Local Enterprises in the Global Economy

Local Enterprises in the Global Economy

Issues of Governance and Upgrading

Edited by Hubert Schmitz

This book opens a fresh chapter in the debate on local enterprise clusters and their strategies for upgrading in the global economy. The authors employ a novel conceptual framework in their research on industrial clusters in Europe, Latin America and Asia and provide new perspectives and insights for researchers and policymakers alike.

Chapter 13: Chain governance and upgrading: taking stock

John Humphrey and Hubert Schmitz

Subjects: development studies, development economics, economics and finance, development economics, geography, economic geography, innovation and technology, innovation policy


John Humphrey and Hubert Schmitz 1. INTRODUCTION The upgrading prospects of clusters of local enterprises differ according to the type of global value chain they feed into. This is a central theme of the book running through most of its chapters. This final chapter pulls together the evidence and draws out the strengths and limitations of the chain approach to upgrading.1 Our focus on chain governance does not imply that other factors are not important for upgrading. Our proposition is that the upgrading opportunities of local enterprises are often structured by the relationships in global value chains. If this is so, then the chain perspective has a profound effect on the order of questions asked in the debate on upgrading in clusters, switching the focus away from the internal organization of clusters towards the linkages with the global economy, in particular with global buyers. The chapter is structured as follows: section 2 identifies the main positions found in the literature on the connection between chain governance and upgrading. It then provides typologies of chain governance and upgrading. These are necessary for moving the debate forward and formulating hypotheses for new research. Section 3 sets out the propositions with which we started the research project on which this book is based. Sections 4 to 8 then pull together the evidence, drawing mainly on the chapters in this book but complementing them with other recent studies. Section 9 discusses the limitation of the chain approach and the final section...

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