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Law and the Operation of Global Value Chains: Challenges at the Intersection of Systematisation and Flexibility

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Global Value Chains, Flexibility and Sustainability

Part of the book series: Flexible Systems Management ((FLEXSYS))

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Abstract

Flexibility makes it possible for firms to be nimble, responsive and resilient. At the same time, a range of economic, operational and social factors are steadily causing supply chains —in the form of global value chains—to become more systemically integrated. Flexibility and chain integration , however, are in many ways mutually exclusive. This chapter explores some of the results of this tension. In particular, the chapter shows how the chain integration processes in play today are having potentially unforeseen consequences on the ability of firms to enter into flexible relationships. Historically, through the use of contract relationships rather than vertical integration , firms were simultaneously able to increase flexibility and limit potential liability caused by their suppliers. But because of ongoing global value chain integration , this protection from liability is currently eroding: lead firms are becoming liable for the conduct of suppliers, even when they enter into arm’s-length contract relationships with those suppliers. The result is that even as the law of contracts continues to permit flexibility in chain operation, the law more broadly is coming to infuse that operational flexibility with liability for conduct by other actors in the chain—actors who are connected by contract alone, or even by strings of contracts. The chapter further discusses the factors that are driving this shift towards greater liability as well as some of the key practical consequences.

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Author information

Authors and Affiliations

  1. University of Newcastle, Newcastle, Australia

    Kevin Sobel-Read & Madeleine MacKenzie

Authors
  1. Kevin Sobel-Read
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  2. Madeleine MacKenzie
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Correspondence to Kevin Sobel-Read .

Editor information

Editors and Affiliations

  1. University of Newcastle, Newcastle, New South Wales, Australia

    Julia Connell

  2. University of Technology Sydney, Sydney, New South Wales, Australia

    Renu Agarwal

  3. Department of Management Studies, Indian Institute of Technology Delhi, New Delhi, India

    Sushil

  4. Department of Management Studies, Indian Institute of Technology Delhi, New Delhi, India

    Sanjay Dhir

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Sobel-Read, K., MacKenzie, M. (2018). Law and the Operation of Global Value Chains: Challenges at the Intersection of Systematisation and Flexibility. In: Connell, J., Agarwal, R., Sushil, Dhir, S. (eds) Global Value Chains, Flexibility and Sustainability. Flexible Systems Management. Springer, Singapore. https://doi.org/10.1007/978-981-10-8929-9_5

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