Sharing the Shared Value: A Transaction

Cost Perspective on Strategic CSR Policies

in Global Value Chains

Aurélien Acquier, Bertrand Valiorgue &

Thibault Daudigeos

Journal of Business Ethics

ISSN 0167-4544

J Bus Ethics
DOI 10.1007/s10551-015-2820-0

1 23
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 Author's personal copy
J Bus Ethics
DOI 10.1007/s10551-015-2820-0

Sharing the Shared Value: A Transaction Cost Perspective

on Strategic CSR Policies in Global Value Chains
Aurélien Acquier1 • Bertrand Valiorgue2 • Thibault Daudigeos3

Received: 4 February 2015 / Accepted: 12 August 2015

 Springer Science+Business Media Dordrecht 2015

Abstract This paper explores the conditions favouring or to bypass the numerous difficulties involved in the imple-
inhibiting the implementation of strategic corporate social mentation of strategic CSR policies.
responsibility (CSR) policies in the context of global value
chains (GVCs). Using transaction cost theory (TCT), we
Keywords Global value chains
Strategic corporate
specify the economic and behavioural issues raised by
social responsibility
Transaction cost theory
Asset
strategic CSR policies. We show that the existence of
specificity
Governance structure
market rewards for such policies does not constitute a
solution per se, but tends to increase the difficulties that
Abbreviations
value chain members face. Bringing TCT into the analysis
CSR Corporate social responsibility
of the diffusion of strategic CSR policies in GVCs helps us
GVC Global value chain
to make different contributions. We first theoretically
MSI Multi-stakeholder initiative
identify some limiting conditions of strategic CSR policies
NGO Non-governmental Organisation
in GVCs. We also contribute to developing a more robust
TCT Transaction cost theory
theoretical perspective for CSR in GVC research, which
remains underdeveloped and mostly driven by empirical
case studies. Finally, we shed light on new research
questions and topics that could guide major theoretical and
empirical investigations in the capacity of GVCs members Introduction

A major issue for multinational corporations adopting

corporate social responsibility (CSR) policies is to find a
We sincerely thank the Editor Adam Lindgreen and the two balance between responsible practices and competitive
anonymous reviewers for their insightful reviews and comments initiatives to maintain a robust position in challenging
which have helped us to improve the paper. business environments (Lund-Thomsen and Lindgreen
2013). This topic has received special attention within the
& Bertrand Valiorgue
bertrand.valiorgue@udamail.fr strategic CSR corpus (McWilliams and Siegel 2001;
McWilliams et al. 2006; Porter and Kramer 2006, 2011),
Aurélien Acquier
aacquier@escpeurope.eu exhorting firms to balance offer and demand in the field of
CSR (Orlitzky et al. 2011; Crane et al. 2014). From this
Thibault Daudigeos
thibault.daudigeos@grenoble-em.com research perspective, firms adopt CSR policies to the extent
that they find customers or shareholders ready to offer a
1
ESCP Europe, Paris, France market premium for such policies (Burke and Logsdon
2
CRCGM, Ecole Universitaire de Management, 1996; McWilliams et al. 2006; Vogel 2006). These policies
Clermont-Ferrand, France are considered as strategic issues for creating ‘shared
3
Grenoble Ecole de Management, Grenoble, France value’ between firms and society, by setting up

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A. Acquier et al.

policies and operating practices that enhance the assumptions of strategic CSR and the shared-value con-
competitiveness of a company while simultaneously cept, which rest on natural cooperation among stakeholders
advancing the economic and social conditions in the and the firm, are theoretically inconsistent with the other
communities in which it operates (Porter and Kramer dominant approach to strategy, which views the relation-
2011, p. 6). ship between the firm and its stakeholders as opportunistic
and conflictual (Levy 2008; Bair and Palpacuer 2012;
Despite its fast academic growth, the strategic CSR
Soundararajan and Brown 2014).
corpus tends to ignore a key dimension in the emergence of
In this article, we wish to contribute to this theoretical
a balance between a CSR offer and demand: it does not
debate. We agree with Crane et al. (2014) that the strategic
take into account the managerial specificity of situations
CSR corpus needs theoretical elaboration and coherence in the
where introducing CSR policies involves not a single
way it approaches the implementation of CSR policies in the
company but a larger collection of firms involved in global
context of GVCs. To achieve this, we rely on the analytical
value chains (GVCs) (Maloni and Brown 2006; Scherer
apparatus developed by transaction cost theory (TCT), which
and Palazzo 2007, 2008, 2011; Andersen and Skjoett-
explores the conditions for the emergence of new markets and
Larsen 2009). This shortcoming is problematic as a rising
intra- and inter-firm systems of cooperation (Williamson
number of CSR issues and policies unfold in such organ-
1991; King 2007; Williamson 2008). By bringing TCT into
isational contexts. In the 1990s, Nike faced a public
the analysis of the diffusion of CSR policies in GVCs, we
backlash over the working conditions in foreign contractor
make various contributions. First, we increase the theoretical
companies in Indonesia, Vietnam and Pakistan. It had to
coherence of the strategic CSR stream and thus address one of
manage the implementation of CSR policies involving
its main shortcomings. Second, we contribute to developing a
legally independent firms located in foreign countries
robust theoretical perspective for CSR in GVC research,
(Arnold and Bowie 2003; Locke et al. 2007; Boje and Khan
which remains underdeveloped and so far dominated by
2009). Likewise, the Rana Plaza disaster in Bangladesh,
empirical case studies (Wahl and Bull 2013). Third, we pro-
which killed over 1200 employees in 2013, occurred in the
vide a better explanation of the specific organisational chal-
context of a complex organisational arrangement involving
lenges raised by the implementation of CSR policies in GVCs,
multinational brands from the fashion industry working
and we propose an assessment of the regulatory potential (and
with local contractors and subcontractors (Lund-Thomsen
limits) of strategic CSR. In particular, the existence of trans-
and Lindgreen 2013; Perry et al. 2014). In this context,
action and cooperation costs explains the difficulties in
implementing CSR policies implies various forms of
implementing CSR initiatives, and shows that strategic CSR
cooperation and coordination with a large collection of
does not constitute a magic answer to the private and auton-
participants, suppliers, contractors, distributors, clients,
omous regulation of GVCs (King 2007; Lund-Thomsen and
strategic allies and stakeholders (Gereffi et al. 2005; Mal-
Lindgreen 2013).
oni and Brown 2006; Soundararajan and Brown 2014). In
The rest of the paper is structured as follows. ‘‘Theo-
such organisational and institutional contexts, the central
retical background’’ section reviews the literature on
issue is no longer to know how a vertically integrated
strategic CSR, GVCs and TCT. ‘‘Implementing strategic
corporation can gain a competitive advantage via strategic
CSR policies in GVCs: economic and behavioural issues’’
CSR policies, but to know how a collection of legally
section explores the economic and behavioural issues
independent business organisations located in different
underlying the implementation of CSR policies in GVCs.
parts of the world can collectively implement and give
Section ‘‘Asset specificity and GVCs governance structures
value to a series of scattered socially responsible practices
as moderating variables’’ identifies two mediating variables
(Spence and Rinaldi 2012; Soundararajan and Brown
that affect these issues and increase the difficulties of
2014).
implementing CSR policies in GVCs. In ‘‘Contributions
Among critics of strategic CSR, several authors recently
and research perspectives’’ section, we develop the main
contested the theoretical value of the strategic CSR
implications of this work and present research perspectives,
research stream for being overly optimistic about the
before drawing conclusions in ‘‘Conclusion’’ section.
ability of GVCs to self-regulate via the implementation of
CSR policies (Palpacuer 2008; Lund-Thomsen and Lind-
green 2013; Crane et al. 2014; Soundararajan and Brown Theoretical Background
2014). They argue that strategic CSR policies are not
naturally endorsed by companies along a GVC, because Strategic CSR
political complexities, conflicts and contradictions among
chain members and numerous stakeholders are not easily The field of strategic CSR encompasses various perspec-
bypassed (Vogel 2006). For these authors, the behavioural tives exploring the economic and strategic—rather than

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Sharing the Shared Value: A Transaction Cost Perspective on Strategic CSR Policies in Global…
ethical—drivers for CSR. As such, it keeps its distance
both from normative perspectives, which focus on the
ethical dimension of CSR (Donaldson and Preston 1995),
and from institutional perspectives, which consider how
political, cultural and economic institutions frame firms’
CSR initiatives and policies (Campbell 2007; Matten and
Moon 2008). Strategic CSR investigates how market and
competitive logics shape CSR behaviours, and how firms
can gain competitive advantage by combining economic
and social value creation (Grayson and Hodges 2004;
Vogel 2006). From this perspective,
managers conduct a cost/benefit analysis to determine
the level of resources to devote to CSR activities/
attributes. […] They assess the market demand for
CSR and also evaluate the cost of satisfying this
demand. […] CSR can be an integral element of a
firm’s business and corporate-level differentiation
strategies (McWilliams et al. 2006, p. 6).
Translated into the language of business, this means
transforming social problems into business opportu-
nities, thereby contributing to the solving of critical
societal challenges while simultaneously driving
greater profitability (Crane et al. 2014, p. 130).
Research related to strategic CSR has explored the
relationship between CSR and financial performance
(Margolis and Walsh 2003; Arouri and Pijourlet 2015) and
opened the black box of this relationship by exploring the
business case of CSR (Daudigeos and Valiorgue 2011).
Authors try to specify which kind of competitive gains (in
terms of reputational gains, market innovations, cost
reductions, increased employee motivation. etc.) can be
obtained from CSR initiatives (Burke and Logsdon 1996;
Husted and Allen 2007). The vision that CSR should be
better articulated with competitive strategy has also led to
various conceptual and empirical developments. Concepts
such as the ‘triple bottom line’ (Elkington 1994) or ‘cre-
ating shared value’ (Porter and Kramer 2006, 2011) have
been put forth not only to raise managerial awareness of
social and environmental issues, but also to practically
explore business models that simultaneously drive eco-
nomic, social and environmental value creation (Daudigeos
and Valiorgue 2010). Following this call, research on
social business (Yunus et al. 2010) or markets at the bottom
of the pyramid (Prahalad 2009) explores business models
that combine social and economic value creation in
developing economies (Nidumolu et al. 2009). Other works
have explored strategic CSR initiatives under the lens of
‘mainstream’ strategy theories, such as the Resource-Based
View (Aragon-Correa and Sharma 2003), dynamic capa-
bilities (Russo and Fouts 1997; Marcus and Anderson
2006), stakeholder theory (Harrison and Freeman 1999)
and economic perspectives and TCT (McWilliams and
Siegel 2001; McWilliams et al. 2006; King 2007).
These perspectives have implicitly taken the large and
vertically integrated firm as their object of analysis, and
thus have either ignored or bypassed a major transfor-
mation in contemporary business landscapes: the out-
sourcing and fragmentation of production processes
(Kaplinsky 2004; Acquier et al. 2011). This fragmenta-
tion of production processes and dispersion at a global
scale of independent business partners increases the
complexity of CSR policies (Freeman and Liedtka 1997).
Indeed, implementing a strategic CSR policy does not
constitute a simple trade-off between the costs and
benefits of such policy; it engages many different actors
and stakeholders located in different institutional contexts
who must find and implement new coordination patterns.
GVCs increase the complexity of setting-up global and
efficient CSR policies, as CSR issues expand beyond the
traditional limits of ownership and control (Vurro et al.
2009).
While the inclination of strategic CSR to find arguments
in favour of CSR is understandable, we contend that the
omission of outsourcing and GVCs as a central contem-
porary organisational reality constitutes a major limitation
of the present literature, which severely limits its
explanatory power. Accordingly, strategic CSR needs to
better integrate the main difficulties that actors engaged in
a GVC may encounter when they want to implement and
give value to CSR policies (Tsutsui and Lim 2015).
GVCs and CSR
In contrast to the literature on strategic CSR, that on GVCs
has explored how international trade and the global divi-
sion of labour have led to an increased complexification
and interconnectedness of production processes. The con-
cept of GVCs refers to the integration of internationally
fragmented activities, where value creation is organised
among legally independent businesses, based in different
countries and linked to one another by more or less
recurrent supply, production or distributed commercial
transactions (Gereffi et al. 2005). Some authors prefer the
term ‘Global Production Network’, believing it better
describes the complex relational networks (not simply
linear chain) composed of business partners and secondary
stakeholders (Ernst and Ravenhill 1999; Dicken et al.
2001). From this perspective, GVCs are seen as politically
contested organisational fields, driven by major power
asymmetries. Using sociological and critical perspectives,
this research perspective shows how dominant actors in
GVCs produce and reproduce their dominance through
market, political and ideological influences (Levy 2008;
Bair and Palpacuer 2012).
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Instead of focusing on a single organisation, research on
GVCs takes industry and international value chains (in-
stead of single companies) as the primary units of analysis.
Within this stream, a significant amount of work has
focused on the economic structure and governance mech-
anisms of GVCs. Based on TCT, Gereffi and colleagues
have identified five main types of GVCs and governance
mechanisms, depending on the presence, location and role
of lead firms among the different business partners (Gereffi
1999; Gereffi et al. 2005).
A central macro-economic debate within the literature
concerns ‘economic and social upgrading processes’, i.e.
the ways in which local corporations and developing
countries capture economic value, and stimulate economic
and social development, through their engagement in
GVCs (Gereffi 2005; Gereffi and Lee 2014). While the
traditional literature on GVCs has often implicitly assumed
that economic involvement in GVCs would naturally lead
to economic and social upgrading, there is a growing
recognition that the rights of workers and the quality of
their employment are not natural by-products of belonging
to GVCs (Barrientos et al. 2011; Barrientos 2013). As a
result, researchers have begun to pay attention to CSR as
one potential factor in such upgrading processes (Tsutsui
and Lim 2015). This sub-field is dominated by practice-
oriented research (Wahl and Bull 2013), revealing the
limits of CSR initiatives on GVCs by pointing out the
inherent tensions between lead firms and the other eco-
nomic actors of the chain, from both compliance and
cooperation perspectives (Lund-Thomsen and Lindgreen
2013). According to GVC scholars, there is a need to better
characterise such difficulties and to analyse how chain
members bypass them (Knudsen 2013). GVCs scholars
must achieve a greater theoretical integration in order to
better assess the potential of CSR initiatives as a regulatory
tool (Wahl and Bull 2013).
TCT
TCT has played a central role in understanding the delin-
eation of firm and market boundaries. If we view markets
and hierarchies as alternative coordination modes, one of
the main focuses of TCT is to understand on what basis
managers decide to internalise some business operations
and to outsource others to subcontractors and business
partners (Coase 1937, 1992; Williamson and Winter 1993).
In explaining this, TCT throws light on why business
partners rely on arm’s-length market relationships to pro-
duce a product or service in some cases, and on adminis-
trative and hierarchical mechanisms in others. Based on
assumptions of imperfect information, and the limited
rationality, uncertainty and opportunistic behaviours of
economic actors, TCT argues that any economic activity
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A. Acquier et al.
generates transaction costs and coordination problems
between business partners (Williamson 1996). Governance
schemes are thus required to mitigate the risks of fraud and
deception among partners (Williamson 1991).
Three main categories of transaction costs are generally
proposed by TCT: the cost of finding business partners, the
cost of negotiating agreements and the cost of monitoring
and enforcing compliance with agreements (Shelanski and
Klein 1995). In some cases, transaction costs are too high
and the use of market mechanisms is prohibited. This sit-
uation can be observed in situations where there are fre-
quent transactions and there is greater asset specificity.
Specific assets are non-redeployable physical and human
investments that are specialised and unique to a task. Four
categories are generally identified: site specificity, physical
asset specificity, human asset specificity and dedicated
assets. These assets have a value only within the relation-
ship between contracting parties, and prove hard to rede-
ploy and value for other purposes or with other commercial
parties. Asset specificity involves an increased dependence
among business partners and increases the risk of ‘hold-up’
(Holmström and Roberts 1998; Masten and Saussier 2000).
Hold-up is a situation in which the parties obtain mutual
benefits from cooperating, but all have an interest in min-
imising their contribution and in maximising their own
profit to their partners’ detriment—or in taking advantage
of an investment so as to maximise their bargaining power
over that of their partners. The phenomenon is due to the
fact that the parties undertaking to collaborate remain
legally independent—i.e. owners of their assets—and
constitute autonomous decision-making centres, the beha-
viour of which can change over time according to each
actor’s interest. In this context, transaction costs dramati-
cally rise with asset specificity, because partners must
engage ‘‘special efforts to design an exchange that has
good continuity properties’’ (Williamson 1981, p. 555).
Asset specificity, opportunism and transaction costs can
be softened with specific governance structures such as
joint ventures, long-term contractual relationships, etc.
(Ménard 1996; Menard 2000). From this perspective,
GVCs can be described as examples of hybrid governance
structures, between ‘pure’ market and ‘pure’ hierarchy
(Williamson 1991; Ménard 1996). Using TCT, Gereffi
et al. (2005) have identified five main governance mecha-
nisms to treat asset specificity, opportunism and transaction
costs in the context of global inter-connected production
processes. These governance structures permit GVC
members to develop mutually beneficial exchanges and
efficient inter-firm systems of coordination on a global
scale.
Recently, some authors have extended the scope of TCT
beyond economic transactions, to explore the specific
cooperation and transactional problems raised by business
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Sharing the Shared Value: A Transaction Cost Perspective on Strategic CSR Policies in Global…
and society issues. For example, King (2007) analyses
cooperation between firms and their non-commercial
stakeholders (i.e. Non-Governmental Organisations
(NGOs), International Organisations, local environmental
associations, etc.) through the lens of transaction costs.
King considers that firms and stakeholders encounter dif-
ficulties in cooperating because there are ‘cooperation
costs’ that have to be overcome. These costs are composed
of three parts: the cost of identifying relevant social and
environmental issues and related stakeholders; the cost of
negotiating agreement with these stakeholders and the cost
of monitoring and enforcing compliance with agreements.
In this way, King follows the position of Coase, who argues
that firms and stakeholders can obtain mutually beneficial
exchange through direct and private negotiations between
these actors, but that costs get in the way and actors have to
deal with them.
Implementing Strategic CSR Policies in GVCs:
Economic and Behavioural Issues
In this section, we integrate the inputs from the TCT and
the GVC literature to identify the difficulties associated
with implementing strategic CSR policies in GVCs. We
classify these difficulties into two distinct categories: eco-
nomic (‘‘Economic issues’’ section) and behavioural issues
(‘‘Behavioural threats’’ section). Figure 1 offers a graphic
representation of the argument.
Economic Issues
Implementing CSR policies in GVCs involves many
changes and transformations, which inevitably generate
costs. Three types of costs can be pinpointed: (i) organisa-
tional costs; (ii) transaction costs with business partners
and (iii) cooperation costs with secondary stakeholders.
Organisational Costs: Transformations of Productive
Processes
When firms involved in a GVC want to implement CSR
policies, the first costs originate in the investments that
these firms must make in order to conceive and realise
operational changes. In a recent study, Gereffi and Lee
documented the different changes that chain members must
make in order to integrate local stakeholder needs and
implement CSR policies along a GVC (Gereffi 2005;
Gereffi and Lee 2014). They identified four major areas:
product transformations (moving into more sophisticated
and responsible product lines); productive process
improvements (reorganising the production system and
introducing more responsible technologies); creation or
abandonment of certain functions (increasing the skills and
competences of chain members) and chain upgrading
(changing the overall pattern of activities and institutions
of the industry). All these changes involved in the imple-
mentation of a CSR policy inevitably incur costs that GVC
members have to take on board.
Proposition 1 Implementing CSR policies in GVCs gen-
erates organisational costs for chain members.
Transaction Costs: Redesigning Contractual Arrangements
with Business Partners
Developing and implementing CSR policies generates
transaction costs. Indeed, implementing CSR policies leads
to an evolution and transformation of existing contractual
arrangements between parties. GVC members need to
redefine the division of labour and responsibilities among
existing chain members. For a global brand in the clothing
industry, introducing criteria for workplace safety in third-
world countries implies rewriting existing contracts to
allocate responsibility to clients and suppliers, and
designing monitoring mechanisms accordingly. In other
cases, implementing CSR policies will also require existing
contracts to be severed, switching to new suppliers and
introducing new actors along the GVC—external certifi-
cation bodies, auditors, partners for developing new tech-
nologies, new suppliers or distributors, etc. (Reinecke et al.
2012). Incorporating these new actors generates transaction
costs, as GVC members have to identify trustworthy and
competent partners, negotiate contracts and enforce com-
pliance mechanisms. Recent work has shed some light on
this phenomenon in the specific case of coffee GVCs. They
show how the requirements of Western firms in terms of
technical transfer, certification and product upgrading
increase the transaction costs in the value chain, and how
multinational coffee traders tend to pass such costs onto the
farmers further along the chain (Neilson 2008, Wahl and
Bull 2013). Implementing a CSR policy requires new
contracts to be drafted and/or old contracts made more
complicated, with the modifications generating many
‘transaction costs’ that actors along the value chain have to
take on board.
Proposition 2 Implementing CSR policies in GVCs gen-
erates transaction costs among existing and new chain
members.
Cooperation Costs: Identifying and Reaching Agreement
with Secondary Stakeholders
The implementation of strategic CSR policies in GVCs
requires not only the development of new sets of contracts
and relationships with economic partners, but also
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Fig. 1 Impact of asset
specificity and GVC structure
on economic and behavioural
issues
Strategic CSR
in GVC
coordination with secondary and non-business stakeholders
(Clarkson 1995). These stakeholders may include diverse
actors operating at various levels (e.g. international
organisations, national governments, NGOs, trade unions,
advocacy groups, local business associations, community
organisations and religious groups (Lund-Thomsen and
Lindgreen 2013). They do not entertain formal contractual
links with the company; interacting and coordinating with
them is distinctively complex, as the relationships between
the firm and secondary stakeholders cannot be mediated by
either commercial contracts or administrative mechanisms
(Eesley and Lenox 2006). Chain members must develop
horizontal forms of collaboration with such stakeholders.
Controlling and predicting behaviours is also made difficult
by the plurality and heterogeneity of the stakeholders, and
the fact that the parties do not directly derive profit from
the social issue, which makes their behaviour atypical
(Lund-Thomsen and Nadvi 2010; Rivera-Santos and Rufı́n
2010). Beyond the inherent political complexity of navi-
gating through such heterogeneous networks of stake-
holders, GVC members may be faced with contradictory
values and expectations on social issues, such as child
labour (Ruwanpura and Roncolato 2006; Khan et al. 2007;
Neilson and Pritchard 2011). Establishing cooperation with
secondary stakeholders presupposes selecting a relevant
social issue from among all the possible problems, recog-
nising the stakeholders concerned, understanding what they
expect and appraising their power as well as the urgency
and legitimacy of the claims expressed (Mitchell et al.
1997; de Bakker and den Hond 2008).
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A. Acquier et al.
Asset
specificity
P5
P1 – Organisational costs
Economic costs
P2 – Transaction costs
P3 – Cooperation costs
Behavioural threats P4 – investment
sharing and profit
appropriation
P6
GVC structure
As for the transactions established between firms in a
GVC, cooperation with secondary stakeholders is far from
being a cost-free and spontaneous process (King 2007).
Using TCT phraseology, cooperation costs with secondary
stakeholders refer to the costs of identifying relevant and
legitimate social issues, and the associated stakeholders.
Subsequent to this identification, it is necessary to define a
response designed to meet the stakeholders’ expectations—
which correspond to the costs of negotiating agreement. A
conclusion needs eventually to be reached, implemented
and monitored; this is the cost of monitoring and enforcing
compliance with agreements (King 2007). Working and
cooperating with secondary stakeholders inevitably gener-
ates cooperation costs, and this category of costs is gen-
erally obscured, but turns out to be central in the
implementation of any CSR policies in GVCs.
Proposition 3 Implementing CSR policies in GVCs gen-
erates cooperation costs between chain members and
secondary stakeholders.
Behavioural Threats
For strategic CSR scholars, market premiums can cover the
organisational, transaction and cooperation costs of
strategic CSR, and push firms to implement CSR policies.
In the specific context of GVCs, these market premiums for
CSR policies do not constitute a sufficient condition, due to
opportunistic behaviours. These behavioural issues arise
from the threats of conflicts related to how investments and
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Sharing the Shared Value: A Transaction Cost Perspective on Strategic CSR Policies in Global…
profits generated by the CSR policy are shared among
chain members. The GVC literature provides empirical
evidence of situations where specific actors are expected to
cover a disproportionate amount of the additional costs
incurred in implementing CSR initiatives without receiving
a similar share of the profit generated. For example, Barri-
entos (2013) describes situations where international buyers
from Western countries impose labour codes on their sup-
pliers without providing any support for compliance costs,
while squeezing their prices. Likewise, Ruwampara and
Wrigley (2011) have shown that Sri Lankan clothing man-
ufacturers that display high commitment to social and
environmental policies do not enjoy any economic rewards
or clear economic incentives from their clients. In such sit-
uations, how should the sharing of investments and the
market premiums for CSR policies be organised, when dif-
ferent and independent business organisations are involved?
Members of GVCs come up against the classic issue of
‘hold-up’ (Holmström and Roberts 1998; Masten and
Saussier 2000), where certain firms along the value chain
benefit more than others from the economic value created
by the strategic CSR policy. The initiative may collectively
generate economic value, but chain members have to share
this economic value fairly. If one actor captures a dispro-
portionate amount of the value collectively created, the
cooperation among partners will be broken, and other chain
members are likely to give up on the CSR initiative or to
engage in cheating, fraud or deception. Such a situation is
empirically met in GVCs (Lund-Thomsen and Lindgreen
2013), with empirical studies uncovering auditing fraud by
local Chinese suppliers (Wilshaw et al. 2013; Egels-Zan-
dén 2014) and within client organisations themselves
(Lund-Thomsen et al. 2012).
Sharing the investments required to implement a
strategic CSR policy and the value collectively created by
the enforcement of such a policy are two central issues in
GVCs. If GVC members fail to tackle these behavioural
issues, no strategic CSR initiatives will emerge.
Proposition 4 Implementing CSR policies in GVCs tends
to generate behavioural threats related to a dispropor-
tionate distribution of investment and profit among chain
members.
Implementing CSR policies in the context of GVCs
generates many costs that chain members have to take on
board. The existence of a premium paid by customers and/
or shareholders for CSR policies does not constitute a
solution per se; on the contrary, it is the source of beha-
vioural threats that can slow down or even block the
implementation of CSR policies. Table 1 synthesises the
various issues involved in the implementation of CSR
policies in GVCs.
Asset Specificity and GVCs Governance Structures
as Moderating Variables
Implementing CSR policies in GVCs can be called into
question by the existence of costs generated by such ini-
tiatives, as well as by the threats of conflicts of interests
and opportunistic behaviours between chain members.
Mobilising the TCT theoretical apparatus, we show in the
following paragraphs that economic costs and behavioural
threats are moderated by two elements: the specificity of
assets that chain members may have to develop (‘‘Impact
of asset specificity on economic issues’’ section) and GVC
governance structures (‘‘Impact of GVC structures on
behavioural threats’’ section).
Impact of Asset Specificity on Economic Issues
Implementing CSR policies entails initiatives and invest-
ments by chain members to adapt their production pro-
cesses, re-coordinate themselves and reach agreements
with secondary stakeholders. Formulated in TCT vocabu-
lary, investments needed for implementing CSR policies
result in the creation of more or less specific assets (Wil-
liamson 1991). Such CSR-specific assets may be physical
(as in the case of material for evaluating pollution), human
(via, for instance, hiring sustainable-development man-
agers) or organisational and intangible (through creating
certificates, processes and behavioural standards). They
may be particular to a single firm or to several firms in the
value chain, with the firms involved sharing their know-
how and resources so as to produce and coordinate them-
selves in a socially responsible way.
When the efforts of GVC members to implement a CSR
policy necessitate the involvement of specific assets, the
transaction and cooperation costs associated with the pol-
icy will dramatically increase. Indeed, specific investments
must be protected and chain members must have contrac-
tual guarantees that those investments will lead to eco-
nomic compensation. Chain members need to be confident
that their business partners along the chain will provide
them with an ongoing stream of payments for the specific
investments made. However, once a GVC member has
made investments, other business partners will have little
incentive to provide any such payments. In this case, chain
members have to protect the specific investments for which
they are responsible, through contractual arrangements that
will guarantee they will receive payments. This tends to
increase transaction costs—especially ex-post transaction
costs between chain members, who are often located in
different institutional and legal contexts (Young 2006;
Scherer and Palazzo 2011). In such contexts, the costs of
monitoring and eventually contesting contractual
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A. Acquier et al.

Table 1 Nature and range of issues associated with the implementation of CSR policies in GVCs
Nature of the issues Range of issues Definition

Economic costs Organisational costs Costs and investments associated with designing and implementing CSR policies
Transaction costs Costs of identifying new business partners, (re)negotiating contracts and monitoring performance
Cooperation costs Costs of identifying stakeholders, negotiating compromises and monitoring performance
Behavioural threats Investment sharing Threats owing to a disproportionate distribution of investments among chain members
Profit appropriation Threats owing to a disproportionate distribution of profits among chain members

agreements are high, as business partners belong to dif-
ferent systems of law.
The same phenomenon can be observed for cooperation
costs with secondary stakeholders. GVCs members can
negotiate and reach agreement on responsible behaviours
with their stakeholders through developing specific assets
dedicated to the treatment of a specific environmental or
social issue. Nothing guarantees that after this agreement,
stakeholders and their representatives will not ask for new
engagements and investments, and push chain members to
invest in other assets. GVCs members must secure their
relationships with secondary stakeholders through agree-
ments and joint projects that lead to an increase in coop-
eration costs.
Proposition 5 The more specific the assets involved in
the implementation of strategic CSR policies are, the more
they will increase transaction and cooperation costs.
Reducing asset specificity is thus key to reducing transac-
tion costs and securing behaviours with secondary stake-
holders. Standards, norms and labels are highly relevant in this
regard, as they allow the ‘despecification’ of the investments
that GVC members have to undertake, or the securement of a
fair return for the investments—as in fair trade. For example, it
would be very risky for farmers to switch to growing organic
food without the existence of any label or standard: they would
have to make significant investments in the form of organi-
sation and transaction costs (such as removing chemicals from
their processes, and finding new clients and retail stores). They
would also have to bear the risk that such investments were not
seen as appropriate responses by environmentally aware
customers and stakeholders. In such situations, labels are
likely to reduce transaction and cooperation costs by provid-
ing a predefined list of investments, and a guarantee that such
investments can be re-deployed and will have a value for other
business partners and stakeholders who adhere to the same
standards.
Impact of GVC Structures on Behavioural Threats
GVC governance structures constitute a second variable
that has an important impact on the implementation of CSR
policies (Russo and Perrini 2010; Lund-Thomsen and
Lindgreen 2013; Soundararajan and Brown 2014). By
GVCs governance structures, we refer to the configuration
of GVCs in terms of coordination and division of labour.
One particular aspect is the existence of a focal, pivot or
dominant firm within the value chain, enjoying high bar-
gaining power and able to impose certain standards of
behaviour or pricing conditions on the other firms, and to
govern their relations (Kaplinsky and Morris 2001; Gereffi
et al. 2005; Crook and Combs 2007). This type of con-
figuration can be found in, for instance, the textile or the
agro-food industry, with large international buyers inter-
acting with a wide network of dispersed suppliers (Elms
and Low 2013). Such ‘captive value chains’ (Gereffi et al.
2005) constitute a paradoxical configuration for the
implementation of strategic CSR policies.
On one hand, the presence of a highly visible lead firm
makes it easier for secondary stakeholders—such as NGOs
and advocacy movements—to target the lead firm and
blame it for irresponsible practices within the supply chain
(Bair and Palpacuer 2012). Likewise, through its power,
the lead firm can more easily organise and control trans-
actions, and put pressure on suppliers to comply with rules,
responsibility standards and CSR policies (Gereffi et al.
2005; Vurro et al. 2009).
On the other hand, such a configuration limits the scope
and implementation of CSR policies, because it increases
behavioural threats. As the dominant firm has the power
and capacity to impose pricing conditions and behavioural
standards, it is in a position to derive most benefits from
strategic CSR policies (Crook and Combs 2007; Stigzelius
and Mark-Herbert 2009; Kaplinsky 2013). Weak firms in
the value chain both depend on this central actor and resist
being fully committed, since the CSR programme tends to
make them more dependent on—and held captive by—a
firm that may grab all the benefits of the initiative for itself
(Baden et al. 2009; Locke et al. 2009; Lund-Thomsen and
Lindgreen 2013). For instance, some leading firms ask their
suppliers to change their employment policies, and force
them to be more socially responsible by hiring permanent,
full-time employees and paying compensation after lay-
offs, but they do not guarantee sufficient work throughout

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Sharing the Shared Value: A Transaction Cost Perspective on Strategic CSR Policies in Global…
the year. For these suppliers, it becomes financially
unsustainable to continue with such responsible employ-
ment policies in their factories (Lund-Thomsen 2008;
Lund-Thomsen and Lindgreen 2013). In this case, the lead
firm enjoys the value of the strategic CSR initiative, but the
cost and the burden are outsourced to suppliers (Kaplinsky
2013).
Owing to their power, lead firms in the GVC can thus
seek to transfer the burden of most of the CSR investments
onto other chain members, and take the premium that
customers or shareholders are willing to pay in order to see
the implementation of a CSR policy (Kaplinsky 2013;
Lund-Thomsen and Lindgreen 2013). Such phenomena are
major threats in the implementation of CSR policies in
GVCs—as, for some firms, it means implementing socially
responsible practices and making disproportionate efforts
without benefiting from guarantees on the returns on their
investments. The literature on supply chain management
has documented these aspects and has shown that
depending on the dependency between chain members,
lead firms tend to take a disproportionate amount of profit
(Crook and Combs 2007). Because of the power of the lead
firm, weak actors in the chain may be forced to adopt the
CSR policy, but are likely to try to resist or adopt deceptive
behaviours such as fraud, decoupling and ceremonial
adoption (Meyer and Rowan 1977) in order to limit the
amount of specific investment required to satisfy client
requirements.
Proposition 6 Lead firms push GVCs members to
implement strategic CSR initiatives and tend to increase
behavioural threats.
Contributions and Research Perspectives
In this section, we develop our contributions to strategic
CSR and the GVC literature (‘‘Theoretical contributions’’
section) and an agenda for future research (‘‘Avenues for
future research’’ section).
Theoretical Contributions
While the literature on strategic CSR suggests that CSR
initiatives can be a source of economic and social progress,
the GVC literature provides empirical evidence that effi-
cient implementation of strategic CSR policies is difficult
and complex in the context of GVCs (Lund-Thomsen and
Lindgreen 2013; Gereffi and Lee 2014; Tsutsui and Lim
2015). By using TCT, we contribute to bridging this gap,
and we develop theoretical explanations of the difficulties
that chain members and their stakeholders face when they
want to implement strategic CSR policies. By so doing, we
extend the scope of strategic CSR to the context of GVCs,
and specify the limiting conditions of strategic CSR
initiatives.
Strategic CSR scholars have clearly demonstrated that
implementing a CSR policy involves costs (McWilliams
et al. 2006; Vogel 2006; Porter and Kramer 2011), but they
do not give explanations for the nature and origins of these
costs, and tend to focus on one type of costs: organisational
costs. We contribute to this debate by providing a theo-
retical specification of the costs associated with CSR in
GVC, which take the form of organisational costs, trans-
action costs and cooperation costs. Doing so, we integrate
into strategic CSR theory the fact that we live in a world of
positive transaction/cooperation costs (Coase 1992; King
2007) and that these costs must be taken into consideration
when members of value chains implement a strategic CSR
policy. We have also shown that organisational costs can
be considered as ‘the tip of the iceberg’, and strategic CSR
scholars have to investigate transaction and cooperation
costs in the implementation of CSR policies.
Another contribution to the strategic CSR literature is
related to market premiums and their capacity to cover the
costs of CSR initiatives. Such premiums appear as a nec-
essary but not sufficient condition for strategic CSR poli-
cies to be implemented in GVCs. Market rewards for CSR
policies certainly push some value chain members to make
changes in their ways of thinking and acting, but they also
create problems as the value collectively created by the
implementation of the CSR policy must be fairly shared
(Ponte and Gibbon 2005; Kaplinsky 2013; Soundararajan
and Brown 2014). Any attempt to capture a dispropor-
tionate amount of value or to minimise investments is
likely to break cooperation among actors (Kaplinsky 2013).
Market premiums for CSR policies open up alternatives,
but can lead to behavioural threats between chain members
and prevent the emergence of such policies. They have an
ambiguous nature and do not constitute a magic answer to
the regulation of GVCs.
Overall, our work contributes to theoretically identify-
ing the limiting conditions for the emergence of strategic
CSR initiatives in the specific context of GVCs (Vogel
2006). Indeed, TCT provides both a warning about and
guidance on the regulatory potential of strategic CSR
policies in the context of GVCs. According to TCT,
cooperation among chain members is not guaranteed, even
if there are business opportunities. Because of the presence
of various categories of costs and behavioural threats
among chain members related to the issue of sharing the
shared value, cooperation in implementing a CSR policy is
something to be achieved rather than assumed as a starting
point. The conditions for the genuine diffusion of CSR
policies along GVCs appear considerably more complex
than often suggested by strategic CSR scholars.
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We also make various contributions to the GVC litera-
ture. While academic research has largely debated the
positive and negative social and economic impacts of
GVCs on developing countries, more limited attention has
been paid to the factors favouring or inhibiting the emer-
gence of CSR policies (Lund-Thomsen and Lindgreen
2013; Wahl and Bull 2013; Tsutsui and Lim 2015). The
theoretical apparatus of TCT can be useful for organising
research in the field of GVCs, which has been described as
mostly case-based and lacking theoretical elaboration/in-
tegration. Two notions are central in this regard: asset
specificity and GVC structure. When the implementation of
the CSR policy entails the development of specific assets,
the cost of the policy is directly impacted and chain
members will have to internalise transaction and/or coop-
eration costs. These costs inevitably mitigate the economic
gains that the policy offers. The structure of the GVC has
also a direct impact on the implementation of the strategic
CSR policy. The presence of a dominant actor along the
value chain can affect cooperation between chain members
if this actor captures an important part of the value created
by the policy.
Avenues for Future Research
We explore three research avenues that, we believe,
deserve increased attention in the future to refine our
understanding of implementing strategic CSR policies in
GVCs: the role of standards in taming asset specificity
issues; the capacity of multi-stakeholder initiatives (MSIs)
to develop cooperation with stakeholders and the impact of
GVCs structures on the dynamic of implementing strategic
CSR policies.
Standards and Asset Specificity
The first research avenue deals with the role of standards as
a potential solution to the problem of asset specificity. As
we have shown, asset specificity has a negative impact on
the likelihood of implementing a strategic CSR policy,
because it requires actors to engage in investments that are
both specific to the CSR project and hard to recover/re-
deploy once they are made. A major issue is thus to explore
ways to reduce asset specificity within GVCs. A potential
solution to the problem can be found through standards,
labels and norms (Scherer et al. 2006). They allow—in
theory—the ‘de-specification’ of the investments that GVC
members must undertake, and facilitate efficient institu-
tional regulation (Liebowitz and Margolis 1995; Manning
et al. 2012). Ciliberti and colleagues show how the adop-
tion of global standards—in this case, SA8000, the social
accountability standard—can reduce information asym-
metry and transaction costs between chain members
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A. Acquier et al.
(Ciliberti et al. 2009). By implementing such a standard,
chain members can reduce the specificity of investments
related to CSR policies, and can share the value of
investments with other business partners seeking to pro-
mote CSR in GVCs (Schleper and Busse 2013).
In practice, however, the picture appears significantly
more complex. Empirical studies show an uncoordinated
boom in—and an enduring multiplicity of—standards in
GVCs (Reinecke et al. 2012). This proliferation of stan-
dards seems to severely limit the ability of GVCs to sim-
plify transactions and to reduce transaction/cooperation
costs (Chatterji and Levine 2005; Fransen 2011). They also
seem to indicate the existence of competition and oppor-
tunistic behaviours in the process of designing and dif-
fusing such standards. Last, standardisation processes seem
to follow new logics on GVCs that can be depicted as a
process of ‘meta-standardisation’. This refers to a situation
where a multiplicity of standards may coexist, supporting
diversity in concrete attributes while convergence occurs
on overarching principles (Reinecke et al. 2012). Much
research is needed to understand and assess the impacts of
such standardisation processes on costs (organisational,
transaction and cooperation) and behavioural threats, in
order to understand to what extent such codes and stan-
dards constitute a viable solution to the problem of asset
specificity.
Multi-stakeholder Platforms and Efficient Cooperation
with Stakeholders
From a similar perspective, and as a second research ave-
nue, researchers should investigate the impacts of multi-
stakeholder platforms and collaborative devices on coop-
eration costs with secondary stakeholders. At the level of a
GVC, stakeholders are numerous, divided and located in
remote areas—and suffer from a lack of democratic rep-
resentation (Young 2006; Banerjee 2008; de Bakker et al.
2013). We need more knowledge to understand how chain
members deal with these issues and construct legitimate
political platforms capable of effectively and efficiently
linking chain members and their stakeholders. A first focus
for GVC scholars could be to study the contributions of
MSIs—defined as institutions and political platforms
involving corporations, stakeholders, civil society organi-
sations, governments, academia and unions—in coping
with social and environmental challenges across industries
on a global stage (Rasche and Gilbert 2012). By focusing
on MSIs related to a single GVC (such as the sustainable
soy bean or coffee value chain), researchers could explore
how MSIs contribute to the construction of idiosyncratic
political platforms involving chain members, stakeholders,
unions and local representatives, to affect and facilitate the
cooperation between firms and their stakeholders. MSIs
 Author's personal copy
Sharing the Shared Value: A Transaction Cost Perspective on Strategic CSR Policies in Global…
provide learning and legitimising platforms, enable issues
to be selected, develop and enforce behavioural standards,
support auditing and compliance, and issue labels and
certifications (Mena and Palazzo 2012). Research should
explore how these various objectives, which are all related
to cooperation costs with secondary stakeholders, are
tackled by MSIs.
Another issue directly related to the development of
political platforms would be the role of states and public
authorities in facilitating dialogue and discussions between
chain members and their related stakeholders. In their
analysis of the role of public authorities in promoting
shared value and solving social issues, Porter and Kramer
articulate a clear role for state actors in enforcing regula-
tions ‘‘that enhance shared value, set goals, and stimulate
innovation’’. This includes setting ‘‘performance stan-
dards’’, defining ‘‘phase-in periods for meeting standards’’
and ‘‘putting in place universal performance reporting
systems.’’ (Porter and Kramer 2011, p. 14).
While this may be possible in Western countries, the
situation is completely different in developing countries,
where political institutions and nation states may be weak
(Young 2006; Scherer and Palazzo 2011). Before imple-
menting strategic CSR, chain members—especially leading
firms located in Western countries—must be engaged in
political CSR, and must develop local institutions and
practices that will favour and facilitate dialogue between
numerous stakeholders and chain members (Scherer et al.
2006; Scherer and Palazzo 2011; Scherer et al. 2014).
GVC Structures and Strategic CSR Implementation
We have argued that GVC structures have a direct impact
on the implementation of strategic CSR policies. This is
especially so when the GVC encompasses a lead firm
capable of exerting pressure and controlling a captive value
chain. In practice, GVCs scholars have theorised on and
documented different configurations of GVCs, each of
which relies on different coordination and control mecha-
nisms, and exhibits different types of power relationships
among actors (Gereffi et al. 2005; Elms and Low 2013).
Some configurations (market and modular) enable high
degrees of independence among actors, but others (rela-
tional and captive) are characterised by strong interde-
pendencies, one-to-one interactions and power
asymmetries. While some works have begun to consider
the influence of GVC structures on CSR implementation
(Vurro et al. 2009), important research questions remain
unanswered. For example, it is still unclear which types of
GVC structure will enable or inhibit technological inno-
vation related to sustainability issues. Further work is
needed to understand how each GVC configuration affects
economic costs, asset specificity and behavioural threats.
Research should also explore how CSR initiatives may
contribute to the reconfiguration of GVC structures, and the
potential power-redistribution mechanisms involved. This
would imply understanding which CSR solutions lead to
making GVCs more modular (through, for example, the use
of standards), and which other solutions lead to more
captive or relational GVCs. Complementary research may
focus on the relationships and the degree of dependence
that GVC members will entertain. Depending on the nature
of these relationships, Crook and Combs have shown that
lead firms express their bargaining power in different ways,
and take more or less economic value (Crook and Combs
2007).
The role of lead firms deserves more consideration. The
literature on innovation and business ecosystems has shown
how, in some cases, lead firms may take the role of techno-
logical and industrial platform leaders, such as Intel in the
computer industry (Gawer and Phillips 2013). Such platform
leaders organise technological innovation at the level of the
ecosystem and the value chain. More research is needed to
understand whether such platform leadership can be trans-
posed to CSR issues, and to describe and understand its
practical forms. The presence of leading firms in GVCs is an
opportunity to engage in an efficient dialogue with stake-
holders, and push chain members to think and act differently in
terms of CSR. But these leading firms have the responsibility
of constructing trustworthy relationships with their business
partners and stakeholders; otherwise, they will not cooperate
and strategic CSR initiatives will not emerge. Research must
be developed in order to understand how leading firms can
construct such relationships. We need to develop our knowl-
edge on governance mechanisms that favour cooperation
between actors. In this regard, economic incentives, control
and enforcement mechanisms may appear as counter-pro-
ductive to building cooperation and trust (Ghoshal and Moran
1996). Ethical-trade labels, initiatives to relocate agriculture
closer to consumers, and movements such as social businesses
and the sharing economy may provide interesting insights to
understanding whether such initiatives are based on trusting
relationships and shared purposes, or on more classic forms of
controls and incentives for CSR policies. Scholars need to set
aside, in their analysis, controls and incentives for CSR poli-
cies, and focus on the different practices and options that allow
chain members to bypass opportunistic behaviours and
develop in practice trust-based relationships and shared
purposes.
Conclusion
With the support of TCT, we have shown in this research
that GVCs members face many difficulties that slow down
and even prevent the implementation of strategic CSR
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policies. By so doing, we offer robust theoretical tools for
envisaging the numerous limitations observed and descri-
bed by many scholars in implementing CSR policies in the
context of GVCs (Lund-Thomsen and Lindgreen 2013;
Wahl and Bull 2013; Soundararajan and Brown 2014). We
also propose research perspectives to shed light on the
difficulties that actors face—and the pragmatic solutions
that they develop to bypass these—in implementing valu-
able CSR policies.
Mobilising TCT for analysing the implementation of
CSR policies in GVCs also has a counterintuitive effect, as
it reveals the paradoxical nature of policies that go against
the outsourcing logic at the heart of GVCs. Ultimately, it
appears that GVCs are simultaneously a cause of CSR
issues and an obstacle to their resolution. In GVCs, the
commitment by a firm to increase its social responsibilities
goes against the very logic underlying the fragmentation
and dispersion of value chains. Indeed, the aim of frag-
menting a hierarchically organised structure of production
and dividing work between various legally and hierarchi-
cally independent parties is to optimise the use of each of
the firm’s assets by setting up a system of market gover-
nance, and systematically making the parties compete
against one another. In contrast, implementing CSR poli-
cies is diametrically opposed to this logic, since the parties
must come closer to each other, improve their coordination
and agree on specific investments that will be profitable
only through maintaining contractual relations over a long
period. As we have shown, this coming together makes
maintaining a strictly commercial framework of relations
especially problematic. Short of integrating the parties into
a single legal and hierarchical structure, developing CSR
policies apparently implies the setting-up of specific gov-
ernance systems that will enable the parties to coordinate
themselves and handle the economic and behavioural
threats. Thus, CSR policies in GVCs seem to be less a
remedy for—and more a symptom of—the crises con-
nected with the dispersion of responsibilities in GVCs.
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