Global value chains: from governance to governmentality?

Abstract

One of the main preoccupations of global value chain (GVC) analysis has been how value chains are governed and by which types of firms. Most current conceptualizations distinguish between different types of GVC governance and see them as effects of given distributions of attributes between firms along chains. The governmentality literature instead sees economic governance primarily in terms of invoked models of practice, and interprets it through economic agents’ descriptions of their own governing (or governed) practices. Drawing on the specialized magazines, training manuals and professional journals that served purchasing practitioners in US manufacturing, this article draws attention to the hitherto unexplored role of expert knowledge and practices in GVC governance. At the same time, it highlights that the governmentality literature glosses over problems associated with the actual implementation and effectiveness of expert practices. The article concludes by reflecting on the theoretical implications of such an analysis for both the GVC and the governmentality literatures.

Keywords:

• global value chains
• governance
• governmentality
• performativity
• US manufacturing industry
• supply chain management

Acknowledgements

The authors benefited from comments on an earlier draft of this article by two anonymous referees, Jakob Vestergaard and the participants of a workshop held in Copenhagen in June 2007, especially Tim Sturgeon and Jennifer Bair. Thanks also to Kaspar Hoffmann for research assistance. Responsibility for the article's errors remains the authors’ own.

Notes

1. Dobler, Lamar and Burt (1984), Leenders and Fearon (1993) and Monczka, Trent and Handfield (2003).

2. The manufacturing sectors that were of concern to the contributors to this body of work were made up mainly of US-domiciled firms and were all characterized by what in the early 1990s Gereffi and others (1994) called ‘producer-driven chains’. However, the programme of government that was elaborated in this literature seems to have provided a template for all subsequent reported articulations of how to govern GVCs – regardless of sector, country or period.

3. This history of the trade is based on Anon. (1990), Wilkinson (1992) and the historical sections of Dobler, Lamar and Burt (1984) and Leenders and Fearon (1993).

4. Between 1957 and 1991, one of these associations published a second trade magazine, Purchasing World.

5. It reached its twelfth edition in 2002.

6. Credit for coining the term ‘supply chain management’ is disputed – reflecting different promotional projects. A Purchasing journalist (Smock, 2003) states Thomas Stallkamp, then head of purchasing at Chrysler, coined it in the 1980s. Laseter and Oliver (2003) claim Keith Oliver of Booz Allen Hamilton coined it in 1982.

7. Supply Chain Management: An International Journal and Supply Chain Management Review.

8. Nelson was co-author of a book (Nelson, Moody & Stegner, 2001) well received by the trade, while Richter contributed occasional articles (e.g. 2003) and frequent interviews to Purchasing.

9. Richter occupied senior positions at Ford, Black & Decker, Hewlett-Packard, IBM and Xerox, as did Nelson at Honda, Deere and Delphi. Black & Decker, Hewlett-Packard and Xerox were all awarded Purchasing's ‘Medal of Excellence’ when Richter headed their purchasing operations.

10. Supplier qualification, measurement of supplier performance and even first-tier supplier (or prime contractor) systems can be traced to US weapons procurement (Sapolsky, 2003). Operations research, emerging at the interface between natural science and the US military, generated the first inventory management models (Mirowski, 2002, p. 180). The idea of partnering emerged out of ‘relational marketing’.

11. MRP involves computerized integration of data on purchases and inventory with corporate master production schedules, to calculate materials requirements on a time-phased basis.

12. In 1972 NAPM's Journal of Purchasing was re-named the Journal of Purchasing and Materials Management, a title it retained until 1992. Dobler, Lamar and Burt's textbook (1984) was titled Purchasing and Materials Management, and proposals were made to include materials management in NAPM's title.

13. Leenders and Fearon contrast ‘the old-fashioned management perspective…that it is considered acceptable to live with a significant defect level because it is assumed that achieving fewer defects will increase costs’ with ‘the contributions of leaders like Deming and Crosby, as well as [of] Japanese industry [showing] that every defect is expensive and that prevention of defects lowers costs’ (1993, pp. 152–3).

14. Value analysis examines the functions that a product performs, and then (proposes) alternative ways to provide that function at less cost (Cayer, 1988b). According to Ellram (1992), value analysis was developed by buyers at General Electric during the Second World War. It was promoted by Purchasing from the 1950s, with a special edition devoted to it in 1955.

15. Cox (2001a, 2001b); Cox et al., 2002) then developed a revised version of the portfolio approach, while Gelderman and van Weele (2002) and Monczka, Trent and Handfield (2003) claim use of different variants of the approach by a number of very large companies.

16. By 2000, a specialized literature existed proposing increasingly sophisticated computable supplier evaluation methods (cf. Petroni & Braglia, 2000). According to Larson and Halldorsson (2002) performance measurement ranked third among specialized research interests of all supply chain management researchers polled (after buyer–seller relations and supplier development). The main novelty of the more sophisticated models was inclusion of a wider range of variables. Researchers acknowledged a trade-off between complexity and utility. Sarkis and Talluri (2002) stated that, when their own model was tested in discussions with managers, ‘it was clear that the large number of factors and relationships caused them to be fatigued’.

17. Allied Signal's use of a ‘Quality Impact Score’ taking into account not only defect levels but types of defects, costs of defective parts and location of defect discovery is cited by Minahan (1997) as a ground for awarding the company a Purchasing Medal of Excellence, while Motorola's ‘Sigma system’ for classifying defect rates in terms of parts per million rather than parts per 100 is cited from around 1990 as paradigmatic (Raia, 1991).

18. Consigned inventory is reserved exclusively for the buyer, but paid for only when the buyer consumes it. Bonded inventory automatically becomes suppliers’ property when the buyer has no use for it.

19. Results in the same range were obtained by Vonderembse and Tracey (1999), asking about the incidence of supplier participation in new product development, and by Guinipero (1990) asking about the incidence of ‘open and informal communication with suppliers’. Hendrick and Ellram's (1993) survey of buying firms claiming to be partnering, as well as of some of their suppliers, reported that, while partners typically supplied up to 75 per cent of intake for some items, they represented less than 1 per cent of all active suppliers and that the main motive for initiating partnerships was securing price reductions via offers of higher volume. When suppliers were questioned, the study found significant disagreements with buying firms’ perceptions concerning frequency of contact and extent of interchange of information between partners, and on buyer involvement in quality improvement efforts.

20. A CAPS longitudinal survey reported a fall in firms with centralized purchasing from 28 per cent in 1987 to 21 percent in 1995 (Johnson, Leenders & Fearon, 1998). Tan, Kannan and Handfield (1998) report an even lower incidence. Bales and Fearon (1993) and Guinipero and Vogt (1997) report 13 per cent and 23 per cent respectively of purchasing departments being involved in new product development efforts, in both cases mainly in marginal ways.

21. This is contrary to observations in a recent article appearing in this journal (Busch, 2007) where the emergence of the theory and practice of supply chain management is dated to the mid-1980s at the earliest.

22. Because the supply management programme of government remained largely unimplemented in US manufacturing, the above observations do not represent a disproof of characterizations of GVC governance as found in the existing literature. However, they do indicate problems in the GVC literature of selective use of buyer testimony which, while expressed in the programme's language, is then used to make links or demonstrate claims incompatible with its philosophy.

23. In a recent paper Sturgeon, van Biesebroeck & Gereffi (2007) list thirty bankruptcies among major suppliers in the automotive sector between September 1999 and March 2006.