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Inter-firm relationships in global value chains: trends in chain governance and their policy implications


  • John Humphrey
  • Hubert Schmitz


Much of international trade is coordinated by the lead firms of Global Value Chains (GVCs) and regulated through global standards. The way in which this global governance is exercised has a significant impact on the organisation of Small and Medium-sized Enterprises (SME) clusters and their upgrading opportunities. This paper is particularly concerned with the global governance structures themselves – i.e. with GVCs, global standards and their interaction. The objective of the paper is to understand this public–private institutional context for international trade. To this end, the paper looks at the following questions: What is chain governance? When does it arise? How do chain governance and global standards interact? What are the likely trends in the global governance of value chains? What is the policy relevance of these governance structures? The paper sums up the literature on local industrial development and emphasises that understanding the changes at a local level requires an understanding of the changes in global governance.

Suggested Citation

  • John Humphrey & Hubert Schmitz, 2008. "Inter-firm relationships in global value chains: trends in chain governance and their policy implications," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 1(3), pages 258-282.
  • Handle: RePEc:ids:ijtlid:v:1:y:2008:i:3:p:258-282

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    References listed on IDEAS

    1. Fosfuri, Andrea & Motta, Massimo & Ronde, Thomas, 2001. "Foreign direct investment and spillovers through workers' mobility," Journal of International Economics, Elsevier, vol. 53(1), pages 205-222, February.
    2. Richard Disney & Jonathan Haskel & Ylva Heden, 2003. "Restructuring and productivity growth in uk manufacturing," Economic Journal, Royal Economic Society, vol. 113(489), pages 666-694, July.
    3. Anabel Marin & Martin Bell, 2006. "Technology spillovers from Foreign Direct Investment (FDI): the active role of MNC subsidiaries in Argentina in the 1990s," Journal of Development Studies, Taylor & Francis Journals, vol. 42(4), pages 678-697.
    4. Takii, Sadayuki, 2005. "Productivity spillovers and characteristics of foreign multinational plants in Indonesian manufacturing 1990-1995," Journal of Development Economics, Elsevier, vol. 76(2), pages 521-542, April.
    5. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June.
    6. Peri, Giovanni & Urban, Dieter, 2006. "Catching-up to foreign technology? Evidence on the "Veblen-Gerschenkron" effect of foreign investments," Regional Science and Urban Economics, Elsevier, vol. 36(1), pages 72-98, January.
    7. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
    8. Gorg, Holger & Strobl, Eric, 2001. "Multinational Companies and Productivity Spillovers: A Meta-analysis," Economic Journal, Royal Economic Society, vol. 111(475), pages 723-739, November.
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    Cited by:

    1. Terheggen, Anne, 2010. "The new kid in the forest: the impact of China's resource demand on Gabon's tropical timber value chain," MPRA Paper 37982, University Library of Munich, Germany.
    2. Tattara, Giuseppe, 2010. "Offshoring to China and India: Case Studies of Italian Small-Medium-sized Firms," MPRA Paper 29175, University Library of Munich, Germany, revised 2010.
    3. Martin Borowiecki & Bernhard Dachs & Doris Hanzl-Weiss & Steffen Kinkel & Johannes Pöschl & Magdolna Sass & Thomas Christian Schmall & Robert Stehrer & Andrea Szalavetz, 2012. "Global Value Chains and the EU Industry," wiiw Research Reports 383, The Vienna Institute for International Economic Studies, wiiw.
    4. repec:kap:jtecht:v:42:y:2017:i:2:d:10.1007_s10961-016-9534-z is not listed on IDEAS
    5. Bettina Riedel, 2009. "A value chain and cluster perspective on competitiveness of European fresh vegetable production – Case studies from Germany, Italy, and Spain," DEIAgra Working Papers 9001, Alma Mater Studiorum University of Bologna, Department of Agricultural Economics and Engineering, revised Oct 2009.
    6. F. Cafaggi, 2012. "Transnational Governance by Contract – Private Regulation and Contractual Networks in Food Safety," Chapters,in: Private Standards and Global Governance, chapter 8 Edward Elgar Publishing.
    7. Fujita, Mai, 2013. "Exploring the sources of China's challenge to Japan : models of industrial organisation in the motorcycle industry," IDE Discussion Papers 419, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    8. Tattara, Giuseppe, 2012. "From competitive advantage to dynamic capabilities: small and medium-sized multinationals in Asia," MPRA Paper 39364, University Library of Munich, Germany.
    9. Fujita, Mai, 2013. "The Japanese and Chinese models of industrial organisation : fighting for supremacy in the Vietnamese motorcycle industry," IDE Discussion Papers 420, Institute of Developing Economies, Japan External Trade Organization(JETRO).


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