The Sustainability of Global Chain Governance: Network Structures and Local Supplier Upgrading in Thailand

Sungchul Cho and Up Lim
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Sungchul Cho: Korea Environment Institute, 370 Sicheong-daero, Sejong 30147, Korea
Up Lim: Department of Urban Planning and Engineering, Yonsei University, 50 Yonsei-ro, Seodamun-gu, Seoul 03722, Korea

Sustainability, 2016, vol. 8, issue 9, 1-13

Abstract: Although it has been widely accepted that insertion into global production networks may play a critical role in fostering local supplier upgrading, scholars have yet to fully incorporate heterogeneous configurations of buyer-supplier relationships within networks into empirical testing. Using a representative sample of manufacturing firms in Thailand, we propose a more nuanced empirical framework that asks which features of buyer-supplier relationships are related to which aspects of local supplier upgrading. Our findings, derived from latent class analysis, show that the ways value chains are governed can exert varying effects on different types of technological upgrading. Being a multinational corporation (MNC) supplier was found to have positive effects on process and minor product upgrading, irrespective of the types of buyer-supplier networks. However, we found a more radical type of upgrading (i.e., the development of own brands) to be negatively related to insertion into ‘quasi-hierarchical’ or ‘buyer-driven relationships’, whilst involvement in ‘cooperative networks’ was associated with a significantly higher tendency of product and brand upgrading. Understanding this inherent relationality provides a crucial balance to previous firm-level findings, suggesting that the sustainability of participation in global value chains depends on the relational structures in which local manufacturers are embedded.

Keywords: global production network; technological upgrading; network structure; sustainable industrial development; latent class analysis (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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