Governance paradigm of global value chain

Gereffi et al. (2003) based on the production network theory of Puwell and Stern, through abstraction, combined with the theories of value chain, transaction cost economics, technological capability and enterprise learning, put forward a more rigorous and complete analysis framework. At first, they summarized five typical governance models of global value chain, which were ranked from low to high according to the degree of coordination and power asymmetry among the main bodies in the chain: market-oriented, modular, relational, leading and hierarchical. Then five kinds of value chain governance methods are explained by three variables: the complexity of transactions, the degree of reducing transaction costs with standardized contracts (the ability to standardize transactions) and the ability of suppliers (as shown in table 1):

Market: When the transaction cost can be reduced by contract, the product is relatively simple, the supplier has strong ability, the buyer does not need too much investment, and the asset specificity is low, market governance will occur. At this time, the transaction is relatively simple, and both parties can control the uncertainty of the transaction well through the price and contract, without much coordination.

Modular type: products are more complex, suppliers are more capable, and assets are more specialized. Although the number of buyers and sellers is limited, there is still some market flexibility, and it is easier to change partners. The amount of information exchanged between the two parties is larger and more complicated than that in the market, but the transaction cost can be better reduced through standardized contracts, so the required coordination cost is not high.

Relational type: the complexity of products leads to the complexity of transactions, the amount of information that both parties need to exchange is large and complex, the supplier has strong ability, and there is a strong interdependence between leading manufacturers and suppliers. However, both sides can reduce transaction costs through reputation, spatial proximity, family or ethnic relations. Both sides can often negotiate and exchange complex information through face-to-face communication, which requires more coordination. So it is more difficult to change trading partners.

Dominant: the product is complex and the supplier's ability is low, which requires a lot of input and technical support from the supplier. In order to prevent competition from other suppliers, suppliers specialize their assets. Suppliers are very dependent on leading manufacturers, so it is difficult to change their trading partners and become "controlled suppliers". Leading manufacturers achieve governance through a high degree of control over suppliers, and at the same time make suppliers willing to maintain cooperative relations by providing various support.

Hierarchical system: When the product is very complex, the external transaction cost is high, and the supplier's ability is very low, the leading manufacturers have to adopt vertically integrated internal governance. Because the transaction may involve the core competence of the leader, such as tacit knowledge and intellectual property rights. Leaders can't control opportunistic behaviors through contracts, but can only adopt internal production.

In addition, Griffith also studied the dynamics of value chain governance. With the development of time, the three variables that determine the governance model of the value chain will change, and the governance model of the value chain will also change. This dynamic change exists in reality. For example, in the bicycle industry, due to economies of scale, standardization and the improvement of supplier capabilities, the governance model has changed from hierarchical system to market governance; Due to the reduction of transaction complexity and the enhancement of suppliers' ability, the clothing industry has developed from dominant to relational; In American electronics industry, the development of division of labor and specialization makes the governance mode change from hierarchical (vertical integration) to modular.

The reasons for the change of the three variables mainly come from three aspects: first, the improvement of the procurement requirements of leading manufacturers reduces the ability of suppliers and increases the complexity of transactions; Secondly, innovation and standardization are contradictory, and innovation will reduce the standardization ability; Thirdly, the ability of suppliers will change with time, and learning will improve the ability of enterprises. The introduction of new supplier competition, new technological revolution and changes in procurement requirements of leading manufacturers will all affect the relative ability of suppliers.

Griffith's global value chain governance paradigm is the most stringent paradigm at present, covering most typical types of global value chains found at present. Importantly, Griffith not only studied the characteristics of each governance model, but also introduced more economic analysis methods to make the characteristics variable, which has a good theoretical basis. However, there are still some problems in Griffith's paradigm: first, the governance model in this theory is limited to the relationship between leading manufacturers and higher-level suppliers, but in the specific industry value chain, it may include more upstream and downstream entities; Secondly, the first two variables in the model (transaction complexity and transaction standardization) have strong correlation. In fact, these two variables determine the governance mode of the value chain by affecting the transaction cost, but there are more than these two important factors affecting the transaction cost; Third, it may not be accurate to simply divide the three variables into high and low dimensions. For example, the transaction standardization ability of modular type is higher than that of leading type, but lower than that of market type; Fourthly, cultural endowment, enterprise strategy, government policies and domestic and international systems have important influences on value chain governance, but they are not mentioned in Griffith's model; Fifth, Griffith's model does not explain the position of each node in the value chain, that is, different links will be distributed in different regions or countries.