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Governance, value chain positioning and firms' heterogeneous performance: The case of Tuscany

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  • Giorgia Giovannetti
  • Enrico Marvasi

Abstract

The recent trade literature has shown how incomplete contracts can shape firms' boundary and the decision of whether to outsource or integrate vertically. Related evidence and conceptualizations from the business literature show that buyer-supplier relations in global value chains can take several governance structures, depending on the degree of vertical coordination and power relations between firms. Building upon these two non-competing strands of the literature, we construct a taxonomy of firms that considers their positioning (upstream or downstream), their belonging to domestic or global value chains and the type of relations they entertain with other firms. We apply our taxonomy to the 2011 census of firms operating in Tuscany. We first describe regional characteristics and then study how positioning and governance affect firms' decisions and performance. Our results show that firms in hierarchical value chains are more productive than those in market chains; that firms involved in global value chains outperform the one outside or in domestic value chains, and, finally, that firms which are both suppliers and buyers in a value chain have the highest productivity premium.

Suggested Citation

  • Giorgia Giovannetti & Enrico Marvasi, 2018. "Governance, value chain positioning and firms' heterogeneous performance: The case of Tuscany," International Economics, CEPII research center, issue 154, pages 86-107.
  • Handle: RePEc:cii:cepiie:2018-q2-154-6
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    Cited by:

    1. Yilmaz Kili├žaslan & Ugur Aytun & Oytun Me├žik, 2019. "Global Value Chain Integration and Productivity: The Case of Turkish Manufacturing Firms," Working Papers 1283, Economic Research Forum, revised 2019.

    More about this item

    Keywords

    Global value chains; Buyer-supplier relations; Heterogeneous firms; International trade; Firms' performance;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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