How National Business Systems Influence the Diffusion of Paradox Management Practices in Global Value Chains

This study discusses the relationship between inter-organizational paradox management and national business systems (NBS). Based on case study evidence related to a global value chain in the footwear industry between Germany and China, we analyze how the different businesses in the chain coped with the paradoxical tension between providing living wages to workers and upholding financial performance. Our findings show that all firms applied the same policy (i.e. the Business Social Compliance Initiative, BSCI) in order to cope with the paradox. This policy was translated into proactive paradox management practices among German businesses but elicited defensive practices from their Chinese business partners. We show how the different institutional structures underlying the German and Chinese NBS influenced these practices. On the basis of these results we argue (1) that the inter-organizational diffusion of paradox management practices across countries depends on whether an NBS’s institutional structure can provide enough pressure points for firms to interpret adopted policies in ways that enable proactive paradox management practices, and (2) that the theorization of the impact of cross-national distance on paradox management can be enhanced through the adoption of a multidimensional approach to institutional variety that extends beyond culture-based arguments.