Governance of global value chains after the Covid-19 pandemic: A new wave of regionalization?

Abstract

The disruption of the trade and investment activities of multinational enterprises as a consequence of the Covid-19 pandemic has reinvigorated the debate on the configuration of global value chains (GVCs) as well as the risks and challenges associated with offshoring. This article depicts how the pandemic might affect GVC configuration by driving a trend toward a more regional footprint in industries in which resilience and reliability are critical. Such a shift would create new opportunities for reshoring, and affect both the types of upgrading trajectories and the governance systems in value chains. The article also draws from the intersection of the global-strategy and value-chain fields to propose potential topics and avenues for further research related to these trends. JEL Classification: M16, M21, M14

Globalisation in reverse? Reconfiguring the geographies of value chains and production networks

“…Finally, the Covid-19 crisis beginning in early 2020 and its disrupting effects on GVCs has revealed increasing vulnerability of globalisation (Brakman et al, 2020;Bryson and Vanchan, 2020;Ivanov and Dolgui, 2020). This crisis has led to heated debates on whether conventional global value chains and production networks (based on a just-in-time logic) should be substituted with more regionalised and domestic ones (based on a just-in-case logic) (Brakman et al, 2020;Pla-Barber et al, 2021). This is particularly the case for essential goods such as food, medicines, personal protective equipment, etc.…”

Introduction to the Reflection Forum: Clouds in the business landscape—Reflections on the implications of major worldwide turmoil for management and organizations

“…The essay ends speculating about potential ways in which globalization can eventually flow and morph. Pla-Barber et al (2021) follow, presenting an essay that considers how the COVID-19 pandemic will affect the configuration of global value chains (GVCs). Providing an analysis at the intersection of global strategy and value chain analysis, the authors discuss different ways in which firms may adjust their strategies regarding the three basic dimensions of GVCs: the relocation of production, upgrading processes, and governance systems.…”

What motivates Vietnamese enterprises to upgrade in global value chains? Closing the intention-behavior gap

“…This also highlights the drawbacks of longdistance supply chains and hence, lead to the regionalization of the GVCs. On one hand, this poses a threat of "reshoring" where some production activities previously outsourced to third countries, like Vietnam, may return to firms' home and neighboring countries (Pla-Barber et al, 2021). On the other hand, this strategy also reflects a shift to a more balanced leagile supply chain that helps ensure better performance (Irfan et al, 2020;Fadaki et al, 2019).…”

“…This also highlights the drawbacks of long-distance supply chains and hence, lead to the regionalization of the GVCs. On one hand, this poses a threat of “reshoring” where some production activities previously outsourced to third countries, like Vietnam, may return to firms' home and neighboring countries (Pla-Barber et al. , 2021).…”