Upgrading AND power relations in global value chains : Case study of an offshoring service provider in the software industry

Purpose: The purpose of this research is to understand how power relations in GVCs shape the upgrading of offshoring service providers. More specifically, the paper addresses two questions 1) How power asymmetry in GVC shapes the upgrading prospects for offshoring service providers (OSP) 2) How offshoring service providers manage the power asymmetry in GVC and upgrade to a more favourable position?

Design/Approach: The context for this study is the software value chain. Drawing upon relational economic geography and global value chain literature, we build an analytical framework based on three conceptual building blocks: client power, upgrading, and upgrading practices. Based on the analytical framework and in-depth interviews, we design a case study of one OSP in the Pakistani software industry refer to as OSP#A

Findings: The findings reveal that GVCs exercise a high level of power on OSPs. This power is exercised through enforcing certain conditions to participate and coordinate in GVCs. However, it is found that OSP#A is not passive recipient of these demands, instead, it actively manages the power asymmetry through building practices to adapt and collaborate in GVCs and attain relational proximity.

Originality: The paper highlights the significance of upgrading practices and conceptualising upgrading as a process of improving relational power in GVCs by attaining relational proximity.