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Persian Carpet Manufacturing: Value Chains, Governance, and Embeddedness

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Persian Carpet Manufacturing: Value Chains, Governance, and Embeddedness Persian carpet manufacturing: value chains, governance, and embeddedness Saeed Mohammadi B.Sc. (Management), M.Sc. (Business Management) A thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy QUT Business School Queensland University of Technology 2016 A Persian rug (Kerman rug) sold in Sotheby’s auction for 33,765,000 USD - NewYork, 2013. Source: Sotheby’s auction webpage. II KEYWORDS global value chain (GVC), global production network (GPN), governance, embeddedness, power relations, lead actors, Persian rug industry, handmade rugs. III ABSTRACT The global value chain (GVC) and global production network (GPN) are the two main interdisciplinary approaches to evaluate the value– added activities among actors in the globally spread economy and are described as different linkages in a chain or network. The spatial organization of chains and networks is developed by direct, functional integration of geographical economies, including global, national, and regional economies. This integration has introduced specific types of coordination by multinational firms and global buyers with few production tasks via vertical linkage with manufacturers in less developed economies. These approaches highlight the value creation from the global economy and particularly through chain governance and network dynamics to coordinate the value-added activities of a multitude of economic actors. The key mechanism is the uneven power relations among actors where lead actors can coordinate the chain to determine which goods and services are to be supplied and how, when and where they will be produced. This research explores the way that the GVC approach can explain the coordination mechanisms within the Persian rug GVC and also the role of embeddedness when the GVC approach has some limitations in explaining the impact. IV Table of Contents KEY WORDS III ABSTRACT IV LIST OF FIGURES IX LIST OF TABLES XII LIST OF APPENDICES XIII STATEMENT OF ORIGINAL AUTHORSHIP XIV ACKNOWLEDEGMENTS XV Chapter One Introduction………………………………………….………………………...1 1.1 Research problem and study background ................................................................... 1 1.2 Research justification and context ................................................................................. 5 1.3 Research aims .................................................................................................................. 8 1.3.1 Governance mechanisms ....................................................................................... 8 1.3.2 The role of embeddedness in the coordination of the value chain .................. 9 1.4- Research questions ....................................................................................................... 12 1.5 Structure of the thesis ................................................................................................... 13 Chapter 2 Literature Review………………………………………………………………..15 2.1 Introduction ................................................................................................................... 15 2.2-Governance in the global value chain (GVC) ........................................................... 16 2.2.1 The GCC approach…………………………………………………….………………………………..17 2.2.2 The GVC governance approach…………………………………………………………………21 2.2.3 The other theory building efforts……………………………….……………………………..26 2.3- The GPN approach ...................................................................................................... 32 2.4 Limitations in the GVC approach ............................................................................... 37 2.5 Embeddedness ............................................................................................................... 40 2.5.1 Threefold classification of embeddedness……………………..…………………………….42 Conclusion…………………………………………………………………………………….47 Chapter 3 Research Methodology……………………………………………...…………48 3.1 Introduction ................................................................................................................... 48 V 3.2 Justification for the research methodology ................................................................ 48 3.3 Research Design ............................................................................................................ 49 3.3.1 Research Questions………………………………..…………………………………………………..52 3.4 Interview planning and procedure ............................................................................. 53 3.4.1 Sampling………………………………………………………..…………………………..………………53 3.4.2 Interview protocol……………………………………….………..…………………………………...55 3.4.3 The process of the interviews……………………………………..…………………………………57 3.5 Data analysis ................................................................................................................. 60 3.6 Strengths and limitations ................................................................................................. 62 3.7 Ethical consideration.................................................................................................... 63 Chapter 4 The Persian rug GVC…………………..…………………………………...….64 Introduction…………………………………………….……………………………………..64 4.1 The structure of the Persian rug GVC ........................................................................ 65 4.2. The value-added stages in rug production (how the Persian rugs are made).. .. 82 4.3. Economic geography of brand and branding in the Persian rug GVC ................ 94 Chapter 5 Isfahan Region……………..…………………………………………………..105 5-1 A review for the Isfahan region ................................................................................ 106 5-1-1 Geography of the region ................................................................................. 106 5-1-2 Cultural aspects of Isfahan ............................................................................. 106 5-1-3 Economic aspects in Isfahan .......................................................................... 106 5-2- Governance mechanisms in the Isfahan rug GVC ................................................ 114 5-2-1 Factory system production mode .................................................................. 106 5-2-2 High supervision, home-based production mode ...................................... 106 5-2-3 Low supervision home-based production mode ........................................ 106 5-2-4 The independent weaving production mode .............................................. 106 5-3 The role of embeddedness in the coordination mechanisms in the Isfahan rug GVC .............................................................................................................................. 114 5-3-1- The role of embeddedness in shaping different governance modes in the Isfahan rug GVC ......................................................................................................... 114 VI 5-3-2 The role of embeddedness to explain why a specific production mode is dominant…………………………………………………………………………………………….……………………….161 5-4 Overall findings and conclusion ............................................................................... 165 5-4-1 Conclusion about the GVC governance framework .................................. 165 5-4-2 Conclusions about the Embeddedness issue in coordination of the chain .................................................................................................................................... 165 Chapter 6 Tabriz Region………………………………………………………………..171 6-1 A review for the Tabriz region .................................................................................. 172 6-1-1 Geography of the region ............................................................................... 172 6-1-2 Cultural aspects of Tabriz ............................................................................. 172 6-1-3 Economic aspects in Tabriz .......................................................................... 172 6-2 Governance mechanisms in the Tabriz rug GVC ................................................... 176 6-2-1 Home-based weaving in Tabriz ................................................................... 172 6-2-2 Factory production mode in Tabriz ............................................................ 172 6-2-3 Village weaving in the Tabriz region .......................................................... 172 6-3 The role of embeddedness in the coordination mechanisms of the Tabriz rug GVC: ............................................................................................................................. 203 6-3-1 The role of embeddedness in shaping the governance of different production modes in the Tabriz rug GVC ..................................................................... 203 6-3-2 The role of embeddedness to explain why a specific production mode is dominant in the Tabriz rug GVC ..................................................................... 208 6-4 Overall findings and conclusion ............................................................................... 212 6-4-1 Conclusion about the GVC governance framework ................................. 212 6-4-2 Conclusions about the embeddedness issue in the coordination of the chain.............................................................................................................................. 214 Chapter 7 Qom Region…………………………………………………………………217 7-1 A review of the Qom region .....................................................................................
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