Cut-roses global value chain governance : Ecuadorian exports to The Netherlands

The insertion of firms from developing countries into global value chains is usually associated with economic growth as reaching bigger markets and consumers with higher purchasing power brings about higher profits. However, in many cases, the global value chains where developing countries are inserted in, are controlled by developed countries’ ‘lead firms’ who specialise in the higher stages of the chain. Therefore, this perspective is contested due to the profit gap between both actors and the power that the global buyers can have over the global value chain. According to the literature, upgrading, is considered as the path to development and economic growth and the chain’s governance significantly influences the upgrading opportunities. In some cases, the organisation of the chain allows a progressive and complete upgrading, whereas in other instances functional upgrading is hindered by the lead firms. The present research paper involves an analysis of the global value chain of Ecuadorian cut roses exported to the Netherlands. It aims to evaluate how does the value chain governance of this chain affect Ecuadorian Exporter’s upgrading. Hence it involves an analysis of the actors in the chain as well as the benefits and motives for suppliers of developing countries to continue being part of it. Data is collected by interviewing four big Dutch global buyers and five big Ecuadorian exporters. The paper examines the interviews outcomes of both actors and a compilation of official publications, finding out that the type of governance in this global value chain is a combination of relational and captive, but the second is more influential regarding hindering functional upgrading on the exporters. The research aims to contribute to the global value chain literature by focusing on big Ecuadorian exporters’ possibilities for upgrading, different from previous studies where the focus has been only on small and medium enterprises.