Emerging Economy Supplier Firms Upgrading in the Global Supply Chains: The Role of Governance, Capabilities and the Number of Export Customers

This study builds on the social exchange theory to explain the influences of governance on suppliers’ capabilities and upgrading in global value chain. The capabilities perspective is of particular interest to emerging economy supplier firms, who may not possess strategically important and valuable resources and capabilities to internationalize their businesses independently. Using a sample of 321 Bangladeshi apparel supplier firms this research has identified that: (i) relational governance significantly influences suppliers’ learning and relationship capabilities; (ii) relational governance has no significant direct effect on suppliers’ upgrading; (iii) suppliers’ learning and relationship capabilities tend to fully mediate the association between relational governance and upgrading; and (iv) the number of export customers has significant moderation effects on relational governance-capabilities but a non-significant effect on relational governance-upgrading relationships. The implications of the results for theory and practice are discussed and further research opportunities are described.