Effects of path dependence on capabilities in captive global value chains

Abstract

Global Value Chains (GVC) and their participants are dynamic. Events can provoke distinct strategic responses from different firms, even when they are part of a GVC. We investigated how both organizational and supply-chain path dependence can influence the capabilities that a firm needs to achieve a higher value-added position in a GVC. We have integrated three branches of theory, covering Global Value Chains, Organizational Capabilities, and Path dependence. We conducted a case study of a large Brazilian shoe firm, analyzing its relationships with buyers in GVCs. We found that path-dependent elements had locked-in the firm, preventing ascension to higher added value positions and keeping the organization in captive global value chain, even when it moved into new markets. Additionally, we propose a theoretical model that should prove fruitful in future research in other sectors and countries.