Institutional Brokerage and the Governance of Global Value Chains; the case of the US apparel industry

Publication Type: 

In this qualitative study of the apparel industry, I analyze the governance of buyer-supplier interfaces in outsourced global value chains through an institutional theory lens. I set forth that transactional and relational cross-national barriers, linked to institutional distance between home and host country in outsourced production networks, and supplier capabilities are key determinants of variations in the governance mode chosen by lead buyers for their outsourced value chain. I further posit that lead buyers respond to the additional costs imposed by home–host country institutional distance and by structural supplier capability constraints, by means of governance modes that provide institutional brokerage, and examine how the lead buyers’ stock and strategic investment in institutional brokerage capabilities moderates both country and supplier level determinants of their governance choice. This study contributes to theory in two ways: it provides an institutional explanation of lead buyers’ choices of governance mode in their GVCs, and introduces the institutional brokerage construct to describe lead firm strategies aimed at lowering the costs associated with home-host country institutional distance, and with the varying capability levels of supplier in the global value chain. The study also provides a useful contribution to management, by highlighting vital brokerage activities and capabilities that will be critical to implement successful global value chain governance strategies as apparel global value chains migrate from East and South Asia to lower factor-cost countries, like Myanmar, Ethiopia, Kenya and Ghana, which are characterized by greater institutional barriers and a less mature supplier base.

Focus Areas

Country: