Firm agency and global production network dynamics

Abstract

The Global production networks (GPN) framework has been influential in the analysis of globally coordinated economic arrangements. However, research on GPNs tend to focus on a well-established industries and their existing governance structures with a very little attention to the temporality and changes in these networks and their governance structures. Specifically, despite the central role of 'lead-firms' in GPNs, the literature lacks a clear depiction of their competitive and evolutionary trajectory. In response, this paper is concerned with (re)opening the 'black-box' of firms and showing how lead-firms' strategies and practices shape the evolutionary dynamics of GPNs. The paper argues that changing lead firm strategies play a crucial role in shaping the evolution of GPNs, reflecting changes in the industrial and/or business and institutional environments. The paper investigates the Danish, multinational energy company, Ørsted, and discusses the importance of accounting for firm dynamic capabilities, i.e. intra-firm practices and extrafirm (evolutionary) dynamic drivers, in analytical frameworks that analyse GPN dynamics and industries. Lead-firm strategies are shaped by firm-specific capabilities, industryspecific competitive dynamics, and institutions. Accordingly, GPNs' evolutionary process can be understood as an adapting and/or response mechanism by lead-firms to changes in local and international business as well as multi-scalar institutional environments.

Mitigating Extra‐Firm Risk Environments – The Case of Turkish Firms in Germany

“…At the interface between extra‐firm level dynamics and the strategic firm‐level response, is the deliberate agency of firm decision‐makers (Coe & Yeung 2015; Coe 2021; Fuller 2022). The analysis focuses on the micro‐perspective of Turkish firm decision‐makers in Germany, rather than on sectoral‐ or firm specificities other than the firm's origin (see Coe & Yeung 2015; Afewerki 2019). Accordingly, the central unit of analysis are the individual decision‐makers, embedded within a firm that is likewise embedded, with a set of strategic aims of creating, enhancing or capturing value (Coe & Yeung 2015; van Meeteren 2015; Fuller 2022): ‘[…] firms do not make decisions, as decisions are made by individuals employed by firms’ (Bryson 2022, p. 230).…”

“…This interpretation process of extra‐firm risk dynamics relies on the feedback processes within the multi‐scalar firm–environment interaction (cf. McDermott & Taylor 1982; Afewerki 2019; Fuller 2022). Within the GPN 2.0 debate, the Knightian distinction between risk (predictable and calculable) and uncertainty (unpredictable and incalculable) is quite prevalent (e.g.…”

Gaining lead firm position in an emerging industry: A global production networks analysis of two Scandinavian energy firms in offshore wind power

“…Accordingly, in 2007, Ørsted, together with Novo Nordisk, a leading Danish healthcare firm, launched a new business model known as a climate partnership. The partnership made the large 2008 Horns Rev II (OWP) project financially feasible, as Novo Nordisk committed to buying renewable energy certificates until 2020 (Afewerki, 2019). Since 2007, Ørsted has entered into over 100 similar partnerships with various Danish organizations, allowing it to develop comparative advantages in the wind power business area.…”

“…For Ørsted, optimizing its cost-capability ratio was vital for developing scale-related capabilities both in-house and jointly with suppliers, and for optimal utilization of its wind power capacity. The intra-firm process of an “industrialization” approach discussed above was a key instrument in cost reductions through fast feedback and learning processes across the entire organization (Afewerki, 2019).…”

Revisiting risk in the Global Production Network approach 2.0 - Towards a performative risk narrative perspective

“…The perception and interpretation of risk, for instance, referring to expected outcomes for particular value activities, is processed by organizational decision-makers who are socio-spatially (societal, territorial, and network) embedded within a relational web of social relations, place-specific contexts, and decision-making environments (cf. Afewerki, 2019; Geenen, 2018; Schweizer, 2019; Strauss, 2008).…”