Transnational Governance as Contested Institution-Building: China, Merchants, and Contract Rules in the Cotton Trade

Abstract

We are in an era of uncertainty over whose rules will govern global economic inte gration. With the growing market share of Chinese firms and the power of the Chinese state it is unclear if Western firms will continue to dominate transnational governance. Exploring these dynamics through a study of contract rules in the global cotton trade, this article conceptualizes commodity chain governance as a contested process of institution-building. To this end, the global commodity chain/global value chain (GCC/GVC) framework must be revised to better account for the broader institutional context of commodity chain governance, institutional variation across space, and strategic action in the construction of legitimate governance arrangements. I provide a more dynamic model of GCC governance that stresses how strategic action, existing institutions, and dominant discourses intersect as firms and states compete for institutional power within a commodity chain. This advances our understandings of how commodity chain governance emerges and chan ges over time.

Cloth without a weaver: power, emergence and institutions across global value chains

“…GVC research made the very strong prediction that their three causal factors 'influence the shape and governance of global value chains in important ways, regardless of the institutional context within which they are situated' -a prediction others question (Gereffi, Humphrey & Sturgeon, 2005, p. 99, emphasis added). For instance, the ending of the Multifibre Arrangement (MFA) in the textileapparel industry quickly disentangled what are traditionally considered very stable 'relational' linkages between Mexican full-package manufacturers and US retailers (Bair & Werner, 2011), and reshaped the playing field in global cotton (Quark, 2011). Further, the institutions and standards are themselves products of agentic-strategic 'political contestation' among states and firms (Gellert, 2003;Hess & Coe, 2006;Quark, 2011).…”

“…For instance, the ending of the Multifibre Arrangement (MFA) in the textileapparel industry quickly disentangled what are traditionally considered very stable 'relational' linkages between Mexican full-package manufacturers and US retailers (Bair & Werner, 2011), and reshaped the playing field in global cotton (Quark, 2011). Further, the institutions and standards are themselves products of agentic-strategic 'political contestation' among states and firms (Gellert, 2003;Hess & Coe, 2006;Quark, 2011). Still others seek a shift 'from governance to governmentality', arguing that governance is a process of social construction and an exercise of discursive power in which the constructed practices of agents shape specific governance patterns Gibbon, Bair & Ponte, 2008;Quark, 2011).…”

“…Further, the institutions and standards are themselves products of agentic-strategic 'political contestation' among states and firms (Gellert, 2003;Hess & Coe, 2006;Quark, 2011). Still others seek a shift 'from governance to governmentality', arguing that governance is a process of social construction and an exercise of discursive power in which the constructed practices of agents shape specific governance patterns Gibbon, Bair & Ponte, 2008;Quark, 2011).…”

“…A more common complaint is that value chain research does not fully consider the role of national institutions in managing global economic forces as highlighted by 'varieties of capitalism' literatures; hence, it ignores wider debates of how MNCs conform to hostcountry institutions, as well as how national institutions influence the Mark P. Dallas: Cloth without a weaver 325 behaviour of home-country MNCs when they go abroad (Lane, 2008;Lane & Probert, 2009;Morgan, Kristensen & Whitley, 2001;Whitley, 1996). Finally, others illustrate how institutions and standards along value chains undergo continual 'political contestation' among firms and states alike (Gellert, 2003;Hess & Coe, 2006;Quark, 2011).…”

“…(Bair, 2005, p. 166, emphasis in original). In addition, some have criticized that institutions, including the state, have never been properly reconciled with issues of MNC governance, despite frequent theoretical statements of inclusiveness (Bair, 2005;Coe, Dicken & Hess, 2008;Dicken et al, 2001;Hess & Yeung, 2006;Quark, 2011;Whitley, 1996Whitley, , 1998.…”