Perspectives in interfirm global trade relations and chain governance: Transfer Pricing and Sustainability implications for supplier firms in developing countries
Transfer Pricing Consultant, Ernst & Young, England.
Review Article
World Journal of Advanced Research and Reviews, 2021, 12(02), 658–667
Publication history:
Received on 21 June 2021; revised on 24 August 2021; accepted on 27 August 2021
Abstract:
This study intends to further Humphrey & Schmitz's (2008) insights on the global value chain (GVC) by analysing the inter-firm global trade and transfer pricing relations between buyers (of developed countries) and suppliers (of developing countries), with perspectives from India-based software developer startups. Through a review of the literature, the study highlighted the current state of global inter-firm trade relationships and the function of global trade policies and standards in defining these relationships. In addition, the study explored the relevance of value chain governance and transfer pricing for the Indian software developer startups' growth through robust trade policies and standards and how the present value chain governance affects the sustainability of the startups involved in inter-firm trade relations. Findings determined that startups from emerging economies witnessed immense challenges regarding prolonged sustenance— affected by a lack of updated technology and products per the global demand and inter-firm relations in the global South value chain (SVC). Besides, the value proposition of Indian software startups is significantly restricted to "run and operate" instead of "advise, build and implement", providing end-to-end solutions. The study's implications lay in highlighting the Indian software startups' capacity development strategies through the North-South and South-South value chain participation, developing high-end skill-intensive products and services and improving the production quality in the domestic value chain before entering GVC through functional upgrading.
Keywords:
Global Value Chain; Transfer Pricing; India; Software; Startups; North-South; South-South; Governance
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