Firm agency and global production network dynamics

Abstract

The Global production networks (GPN) framework has been influential in the analysis of globally coordinated economic arrangements. However, research on GPNs tend to focus on a well-established industries and their existing governance structures with a very little attention to the temporality and changes in these networks and their governance structures. Specifically, despite the central role of ‘lead-firms’ in GPNs, the literature lacks a clear depiction of their competitive and evolutionary trajectory. In response, this paper is concerned with (re)opening the ‘black-box’ of firms and showing how lead-firms’ strategies and practices shape the evolutionary dynamics of GPNs. The paper argues that changing lead firm strategies play a crucial role in shaping the evolution of GPNs, reflecting changes in the industrial and/or business and institutional environments. The paper investigates the Danish, multinational energy company, Ørsted, and discusses the importance of accounting for firm dynamic capabilities, i.e. intra-firm practices and extra-firm (evolutionary) dynamic drivers, in analytical frameworks that analyse GPN dynamics and industries. Lead-firm strategies are shaped by firm-specific capabilities, industry-specific competitive dynamics, and institutions. Accordingly, GPNs’ evolutionary process can be understood as an adapting and/or response mechanism by lead-firms to changes in local and international business as well as multi-scalar institutional environments.