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Testing predictions on supplier governance from the global value chains literature
[Using hostages to support exchange: dependence balancing and partial equity stakes in Japanese automotive supply relationships]

Author

Listed:
  • Johannes Van Biesebroeck
  • Alexander Schmitt
Abstract
A vast empirical literature analyzes the determinants of the make-or-buy decision. How to organize supplier relationships when the buy option is chosen has received much less attention. The global value chains framework provides testable predictions on the nature of buyer–supplier collaboration. We use a unique transaction-level dataset of outsourced automotive components to study carmakers’ choices between four distinct types of supplier governance: market, captive, relational, or modular. The theory formulates predictions based on three characteristics: the complexity or contractibility of a transaction, the capabilities in the supply base, and how objectively codifiable performance requirements are. Our results illustrate that sourcing relationships vary systematically and that the effects of proxies for the three characteristics are in line with the theory.

Suggested Citation

  • Johannes Van Biesebroeck & Alexander Schmitt, 2022. "Testing predictions on supplier governance from the global value chains literature [Using hostages to support exchange: dependence balancing and partial equity stakes in Japanese automotive supply ," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 31(1), pages 89-111.
    • Handle: RePEc:oup:indcch:v:31:y:2022:i:1:p:89-111.
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    File URL: http://hdl.handle.net/10.1093/icc/dtab034
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    References listed on IDEAS

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    Cited by:

    1. Antrà s, Pol & Chor, Davin, 2021. "Global Value Chains," CEPR Discussion Papers 15908, C.E.P.R. Discussion Papers.

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    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management

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