen, & Ponte, 2000).
Altogether, the evolution of the GVC literature has been driven by empirically rich studies seeking explanations for the systemic industrial reality that followed globalization. However, in GVC research, business networks represent more an empirical context than an object of theoretical development, as is evident in the preservation of the chain metaphor...
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