ABSTRACT

Rapid advances in communications technology, coupled with high-profile natural disasters and garment factory accidents in developing countries, have focused attention on value chain governance, as well as the environmental, social and economic performance of lead firms in value chains. Three heuristic models of value chain connectedness discussed in this chapter differentiate governance based on interdependence, trust and power. These models illustrate how global economic transactions in value chains can influence the social and environmental well-being of stakeholders in a uniquely pervasive manner, not dissimilar to the impact of nation-states prior to the ascendance of neo-liberalism. By focusing on the ready made garment (RMG) industry, where several high-profile factory accidents have occurred, this chapter illustrates the implications of value chain governance, particularly involving relationships between developed country lead firms and suppliers in developing countries. The three models provide practical guidance on how managing governance in value chains through different types of connectedness can influence social, environmental and economic results.