A governance framework for global value chain based on rent theory

It is generally believed that in an era of economic globalization, it is no longer a matter of whether or not to participate in global economies, but how to do so in a manner that guarantees sustainable development for the key actors within global value chain (GVC). By identifying the contexts and essence of GVC, this paper proposes a research framework with a set of governance mechanism, which differs from both the invisible hand as market price mechanism and the visible hand as organizational administrative mechanism. This paper also suggests that the notion of economic rent is a key to better understand the dynamics and governance mechanism of GVC, which per se reflects sustained competitive advantage throughout the chain. The paper concludes with a discussion of how governance in GVC can inform policy and illustrate for future research.