Evolution in inter-firm governance along the transport biofuel value chain in Maritime Silk Road countries

• Published in: Transportation research. Part E, Logistics and transportation review Vol. 122; pp. 268 - 282
• Main Authors: Chan, Jin Hooi, Reiner, David
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01.02.2019
• Subjects: Belt and Road Initiative; Biofuels; China; Fuel-ethanol; Global value chain; South East Asia; Transaction cost theory; South East Asia; China; Fuel-ethanol; Global value chain; Belt and Road Initiative; Biofuels; Transaction cost theory
• ISSN: 1366-5545; 1878-5794
• DOI: 10.1016/j.tre.2018.12.006

•Institutional forces are key determinants in value chain integration in BRI country.•Biofuels firms select governance mode that will secure supply of strategic resource.•Heterogeneity of entrants is due to high permeability of industry boundaries.•Firms producing substitute products will seek control over its marketing channels.•Plural governance mode offers an alternative for finding an optimal governance mode. We investigate how value chain governance can evolve in the transport biofuel sector beyond logistics and operations optimization, drawing on cases of eighteen manufacturers in four Belt and Road countries. We find that key motivations for vertical integration include control of strategic factors such as security of supply and gaining access to the retail market, subject to inter-institutional and intra-organizational barriers. We contribute to a theory of governance mode selection by suggesting plural governance mode offers a key strategic choice under institutional constraints. In BRI countries, plural mode could be less disruptive when integrating value chains.