Corporate Social Responsibility And Industrial Upgrading In Global Production Network

Since 1970s, the global economic structure has undergone enormous changes. With the leading of transnational corporations, the economic organizations form global production networks based on global value chains in the worldwide. In this context, the developing countries undertake a large number of processing and manufacturing sectors at the advantage of low labor costs and get unprecedented opportunities for development, but overall the division is at the disadvantaged status. At the "order transfering "strategy of the transnational corporations, the firms of development countries fall into "race to bottom" in order to get the orders, and the result is the the global deterioration of labor conditions of labor-intensive industries.2010 the multi-hop event in the world famous enterprises-Foxconn is the tragic and focus expression of the plight of enterprise transformation and upgrading and corporate social responsibility.Take the typical labor-intensive industries - textile and garment industry for example, with China's accession to the WTO and the abolishment of the distorted world textile trade system - Multi-Fiber Arrangement (MFA), the China's textile and garment industry of scale advantages play fully, and China's production capacities are released effectively, and play an imporant role in the GPN as the first production and export country in the world. Under the framework of GPN, faced the powerful bargain of the buyers of Europe and the United States and other developed countries and the strict corporate social responsibility standards, coupled with the influment of export tax rebate adjustment, RMB appreciation, the cost of raw materials and labor and operating costs increased and other factors, China's textile and garment industry is facing unprecedented pressure.As a "world factory", China's manufacturing industry is facing economic upgrading and social and upgrading dilemma. Economic upgrading and social and upgrading are two parallel paths of GPN framework, more researchs pay attention to the economic upgrading of developing countries based on the GVC framework, but pay a little attention to social upgrading on the network perspective. The lack of research in this area becomes a foothold for this article. In the context of GPN, the research applies the new analytical framework beyond the current parallel paths of social upgading and economical upgrading, and investigates the relationship between corporate social responsibility (CSR) and the industrial upgrading. The article uses the structural equation model (SEM) approach and takes an empirical test based on the survey of Chinese textile and garment industry. This is also the theoretical innovation of this article.Accoding to the CSP (Context-Strategy-Performance) paradigm, the paper discusses the economic performance and social performance of different CSR strategy and showes the relationship between CSR and industrial upgrading. Based the former research, the paper discusses the essential characteristics and factors of GPN, and the conduction mechanism of CSR in the GPN context, the evolution of the content of industrial upgrading at the different perspective, from global commodity chain(GCC) to global value chain(GVC) and then to GPN. Economic and social are the double features of GPN, so industrial upgrading includes economic upgrading and social upgrading. In the framework of GPN, the corporate power and value represent economic upgrading, and decent work represents social upgrading. The paper chooses CSR, corporate power and corporate value (reflecting the economic upgrade) decent work (reflecting the social upgrading) as four variables to constructe the structural equation model (SEM), and makes positive correlation hypothesis between CSR and corporate power, CSR and corporate value, CSR and decent work. The paper collectes relevant data through a questionnaire survey of China's textile and garment industry, and uses AMOS software for data analysis to test and modify the model test, then draws appropriate conclusions; By cluster analysis, the samples are divided into two categories(active and inactive) to compare the different types of businesses in behavior, to provide further support for the conclusion; The thesis takes case studies of "Shenzhou" and "Younger" to analyse the upgrading path of China's textile and garment enterprises in GPN. At last the paper put forward the sugestions to promote social upgrading and economic upgrading of China's manufacturing industry.In the GPN context the paper showes the positive relationship between CSR and social and economic upgrading based on the theoretical and empirical research on the relationship of CSR and industrial upgrading. The major findings are as follows:(1) GPN, as a new organization, campared with firm and market, has diferrent essential characteriics. The exchange within the network is based on the interactive relationship, the relationship of the members within the network is maintained by prestige, and the relationship of the members is win-win cooperation. Campared to the perspective of GCC and GVC, the GPN framework pay more attention to the social. The production and exchange of specific products and services is the process of value creation, enhancement and capture, reflecting the economy; the distribution of power within the network and the relationship of the members which are determined by the organizational structure based on value creation and distribution is the base of GPN, reflecting the social.(2) The prevalence of the concept of CSR is inseparable from the development of economic globalization. Exchange within the GPN is more social, and dependents more on relationships, mutual interests and reputation. CSR has an impact on reputation, to promote the stability of the relationship between the members and the development of the organization. The social institutions of the GPN regular the conduct of the local suppliers through a variety of constraint and transmission mechanisms, CSR become a favorable and even necessary condition for local suppliers inserting into GPN.(3) In the framework of GPN, the research of upgrading on the developing countries are in two areas:economic upgrading and social upgrading. The economic upgrading and social upgrading are interactive and interfluence in the GPN. Economic upgrading promotes social upgrading, and social upgrading counteracts economic upgrading.(4) The empirical research based on the China's textile and garment industry shows that CSR has positive relationship with economic upgrading and social upgrading. Structural equation model analysis shows that CSR has positive relationship with coroprate power, corporate value and decent work, and the correlation coefficients are greater successively, which shows that the force of CSR in corporate power is relatively weak, and in decent work is stronger.(5) The case studies, Shenzhou and Younger, as two representative case, further confirm the results of theoretical and empirical research. Shenzhou, as a success of OEM model, achieves economic upgrading through relationship rent and organization rent, and Younger, as a model of wide range of innovative and coordinated brand strategy, fulfills economic upgrading through brand rent. China's garment industry can upgrade path along two parallel loads.