Inter-Firm Relations in Global Manufacturing: Disintegrated Production and its Globalization



This chapter surveys the state of international scholarly debate on inter-firm relations in global manufacturing. It focuses on the evolving strategies of customers and suppliers within the value chains of core manufacturing industries, such as motor vehicles and complex mechanical engineering products. The analysis is divided into three parts. The first part discusses the historical emergence of clustered, flexible, and/or vertically disintegrated production (hereafter: disintegrated production) since the 1980s. It contrasts disintegrated production with production within hierarchical, vertically integrated Fordist/Chandlerian firms, arguing that the former has undermined the latter over the past thirty years, both in scholarly discussion and to a large extent in the practical orientations of the actors themselves. Two related but distinct variants of disintegrated production are presented: the industrial district/local production system model (ID/LPS) and the lean production/collaborative supply chain model (LP/CSC).

The second part addresses the globalization of disintegrated production. It examines the strengths and weaknesses of the modularity/contract manufacturing approach to transnational supply chains, and then goes on to contrast these to alternative forms of internationalization by multinational customer and supplier firms. Just as disintegration of production was seen to undermine hierarchy within and between firms in the preceding section, here the global dispersal of production appears to be gradually undermining old hierarchies between developed and developing regions. Recomposable hierarchy, collaboration, and mutual exchange increasingly shape interactions between the two types of manufacturing regions.

The subjects of the first two parts can usefully be thought of as historically sequential: vertical disintegration and regionalization occurred prior to extensive globalization of production. Today, however, the analytical distinction between the two has become less sharp as different systems of decentralized producer relations increasingly interact and interpenetrate in ways that generate their own distinctive dynamic. This is particularly true when our focus shifts to small- and medium-sized firms (SMEs).The third part analyses interactions between production in developed and developing regions, together with the evolution of SME strategies in high-wage regions in response to the resulting challenges and opportunities. The concluding section considers the implications of these developments for power and inequality in global supply chains.
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The Business History Seminar has been made possible by financial support from the Erasmus Research Institute of Management (ERIM) and the Vereniging Trustfonds Erasmus Universiteit Rotterdam.
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Abe de Jong Ben Wubs
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