The Mechanisms Of Firm Power, Hierarchy Structure And Disequilibrium Of Trade Development

Researches on trade are shifting from macro field to micro study and from marketing to manufacturing. It is of far-reaching significance to study the effects of firm behavior on trade development. This dissertation, aiming at the disequilibrium of north-south trade development in global production network, tends to develop the theory of firm power and its analysis framework of international production and trade from the perspective of global production organizations, which the author applies to account for the disadvantages of developing countries in imbalanced trade development and offer new explanations for and policy enlightenments to the problems in China's trade development.Firstly, this dissertation develops the theory and analytic framework of firm power of international production and trade. Based on the nature and organizational form of firms in global production network, this dissertation defines firm power as control power or special influence which an enterprise or enterprise group exerts on others by means of its special resources and capability of system. The author holds that the system of firm powers should be built from material assets, organization mechanism, and intangible assets. Based on Barney's(1991) theory of resource-based firm capability and Gereffi's (1999) theory of global value chain, the concept of chain link power is put forward, which is defined as position power embodied in value chains according to specialization and capability difference. Combined with GHM theory(Grossman and Hart,1986;Hart and Moore,1990) and Rajan & Zingales's(1998) access theory, firm power is in turn specified as chain link power, property ownership and access power, and the respective mechanisms are capability control, ownership control, and organization control. This dissertation studies the phenomenon of firm power within a unified framework of"power mechanism-power structure", and attempts to employ a new analytic paradigm which takes the activities of global production and trade as a market-orientated restraint behavior of firm power, to pursue an integration of power restraints and market mechanism.Then, this dissertation applies this theory and analytic framework to demonstrate the internal principles of firm power effects on disequilibrium of trade development from the perspective of power mechanism through building up a series of models of international production and trade under firm power restraints. The results go as follows:â‘ The final good producer's ownership arrangement to processing firms is the root of microeconomic organization exerting effects on the imbalance of North-South trade structure. The asymmetric changes of trade mode are influenced by the final good producer's ownership arrangement, choice and control of trade organization structure. Under certain conditions, a northern country can be a net importer of both capital and labor. Therefore, the question of United States-China Trade deficit can be reasonably answered from a new perspective.â‘¡The final good producer's organization control of access power is one of important mechanism to influence the disequilibrium development of country's comparative advantage. By restricting access and adjusting numbers, the final good producer can incentive the supplier to provide more customized investment, transfer investment and optimal specialization investment. In fact, this process results in a negative influence over trade comparative advantages of suppliers and their countries. So this study provides new enlightenments to the paradox question of comparative advantages of China's foreign trade.â‘¢The capability control of chain link power is the organization root of differentiation in trade growth pattern. Under incomplete contract, the capability control of the high chain firm enjoys power to decompose production process and high bargain and the corresponding power to extract rent share of subordinate supplier. The growing inequality of input factor reward strengthened directly incentives the differentiation of trade growth pattern. This study provides a new theoretical approach to the problem of China's trade growth pattern transition.Finally, this dissertation, based on an empirical analysis of China, Korean and the US, reveals that the hierarchy structure of firm power is the foundation of micro organization that influences the disequilibrium development of vertical specialization trade from the power structure perspective, and points out:â‘ the system of firm power in global production and trade may be divided into three levels: the global level, the transnational level and the national level according to the size of firm power and geography spatial relations;â‘¡the value index, the share index and the change tendency of vertical specialization in China, Korean, and the US indicate that their vertical specialization trade comes to be a trend of division development, and corresponds with their hierarchy structure of firm power;â‘¢the low growth stage of Chinese vertical specialization has been completed. The low hierarchy structure of firm power restricts China's industrial upgrading, technology advancement and trade development. It is necessary for China to promote its firm power level in global production network, choose and correspondingly adjust strategies for its economic and trade development. Therefore, the policy implications of this dissertation are as follows:â‘ China should endeavor to provide support to the development of promising enterprises;â‘¡new open-type strategies for China's economic and trade development should be adopted to enhance the level of firm power structure. Other relative policy suggestions on how to realize these new strategies are put forward.