Countering Overseas Power in Global Value Chains : Information Asymmetries and Subcontracting in the Plastics Industry

Resource Dependency Theory (RDT) and Global Value Chain (GVC) theory have been deployed in the strategic and international management literatures to address questions of power in dyadic relationships and global production networks, respectively. This paper integrates the two theoretical approaches in order to expand RDT. Using the relationship between buyers and contract manufacturers from GVC analysis, we find a correlation between firm size and choice of strategic action in response to contract manufacturers' dependence on buyers. Large firms follow an acquiesce strategy while small manufacturers follow an avoid strategy. Enabled by scale or control over information, both of these approaches successfully reduce uncertainty and provide a source of sustained competitive advantage. Using a study of the global production chain in plastics manufacturing in China, we show how dependent firms are able to respond to GVC induced pressure depending on their size. This opens important insights into the role that structural characteristics of organizations (like size) play in determining responses to dependency in global value chains