Global models of networked organization, the positional power of nations and economic development

Abstract

Interdisciplinary literature on global commodity chains (GCCs)/global value chains (GVCs) and global production networks (GPNs) contends that interfirm power differentials within globally networked forms of economic organization have implications for the developmental trajectories of nation-states. In this article, I advance these literatures in three ways. First, I bridge the two approaches by elaborating an exchange-theoretic conceptualization of interfirm power that is latent in the two literatures. This conceptualization focuses narrowly on the determinants of inter-firm power asymmetries and is useful for explaining why actual production networks vary in terms of the relative power of buyers and producers. Second, I develop an empirical framework to advance basic research on the link between globally networked forms of economic organization and national economic development. In particular, I derive cross-nationally and temporally comparable country-level measurements of the average bargaining power of a country's resident firms using industry-specific international exchange (trade) networks. I demonstrate the validity of these indices through a historical analysis of trade networks in the transport equipment and garment industries and by analysing crossnational variations in wages in the two industries. Finally, I conclude by charting a parallel path for GCC/GVC and GPN research that implicates global models of network organization in macro-comparative analyses of economic development.

Global Production Networks and International Inequality: Making a Case for a Meso-Level Turn in Macro-Comparative Sociology

“…Through a triangulated process of validation, I demonstrate that these measures capture what they intend. They (I) correlate strongly with the actual location of leading firms in the two industries, (2) successfully explain cross-national variation in manufacturing specialization in the two industries, (3) vary over time in ways that correspond to the historical record of the rise and fall of specific national industries, and ( 4) correlate positively with wages in the two industries (Mahutga 20 l 4a;2014b ).…”

“…I select these industries because they are archetypical cases of "buyer" and "producerdriven" governance, respectively (see Gereffi 1994;Gibbon and Ponte 2005;Mahutga 2012;2014a;2014b). 3 This allows me to draw from the organizational literature on these two industries to derive network indices of power that are high when a focal country engages in trade relations that are indicative of what one would expect of a country with many leading firms.…”

“…Two key explanatory variables in the regressions that follow are buyer and producer-driven power, as defined in the following equations Mahutga (2014a;2014b):…”

“…2 In these early works I do little more than speculate as to the precise distributional consequences of asymmetric inter-firm power relations in GPNs, but one can derive at least three kinds of hypotheses (e.g. Mahutga 2014a;2014b;2012).…”

“…In a recent article on the relationship between global commodity/value chain/production networks (GCC/GVC/GPN) and economic development (Mahutga 2014a), I argue that "the most powerful and unique contribution of both the GCC/GVC and GPN approaches [is that] positional power matters for the developmental consequences of globalized production" (182). By "positional power," I intend an exchange theoretic understanding of power, in which the power of a focal actor depends on (1) the extent to which other actors value his/her resources, (2) the number of exchange partners available to the focal actor and (3) the number of alternative exchange partners available to the focal actor's alters.…”