Faculty Publications

Countering Overseas Power In Global Value Chains: Information Asymmetries And Subcontracting In The Plastics Industry

Document Type

Article

Keywords

China, Contract manufacturers, Global value chains, Resource dependency theory

Journal/Book/Conference Title

Journal of International Management

Volume

24

Issue

2

First Page

123

Last Page

136

Abstract

Resource Dependency Theory (RDT) and Global Value Chain (GVC) analysis have been deployed in the strategic and international management literatures to address questions of power in dyadic relationships and global production networks, respectively. This paper integrates the two theoretical approaches in order to expand RDT, using insights from Hirschman's exit/voice model to show the options available to some firms but not others. Using the relationship between buyers and contract manufacturers from GVC analysis, we find a correlation between firm size and choice of strategic action in response to contract manufacturers’ dependence on buyers. Large firms follow an acquiescence strategy while small manufacturers follow an avoidance strategy, able to use both exit and voice strategies. Enabled by scale or control over information, both of these approaches successfully reduce uncertainty and provide a source of sustained competitive advantage. Using a study of the production chain in consumer plastics manufacturing in China, we show how dependent firms respond to GVC induced pressure. We find that based on the size of the contract manufacturer, the range of strategic responses to power is constrained by the nature of the dependency in global value chains. This opens important insights into the role that structural characteristics of organizations (like size) play in determining strategic freedom.

Department

Department of Management

Original Publication Date

6-1-2018

DOI of published version

10.1016/j.intman.2017.09.007

Repository

UNI ScholarWorks, Rod Library, University of Northern Iowa

Language

en

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