Supplier Firm Value Capture Through Trajectories in Global Value Chains: Which Complementary Assets Matter?

Did the emergence of large transnational suppliers alter the value capture dynamics in globalized production, or do ‘strategic partners’ remain in a subordinated position to lead firms that control access to end markets? We show that the Global Value Chain literature faces methodological and conceptual constraints in answering this question and seek to resolve these issues through the proposed Complementary Assets approach, combining insights from entry barriers in globalized industries to explain how supplier value capture trajectories are a function of the complementary assets they create to match lead firm product strategies. With few options to establish sustained entry barriers, apparel suppliers largely compete in commoditized products leading to large orders with small profit margins. The paper explains how some apparel suppliers obtain both high volumes and high profit margins by supplying lead firms that pursue a non-commoditized product strategy and offering complementary assets that are not easily emulated by other apparel suppliers.