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Session Overview
3-HP116: Economic, Social and Environmental Upgrading in Global Value Chains
Tuesday, 06/July/2021:
2:00pm - 3:15pm

Session Chair: Prof. Stefano Ponte, Copenhagen Business School, Denmark
Session Chair: Dr. Aarti Krishnan, University of Manchester, UK, United Kingdom

Session Abstract

Global Value Chains (GVC) have become key for understanding how the global fragmentation of production affects sustainable development and social justice. Under what circumstances participation in GVCs allows firms and territories to gain market access and learning opportunities? What forms of participation can foster solidarity among disadvantaged players and along value chains? How can economic, social and environmental upgrading promote social and environmental justice and address inequalities along value chains? By bringing together academics across disciplines, and from both the Global South and Global North, the panel aims to explore whether and how GVCs can be vectors of sustainable development.

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Economic, Social and Environmental Upgrading in Global Value Chains: An Integrative Approach

Aarti Krishnan1, Stefano Ponte2, Valentina De Marchi3

1University of Manchester; 2Copenhagen Business School, Denmark; 3University of Padova

In this paper, we examine how lead firms in global value chains create and capture intangible value by managing social, environmental and ‘development’ concerns for capital accumulation. First, we identify three key sets of upgradingattributes: actors, agency and drivers; processes and strategies; and development outcomes and distributive effects.Second, we integrate the economic, social and environmental aspects of upgrading into a holistic analytical framework. Third, we apply this framework to the case study of the wine value chain in South Africa.

Stakeholder Priorities and Upgrading Dynamics in Agricultural Global Production Networks: Global Decisions vs. Local Realities

Aarti Krishnan2, Judith Krauss1

1University of Sheffield, United Kingdom; 2University of Manchester, United Kingdom

Sustainability standards have proliferated in agricultural global production networks (GPNs) and global value chains (GVCs). There is an assumption that adopting sustainability standards will not only enforce social, environmental and economic priorities, but also automatically entail linear upgrading opportunities for farmers in all three dimensions. However, there are multiple problems with this assumption. Firstly, what different stakeholders take to mean ‘sustainability’ will vary across the environmental, economic and social dimensions, with different standards implementing different constellations of these priorities. Secondly, given these divergences across different stakeholders, farmers’ priorities will not necessarily win out over other dominant stakeholders’, with power dynamics privileging private sector and global North. Finally, the relationship between sustainability priorities and environmental, economic or social benefits for farmers due to upgrading opportunities is often non-linear. Some research has alluded to the ex-post negative outcomes arising from adopting sustainability standards in specific contexts, such as insignificant increase in income and lack of improvement in bargaining power (Barrientos and Smith, 2007; Tokatli, 2013) due to adverse incorporation. However, studies have yet to explore in-depth this nexus of diverging sustainability priorities embedded ex-ante within sustainability initiatives, asymmetric power dynamics and non-linear upgrading implications as manifest through sustainability standards.

Consequently, this study seeks to answer the following research question: How do the convergence and divergence of stakeholder priorities shape economic, social and environmental upgrading opportunities for farmers through sustainability standards in asymmetrical agricultural global production networks? Based on our findings, we argue that there is no automatism linking sustainability priorities effected through standards with economic, social and environmental upgrading as the relationships are far too complex to allow any such generalised assumptions. Instead, we observe that powerful stakeholders are able to project their priorities onto sustainability initiatives, leading to differentiated up- or downgrading opportunities in environmental, social and economic terms for farmers.

Using a novel ‘Constellation of Priorities’ model, we begin by unpacking the priorities which different stakeholders contribute ex-ante to sustainability initiatives in the environmental, economic and social dimensions. The constellation of priorities model, which we propose as a heuristic, practice-oriented device to map stakeholder priorities systematically, emphasises tensions, trade-offs and divergences between different priorities and different stakeholders’ priorities. On this basis, we explore the resulting non-linear, complex dynamics of upgrading and downgrading implications and illustrate how divergent or convergent priorities affect upgrading and downgrading. The final step in the analysis unpacks to what degree power asymmetries played a role in determining whose priorities matter, and ultimately what down- or upgrading results. We utilize case studies on horticulture in Kenya, and cocoa in Nicaragua to analyse diverse stakeholders’ sustainability priorities, and their implications in terms of social, environmental and economic up- and downgrading in power-asymmetrical production networks. Beyond top-down, dominant stakeholders such as lead firms and governments, we pay particular attention to bottom-up stakeholders such as civil-society organisations and farmers, going beyond a firm-centric view (e.g. Bair, 2008) to address a research gap in much GVC and GPN literature. Investigating the dynamic and iterative intersections of power relations deliberately forefronts questions around the power over and the power to exact sustainability priorities in the production network. Understanding these iterative and reciprocal relationships helps us gain insights into the pathways of power and agency in global production networks (GPNs), particularly related to standards, filling a gap in the literature.

Social Upgrading Through Voluntary Sustainability Standards? A Comparison of Gender Strategies in Global Food Value Chains.

Tanja Verena Matheis, Christian Herzig

University of Kassel, Germany

Well-known standards for consumer products have failed to duly include producers’ voices in their decision-making bodies until recently. In addition, women producers tend to be sidelined in decision-making processes at the household level and in the commercialization of agricultural produce. While voluntary sustainability standards experience a revival in food value chains, for example with regard to the “Sustainable Rice Platform” in many parts of Asia and Africa, evidence on their organizational structures is scattered and mainly includes individual case studies. However, it is insightful to draw comparisons across voluntary standard systems because their structures have nuances in decision-making bodies and working groups. In responding to the question of “what forms of participation can foster solidarity among disadvantaged players and along value chains”, we provide an analysis of standard documents to identify the strategies and types of women producer representation with respect to addressing gender inequality. The central question is as to what extent women producers or workers are represented in the supposed multi-stakeholder structures of the standard-setting organizations, such as in steering committees and working groups. How do sustainability standards for food products address gender inequality at the production level, such as unequal access to land, against the background of their stated social objectives? This evidence is used to highlight various extents of women producers’ participation in decision-making roles. Thus, the findings could help to promote broader participation in the standard’s organizational structures. With this contribution, we also aim to critically reflect upon the concept of “social upgrading” and the related notion of “decent work” in value chain research.

Beyond Workplace Compliance: Portfolios of Buyer Engagement in Promoting Sustainability

Chikako Oka1, Niklas Egels-Zandén2, Rachel Alexander3

1Royal Holloway University of London, UK; 2University of Gothenburg, Sweden; 3London School of Economics, United Kingdom

While sustainability challenges in outsourced garment production have been a prominent issue that leading brands and retailers have been trying to address for decades, the dominant compliance model has had limited impact on the ground. Faced with the limitations of the compliance approach, lead firms in GVCs have been experimenting with new approaches. Research focused on governance in GVCs, sustainable supply chain management and private labour regulation has considered sustainability challenges in outsourced production. However, two important gaps can be identified in extant research. One is that research using the GVC governance and sustainable supply chain approaches has focused on the roles of individual lead firms and the dynamics found within individual buyer-supplier relationships, overlooking collective action of buyers. The other is that the literature on private labour regulation has focused predominantly on assessing the effectiveness of the compliance approach and (to a lesser extent) capacity building efforts at supplier facilities. Very few studies examine efforts that go beyond compliance at the workplace level. This paper seeks to fill in the identified gaps by contributing to emerging research on governance for sustainability in GVCs by exploring an expanding set of strategies that lead firms are using in their efforts to address sustainability challenges.

To better understand how lead firms engage with members of their GVCs, this article focuses on a group of 60 large firms from Germany, Sweden and the UK. These were selected as being the largest 20 garment brands and retailers in their respective countries in terms of revenue in 2015/16. Eighty-seven interviews were conducted with a selection of these companies. Additionally, documents related to all firms’ sourcing policies and practices were systematically reviewed.

We propose a new theoretically derived typology of buyer engagement, incorporating the two often overlooked dimensions of buyers’ collective action and efforts that go beyond compliance at supplier factories. Specifically, the typology considers individual vs collective buyer action and direct supplier engagement vs industry-wide engagement. Through reviewing our empirical data, different engagement mechanisms were found to be used by lead firms seeking to promote change. Cutting across the dimensions of the typology, these mechanisms included compliance, capacity building, and political advocacy (Oka et al. forthcoming).

This study makes both conceptual and empirical contributions. The new typology of buyer engagement and rich illustration help advance our knowledge on the scope and nature of lead firm activities governing production processes. Specifically, a portfolio of approaches that are simultaneously being used to address sustainability challenges in GVCs are identified. This article fills important gaps in the literature by moving beyond the dominating focus on workplace compliance strategies in private labour regulation studies, dyadic buyer-supplier relationships prominent in the GVC literature and the role of focal firms in sustainable supply chain management literature.


Oka, C., Egels-Zandén, N., & Alexander, R. (forthcoming). Buyer Engagement and Labour Conditions in Global Supply Chains: The Bangladesh Accord and Beyond. Development and Change.

Distribution Of Value In The Coffee Sector And Its Social And Environmental Impacts From Production In Colombia, Peru And Ethiopia To Consumption In France.

Christophe Alliot, Sylvain Ly, Marion Feige-Muller, Hugo Segré, Théodore Fechner

BASIC, France

Over two billion cups of coffee are consumed every day, generating 200 billion dollars revenue per year. In France, which epitomizes the evolution of the sector, the market has reached 5.8 billion euros in 2017 and coffee sales have doubled since 2003 thanks to the success of marketing premium Arabica coffees in preportioned sizes (pods and capsules), proposed by all main roasters and retailers, and for which France has become the world’s biggest consumer per capita.

Our research shows that this is benefitting an increasingly concentrated industry: the primary coffee players in the French market, Nestle (34%), JDE (30%) and Lavazza (17%) now represent 81% of the market, compared with 70% in 2008.

This concentration, also visible among supermarkets, has reinforced their bargaining power and enabled them to capture an additional 1.177 billion euros from annual coffee sales over the past 20 years, while farmers and traders have earned just 64 million euros more.

At the other end of the chain, the majority of coffee farmers are suffering a decline in their standard of living and working conditions. Faced with regularly falling coffee prices, increasing production costs, and being dependent on their buyers, growers are suffering from a critical lack of working capital. As a result, our research shows that Peruvian and Ethiopian farmers had an average income 20% lower in 2017 than that of the previous 12 years, keeping them well below the poverty line.

The consequences are mutually re-enforcing: malnutrition, illiteracy, child labour, migration, environmental pollution, continuing deforestation… further exacerbated by the growing impact of climate change on coffee production, especially Arabica. Taken together, these impacts weigh heavily on the economies of producing countries: our estimates show that, in Peru and Ethiopia, for each dollar of coffee exports in 2017, between 85 and 90 cents of hidden costs are generated at the expense of these countries and their populations, resulting in a profound unsustainability. In contrast, our research on Colombia shows that the country was not as badly affected thanks to its comprehensive public regulation system and the success of its value creation nationwide strategy.

Confronted with these challenges, the coffee sector has launched many initiatives that claim to be better for the environment and/or on the social front.

Our research on certifications such as Rainforest and UTZ shows that their vision that market forces can resolve social and environmental issues (once buyers adopt relevant criteria) is not supported by evidence: on the ground, they are generally adopted by producers who have above-average financial resources and support, and do not address the root causes of the current non-sustainability.

Our research on Fair Trade shows that it addresses key determinants of negative impacts with more significant results, in particular through the double certification Fairtrade/organic: according to our estimates, for each dollar of labelled coffee exports, hidden costs are reduced by 45% in Ethiopia, 58% in Colombia and 66% in Peru.

However, the effects of Fair Trade varies enormously among countries and it does not address the need for rebalancing the power in the chain, fighting situations of unfair trading practices, and most importantly distributing more fairly the value along the chain.

The key challenge lies in redistributing the profits within the coffee value chain, at a time when the producers have never been more in need. To achieve this, our research shows that three levers are essential:

  • Developing public regulations in producer and consumer countries, as well as value creation strategies at the export level
  • Strengthening the degree of organisation and autonomy of coffee producers
  • Promoting and disseminating agroforestry models with a low use of inputs

Sustainability Certification as a Tool for Upgrading and Social Justice in the Global Cocoa Chocolate Chain? On structural effects at the local level in Ghana

Franziska Ollendorf

Justus Liebig University Giessen, Germany, and Jean Jaurès University Toulouse, France

This contribution explores the importance of third-party sustainability certification for producers’ upgrading and social justice in the global cocoa chocolate chain. Drawing on extensive field work in Ghana, the paper provides a comprehensive insight in the implementation process of one case of UTZ certification and discusses its outcomes regarding central aspects of upgrading and social justice. The results shall inform the normative discussion on fair global food systems and solidarity in a competing world.

In the past, increasing consumer awareness of serious grievances in the global cocoa value chain –like child labour, extreme poverty and deforestation– led to a rising demand for fair and sustainable chocolate products. Simultaneously, the transnational cocoa and chocolate industry fears a future decline in cocoa production and is therefore concerned about the sustainability of cocoa supply. Hence, third-party sustainability certification schemes became a major governance tool for them to respond to these multiple pressures. However, being understood as a promising tool for improved sustainability of cocoa production and farmers’ livelihoods, the actual local outcomes of these interventions seem to be ambivalent. While many studies focus on the effects of certification at the farm level, structural changes in the local institutional setting which are linked to these interventions are still underexplored.

The paper discusses structural effects at the local institutional and production levels and integrates them in the discussion on upgrading and social justice. While certification schemes provide sources of knowledge acquisition and new technologies, upgrading effects appear to be only partial and are preserved for project-targeted producers. Indeed, at the production level, participating farmers may achieve an increase in the quality and quantity of their produce. In addition, important process standards which contribute to the sustainability of the cocoa chocolate chain, such as environmental, health and labour standards, are increasingly implemented in the course of certification programmes. However, other possible forms of upgrading, such as localising processing or exploring the production of new forms of the commodity, are not part of these interventions. Instead, they might rather be prevented by the major drivers and increasingly main implementors of sustainability certification: transnational cocoa processors and chocolate manufacturers. Therefore, territories targeted by such forms of certification schemes might risk to find themselves locked-in into the weaker position in the value chain. At the institutional level, a hybridization of the local sector governance caused by the implementation of certification projects can be observed. The importance of the leading cocoa processors and chocolate manufacturers drastically increases at the local level in Ghana. Many cocoa farmers are attracted by the immediate benefits of cocoa certification and therefore leave their traditional Licensed Buying Companies. Hence, the latter and their middlemen are facing a rapid loss of clients and might lose ground in the near future which would have a counter-effect on the upgrading of the territory.

Looking at these different levels of certification effects and other problematic tendencies, for instance the creation of inequalities among the farmers or the missing participation of the target groups in decision-making, allows a more nuanced debate on sustainability certification as a tool to achieve social justice in the cocoa chocolate chain by which the paper concludes.

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