Saturday, June 1, 2019

Economic and social upgrading in global value chains and industrial clusters

This article places a focus on governance and how various aspects of this can influence the way that value chains operate on a global level. Much like any value chain, the global example is meant to enhance the way that firms operate with regards to international trade. The study looks at corporate social responsibility as a tool utilized to how these industrial firms in the international market operate. For one, there is economic and social pressure to enhance the creation of value and increase integration through the use of corporate social responsibility more effectively. 
It is also important to figure out trends and with global chains now having to effectively include operations in Asia, then the impact on value chains is determined by how much governance is available. The article also points out that this can come in different forms. For one, private governance in which firms operate on set codes of conduct. It can also be social governance as civil groups keep an eye out on business practices. Public governance incorporates government involvement in business regulation as well as the impact of lobbyists and activists. All of these three together can impact how a business operates and the way that it will be able to create sustained value in the long run.
The article will help on identifying a deeper role for government and the way in which it impacts the value chain. In many ways, it is effective in showing how government and the laws it passes determine things such as location and how important it is to the global value chain.

Gereffi, G., & Lee, J. (2016). Economic and social upgrading in global value chains and industrial clusters: Why governance matters. Journal of Business Ethics133(1), 25-38.

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