How do emerging market suppliers reshape the governance of global value chains? Evidence from China

Abstract

The growth in the number of emerging market firms with a global presence highlights the need to better understand how suppliers influence the governance in global value chains (GVCs). However, existing frameworks do not sufficiently elaborate this phenomenon's standing at firm level. Using a multi-case study of six suppliers in China, this research explains how suppliers can reshape the governance structure with capability development, and thus change the power balance in GVCs. This study highlights governance changes from a supplier-centric perspective: external governance with decentralized control and internal governance with control integration. More specifically, through the underlying mechanism from a value-based perspective, suppliers can take greater control of specific value chain activities and move from being a value creator to becoming a value innovator.