The Dynamics of Outsourcing Relationships in Global Value Chains: Perspectives from MNEs and their Suppliers

We investigate the dynamics of outsourcing relationships within global value chains, through six case studies of lead firm-supplier dyads, considering these relationships from the perspectives not only of the lead firms but also of their suppliers. We track the evolution of the relationships by identifying the roles played by heterogeneous resources and capabilities, isolating mechanisms, and relationship-specific investments in creating potential resource dependence/power asymmetries in the dyads. In our cross-case analysis, we identify different lead firm-supplier dynamics, key underlying mechanisms, and related degrees of dependence/power asymmetries. We also found evidence of the development of trust and of partnerships in situations of power asymmetry and of power balance. In doing so we contribute to an under-researched area in International Business about the evolution over time of outsourcing relationships within global value chains. We advance a set of propositions to be tested in future research.