Global Value Chains

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Since Gereffi's seminal book chapter was published, however, transnational giants have changed quite dramatically, outsourcing many activities and developing strategic alliances with competitors. They have become less vertically integrated and more network-oriented. Better global standards in the realms of business processes and product characteristics, and the heavy application of information technology in areas such as design, manufacturing, service provision, supply-chain coordination, and materials management, has enabled increased outsourcing in producer-driven chains and made it possible, and more compelling, for firms to forge modular linkages between buyers and suppliers in both producer- and buyer-driven chains.

The result has been broad and rapid shifts in chain governance, where producers have become more buyer-like through outsourcing, and where the capabilities required to serve global buyers have been escalating rapidly. Today, global-scale networks of legally independent firms no longer make only simple items, but technology- and capital-intensive goods and services as well. The GVC framework, accordingly, specifies a more elaborate set of governance forms and crucially provides a method to explain changes in governance patterns over time. As a starting-point, however, we can say that buyer-driven chains tend to be coordinated via market, modular, or relational governance, and producer-driven chains tend to be coordinated via captive or hierarchical governance.

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