Rethinking Economic Upgrading in Apparel GVCs: Value Capture Through Strategic Partnership in Product Innovation Cycles

The global value chain (GVC) literature usually approaches the question of value capture among supplier firms in global supply chains through the conceptual lens of economic upgrading, conventionally defined as moving from contract manufacturing to design and then to own brand. However, in the global apparel industry, research shows that few if any apparel manufacturers have developed their own global brand, and it also shows that apparel suppliers have taken on ever more tasks within manufacturing and logistics without increasing their profit share per product. Yet, GVC scholars generally have been concerned with the distribution of the profit share within the chain and how supplier firms can capture more of it. Thus, this paper argues that it is time to re-think how the GVC approach conceptualizes value capture in globalized industries. We offer one way of re-thinking value capture that is tailored for the global apparel industry, building on the work of scholars in economic geography and business studies as well as iterative theory building with our original empirical data on the top transnational apparel suppliers. However, we think that aspects of our product innovation cycle framework proposed in this paper can contribute to a broader rethinking of how to explain value capture by supplier firms in globalized industries.