An integrative typology of global strategy and global value chains: The management and organization of cross‐border activities

Abstract

Research summaryWe contend that a synthesis between the literatures on global strategy and global value chains (GVCs) is mutually beneficial. A typology of four themes—managed cross‐border activities, network optimization, bottom‐up upgrading, and strategic coevolution—illustrates the underlying concepts and mechanisms that these two approaches share in common. Our integrative typology provides an analytical framework to understand the interplay between the statics of GVC governance and the dynamics of firm strategy. Firm‐level actions are a key factor in effective GVC‐level policy making, and our framework provides a roadmap to analyze how major disruptions, such as digitalization and pandemics, affect the symbiotic relationships between GVCs and firm strategy.Managerial summaryWhile the global strategy literature has underplayed the interdependence among firms and other actors in global value chains (GVCs) and highlighted the scope for firm agency, the GVC literature limits the attention to firm strategies per se but puts more emphasis on the governance structure of global industries. In their strategic decision making, managers must take into consideration how firms are positioned along the value chain in terms of four themes: managed cross‐border activities; network optimization; bottom‐up upgrading; and strategic coevolution. Integrating the GVC view adds a further impetus to global strategy beyond the analysis of intra‐firm determinants. Conversely, integrating global strategy into GVC analysis entails a more dynamic view on behaviors of different actors in the value chain. Understanding these interactions enable managers and policy makers to better incorporate how changes and disruptions affect firm strategies within the governance of GVCs.

What does the COVID-19 pandemic teach us about global value chains? The case of medical supplies

“… Quality control problems in the PPE segment have been reported in China due to subcontracting from unauthorized or unregistered factories that ship goods that are contaminated (not sterilized) or of ‘unsuitable’ quality, and thus cannot be used by the client (Lapook, 2020 ; McGarry, 2020 ). In the introductory editorial for a special issue of Global Strategy Journal on “Global Value Chains, Governance and Globalization Strategies,” Pananond, Gereffi, & Pedersen ( 2020 ) propose a new integrative typology that links the literature on global strategy (both lead-firm and supplier-centric variants) and GVC governance (intra-MNE and extra-MNE networks) in terms of four main themes: managed cross-border activities, network optimization, bottom–up upgrading, and strategic coevolution. The discussion of COVID-19-related medical products in this section does not include pharmaceuticals or vaccines.…”

“…In the introductory editorial for a special issue of Global Strategy Journal on “Global Value Chains, Governance and Globalization Strategies,” Pananond, Gereffi, & Pedersen ( 2020 ) propose a new integrative typology that links the literature on global strategy (both lead-firm and supplier-centric variants) and GVC governance (intra-MNE and extra-MNE networks) in terms of four main themes: managed cross-border activities, network optimization, bottom–up upgrading, and strategic coevolution.…”

Trade policies, firm strategies, and adaptive reconfigurations of global value chains

“…Thus, it emphasizes the role of firms in shaping the flows of international trade and FDI based on their geographic and organizational choices with regard to GVCs (Gereffi & Lee, 2016 ). 3 Confronted with trade restrictions, the strategies of both lead firms and suppliers can alter the geographic and organizational dimensions of GVCs (Pananond, Gereffi & Pedersen, 2020 ). We argue, therefore, that (a) in response to trade restrictions, firms seek to mitigate negative impacts on their operations with switching and economic upgrading strategies; and (b) these strategic actions generate adaptive configurations that can enhance the resilience of GVCs.…”

Reshaping the policy debate on the implications of COVID-19 for global supply chains

“…In the case of market linkages and modular value chains, one may have to distinguish the resilience of the supply chain from the resilience of specific firms. Moving from policy proposals focusing mainly on the design of supply chains (e.g., to make them shorter, more domestic, and more diversified) to proposals enhancing the capabilities of firms (e.g., to help them to develop flexibility and agility, as well as visibility in their supply chains) requires clarifying the intersection between firms and GVCs (Pananond, Gereffi and Pedersen, 2020 ).…”