Supplier evolution in global value chains and the new brand game from an attention‐based view

Abstract

Research SummarySuppliers from emerging economies have been particularly active in acquiring brands from advanced economies. We analyze changes in the global value chain (GVC) of the sports shoe industry and show how hollowing out the asset bases of brand‐holding firms through increasing outsourcing has enabled the emergence of rising power firms, as well as a new brand game and a market for brands. These developments in the GVC might be a future challenge for traditional brand‐holding lead firms. We show that managers focused on branding and distribution issues were myopic towards the strategic initiatives of suppliers. Managers need to pay attention to the potential long‐term consequences of outsourcing and offshoring activities, as suppliers could become competitors or acquirers of their order‐giving firms, leading to the question: Are we approaching a state of dual GVC leadership, or do lead firms risk being kicked out by their suppliers?Managerial SummaryWe explore the emergence of rising power firms from the peripheries of GVCs. An increasing number of major brand‐holding companies from traditionally industrialized economies have been acquired by suppliers from newly industrialized economies due to some fundamental changes. First, the emergence of a market for brands makes brands more volatile. Second, continuous outsourcing and hollowing‐out of the lead firm's asset base has reduced their ability to control the GVC. Through a longitudinal case study analysis, by adopting an attention‐based view, we investigate the behavior of the traditional lead firms. Lead firms were not only myopic to the activities of their suppliers, but their focus on downstream activities created increasing opportunity spaces upstream for rising power firms while weakening the defense capacity of brands.

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

“…Generally, upgrading possibilities depend on the GVC’s governance structure (Golini et al, 2018) as well as the internal capabilities of the companies involved in that GVC (Giuliani et al, 2005). Most studies on upgrading have considered the buyer–supplier transaction, with the supplier typically being an independent contractor from a developing country (e.g., Lechner et al, 2020). However, recent research (Ryan et al, 2020), including the upgrading dynamics in intra-MNE GVCs, shows how upgrading accomplished by a subsidiary could become a key determinant of changes in GVC governance.…”

Understanding apparel brand evolution patterns in Bangladesh: an industry life cycle perspective

“…The basic prerequisite for supplier upgrading is the extensive participation in the GVCs because these are the platforms where learning occurs through interactions with the lead firms (Gereffi, 1999; Lechner et al , 2020). Limited involvement in the GVCs does not necessarily lead to upgrading (Lechner et al , 2020). The degree of supplier upgrading relies on the firm's position within the GVC, that is, closeness to the lead firm (e.g.…”

“…first tier, second tier supplier, etc.) (Lechner et al , 2020). How a supplier will upgrade, on the other hand, is determined by the governance structure of the GVC (Lechner et al , 2020).…”

“…In developing nations, the creation of national brands requires certain levels of knowledge in value-added activities such as apparel product development, consumer demand, financial capital and marketing concepts. Acquiring those skills set is possible when the country's apparel manufacturers extensively participate in the global value chains (GVCs) (Gereffi, 1999; Lechner et al , 2020). The presence of a national apparel brand is suggested to be directly or indirectly associated with the development of a nation's textile and apparel industry (Jin et al , 2013).…”

“…While a marked number of studies focus particularly on apparel manufacturing, supply chain, compliance issues, and consumer attitude towards Bangladeshi apparel brands (Ahmed et al , 2016; Bari and Park-Poaps, 2019; Chowdhury and Akter, 2018; Park-Poaps et al , 2020; Rahim, 2017; Rahman and Mannan, 2018), there are still few studies on brand evolution pattern in developing countries, specifically in Bangladesh. There is evidence that numerous factors are associated with the emergence of national apparel brands: socioeconomic factors, characteristics of the apparel manufacturing industry, manufacturers' involvement level in the GVCs, and domestic market or retail structure (Guercini, 2004; Jin et al , 2013; Lechner et al , 2020). As such, it is important to determine what factors are responsible for the development of national apparel brands in Bangladesh.…”