Sales Channels, Governance, and Upgrading in Floriculture Global Value Chains: Implications for Ethiopian-owned Floriculture Firms

Ayelech Tiruwha Melese

Publikation: Working paperForskningpeer review


Floriculture is a dynamic industry that has transformed from a regional business, where both production and consumption were concentrated in Europe, to a global business organized in global value chains. Although the Dutch still lead the industry, particularly through the Dutch auction, developing countries have strengthened their position as producers in the chain. While consumption in traditional markets remains important, new demand has emerged in the global South. This working paper explains the dynamics and main features of the floriculture global value chain, different sales channels and governance structures, and their implications for how supplier firms in developing countries learn and build technological capabilities. Governance structures in the floriculture global value chain are not only shaped by buyer requirements and auction’s institutional rules but also by national and international regulations. The paper argues that there is no static governance structure in the Dutch auction, the dominant sales channel, but rather that buyer-supplier relations in the Dutch auction can move from market-based governance to relational network governance in which unpackers play a crucial role. There are also new governance modes emerging beyond the Dutch auction, such as in online trading as well as in emerging floriculture global value chains in the global South where direct sales channels prevail. The paper further argues that the effort of supplier firms to capture higher value and/or to secure a ‘better deal’ cannot be understood only as ‘upgrading’ or moving up in the ‘value ladder’, as firms appear to use a mix of strategies and move in a variety of directions—up, down and deepen, which enable them to optimize their gains, minimize risks and stabilize income flows.
UdgiverRoskilde Universitet
Antal sider36
ISBN (Trykt)2446-337X
ISBN (Elektronisk)978-87-7349-954-2
StatusUdgivet - 2 mar. 2018

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