Supplier Upgrading in the Home-furnishing Value Chain: An Empirical Study of IKEA’s Sourcing in China and South East Asia

SummaryWe use detailed firm-level data from 2008 to show how the world’s largest home-furnishing retailer, IKEA from Sweden, provides its suppliers in China and SE Asia with significant technological support to improve their products and processes. This demonstrates that even buyer-driven global value chains, coordinated by large retailers, have the potential to contribute to technological upgrading among many small, inexperienced producers of labor-intensive products. Theoretically, this suggests that the current value-chain theory needs to take into account the existence of a “developmental” governance structure.