Journal of International Business Studies (2020) ª 2020 The Author(s) All rights reserved 0047-2506/20 www.jibs.net REVIEW ARTICLE Global value chains: A review of the multi- disciplinary literature Liena Kano1, Eric W. K. Tsang2 Abstract 3 This article reviews the rapidly growing domain of global value chain (GVC) and Henry Wai-chung Yeung research by analyzing several highly cited conceptual frameworks and then 1 appraising GVC studies published in such disciplines as international business, Haskayne School of Business, University of general management, supply chain management, operations management, Calgary, Calgary, AB T2N 1N4, Canada; 2Naveen Jindal School of Management, University of Texas economic geography, regional and development studies, and international at Dallas, 800 W Campbell Rd., SM43, political economy. Building on GVC conceptual frameworks, we conducted the Richardson, TX 75080-3021, USA; 3Department review based on a comparative institutional perspective that encompasses of Geography and GPN@NUS Centre, National critical governance issues at the micro-, GVC, and macro-levels. Our results University of Singapore, 1 Arts Link, indicate that some of these issues have garnered significantly more scholarly Singapore 117570, Singapore attention than others. We suggest several future research topics such as microfoundations of GVC governance, GVC mapping, learning, impact of lead Correspondence: firm ownership and strategy, dynamics of GVC arrangements, value creation L Kano, Haskayne School of Business, University of Calgary, Calgary, AB T2N 1N4, and distribution, financialization, digitization, the impact of renewed Canada protectionism, the impact of GVCs on their macro-environment, and chain- e-mail: [email protected] level performance management. Journal of International Business Studies (2020). https://doi.org/10.1057/s41267-020-00304-2 Keywords:: global value chains; global production networks; global commodity chains; global factory; comparative institutional analysis The online version of this article is available Open Access INTRODUCTION During the last few decades, the gradual liberalization and dereg- ulation of international trade and investment, coupled with the rapid development and spread of information and communication technologies (ICT), have fundamentally changed how multina- tional enterprises (MNEs) operate and compete in the globalizing world economy. A clear and yet sophisticated pattern of organiza- tionally fragmented and spatially dispersed international business activity has emerged, whereby offshore production sites located in low-cost developing countries are closely linked with lead firm buyers and MNEs from major consumer markets in North America and Europe (Coe & Yeung, 2015; Dicken, 2015; Gereffi, 2018). New MNEs have also emerged from developing economies, particularly Received: 31 January 2019 Revised: 1 December 2019 those in East and Southeast Asia, as major strategic partners and Accepted: 29 December 2019 manufacturing service providers for traditional MNEs from Global value chains Liena Kano et al advanced industrialized economies (Yeung, 2016). primary focus of research and analytical attention This pattern signals a new divide in industrial in the social sciences and, lately, international organization on a worldwide scale: a transition policy communities. The economic sociology view from hierarchically organized MNEs, with their of GVC remains concerned mainly with the social traditional focus on managing internalized over- consequences of economic exchange, and with seas investments, to MNEs as international lead mapping the governance structures/developing firms. These firms work with and integrate their typologies of GVCs and their consequences for geographically dispersed strategic partners, special- local upgrading (Gereffi, 2018; Gereffi et al., 2005; ized suppliers, and customer bases into complex Humphrey & Schmitz, 2002). The study of GVCs structures, referred to variously as global commod- within the international economics literature ity chains (GCCs), global value chains (GVCs), focuses on efficiency of contractual organization global production networks (GPNs), or global and economic exchanges in GVCs, and on map- factories. ping the geography of international trade flows and Since Gereffi and Korzeniewicz’s (1994) collec- value creation (Aichele & Heiland, 2018; Antra`s& tion in the early 1990s, this phenomenon of Chor, 2013; Grossman & Rossi-Hansberg, 2008; organizationally fragmented international produc- Johnson & Noguera, 2012; Lee & Yi, 2018). IB tion has been subject to investigation in a wide researchers are interested mainly in how firms can range of academic disciplines, including economic profitably strengthen and exploit their unique firm- sociology, international economics, regional and specific advantages, and create value by forging development studies, economic geography, inter- business relationships across national borders national political economy, supply chain manage- through MNE activity in GVCs (Buckley, 2009a; ment, operations management, and international Kano, 2018; Laplume, Petersen, & Pearce, 2016; business (IB) (Buckley, 2009a, b; Coe & Yeung, Mudambi, 2008). 2015, 2019; Funk, Arthurs, Trevin˜o, & Joireman, Closely related to the GVC concept is the GPN 2010; Gereffi, 1994, 2018; Gereffi, Humphrey, & construct. The GPN concept was developed in the Sturgeon, 2005; Henderson, Dicken, Hess, Coe, & late 1990s by a group of researchers in economic Yeung, 2002). In economic sociology and develop- geography, and emerged from a growing dissatis- ment studies, the earliest work was concerned with faction with existing theories of economic devel- global commodity trade and the governance struc- opment that failed to account for the increasingly ture of such commodity chains in labor-intensive and complex, networked nature of production activi- high-tech industries (Bair, 2009; Gereffi, ties, which spanned across national borders and led 1999, 2018; Gereffi & Korzeniewicz, 1994). This to uneven development in different regions and literature has developed a simple typology of buyer- countries (Coe & Yeung, 2015, 2019; Henderson driven and producer-driven GCCs on the basis of et al., 2002; Hess, 2017; Yeung, 2009, 2018). The the power and control exerted by buyers (retailers idea of a GPN goes beyond the simple notions of and brand name firms) or producers (original trading and outsourcing, and highlights firm-speci- equipment manufacturers [OEMs]) in governing fic coordination and cooperation strategies through their international suppliers and service providers. which such relational networks are constructed, In 2000, the Rockefeller Foundation funded a managed, and sustained, as well as the networks’ large-scale GVC convention, which marked the geographical reach in specific territories, such as beginning of a rapid growth of GVC research sub-national regions and industrial clusters. It also (Gereffi, Humphrey, Kaplinsky, & Sturgeon, 2001). considers the strategic responses of other corporate By the early 2000s – near the beginning point of our and non-corporate actors within the GPN, such as review – the GCC literature moved away from its the state and business associations. This central earlier focus on commodities (e.g., clothing, foot- focus on economic actors, such as MNEs and their wear, automobiles) to examining value chains that strategic partners, and territorialized institutions, connected spatially dispersed production activities. such as state agencies and business associations, In their introduction to a special issue of IDB also distinguishes GPN thinking from GCC Bulletin on globalization, value chains, and devel- research’s focus on a particular commodity or opment, Gereffi et al. (2001) identified several GVC research’s concern with the aggregation of pressing challenges for value chain researchers different value chains into industries. and pushed for the use of GVC as a common While the term ‘‘GPN’’ accurately reflects the fact terminology. Since then, GVC has become the that the firms involved often form intricate intra- Journal of International Business Studies Global value chains Liena Kano et al and inter-firm networks (rather than linear chains), management literatures on GVCs and suggests we propose to use the term ‘‘GVCs’’ in an inclusive pointers for future research, specifically for IB fashion throughout this review, to reflect the fact scholars. Our review aims to fill this important that disaggregation and geographic dispersion pre- void. sently occurs in various parts of the value chain and The rest of the paper is organized as follows. We encompasses both primary and support activities, start by developing an organizing framework to with increasingly sophisticated knowledge-inten- guide our systematic review of multidisciplinary sive processes being offshored and outsourced literature. This framework is premised on an inclu- (Gereffi & Fernandez-Stark, 2010). The term sive theoretical coverage of the seminal works on ‘‘GVC’’ thus not only refers to manufacturing firms GVC governance, upgrading, competitive dynam- but also characterizes a variety of modern MNEs, ics, and territorial outcomes, and follows compar- including service multinationals and the so called ative institutional analysis logic. We then discuss ‘‘digital MNEs,’’ (i.e., firms that use advanced tech- our review methodology, and present the results of nologies to generate revenues from dispersed for- the review of 87 empirical and conceptual studies, eign