Global Production Network

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Global Production Network

By | August 2008
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What is Global Production Network?

Global production network (GPN) does not refer broadly to all products that are internationally traded. Rather, it refers to those products and services in which the production chain is extended over several (two or more) countries. GPNs are typically characterized by transnational corporations which tend to retain their knowledge-intensive, design-intensive activities, and marketing associated with proprietary know-how and higher value-added activities in their company headquarters; it relies on international outsourcing to conduct more labor-intensive manufacturing and provision of services. However, there are increasingly examples where higher value-added activities may be conducted overseas (Dilts, 2006).

Production networks become “global” when the distribution and coordination of geographically dispersed activities within and/or among enterprises takes place across borders in multiple countries. A production network represents linkages within or among a group of firms in a particular global value chain (GVC) for producing specific products such as particular types of computers, mobile phones, and cars. It represents how lead firms such as Toyota, Cisco Systems Inc., and Nike Inc. organize their particular networks of subsidiaries, affiliates, and suppliers to produce a given product (Gereffi, 2003).

Production networks are inherently dynamic; they are always, by definition, in a process of flux – in the process of becoming – both organizationally and geographically. The spatio-temporality of production networks, therefore, is highly variable and contingent. The GPN approach is a broad relational framework, which attempts to go beyond the very valuable but, in practice, more restricted, global commodity chain (GCC) and global value chain (GVC) formulations. Although the core of all three conceptualizations is similar – the nexus of interconnected functions, operations, and transactions through which a...