On Socially Responsible GVC Governance Structures: Outsourcing vs. Internalization in the First Mile

Simon Iskander*, Anthony Goerzen, Christian Geisler Asmussen, Niron Hashai

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference abstract in proceedingsResearchpeer-review


To minimize costs, the traditional approach used by multinational corporations (MNCs) to optimize price and quality in the production and delivery of goods and services has been achieved through hierarchical and arm’s length contractual means. This approach combines with the factors that propel economic globalization, yielding complex global value chains (GVCs). However, an emerging challenge facing lead MNCs is that they are unable to control the social and environmental implications of the activities throughout their GVCs. The traditional approach to deal with these issues has been that of “cascading contracts” where responsibility is handed along the GVC sequence of firms. Yet, consumers, civil society, and regulators are increasingly holding lead MNCs morally and financially responsible for social and environmental problems even when these issues do not arise within the MNC’s hierarchical or contractual boundaries. To provide new insights into the organization of MNCs, we develop a formal analytical model that combines cascading responsibilities with the value-adding and value diminishing factors that have begun to arch from the “first mile” of the GVC directly to the lead MNC.
Original languageEnglish
Title of host publicationProceedings of the 65th Annual Meeting of the Academy of International Business. AIB 2023 : International Business Resilience under Global Disruptions
EditorsKazuhiro Asakawa, Tunga Kiyak
Number of pages1
Place of PublicationEast Lansing, MI
PublisherAcademy of International Business
Publication date2023
Publication statusPublished - 2023
EventAIB 2023 Annual Meeting: International Business Resilience under Global Disruptions - SGH Warsaw School of Economics, Warsaw, Poland
Duration: 5 Jul 20239 Jul 2023
Conference number: 65


ConferenceAIB 2023 Annual Meeting
LocationSGH Warsaw School of Economics
Internet address
SeriesProceedings of the Annual Meeting of the Academy of International Business

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