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2.1.3 Governance
Value chain analysis highlights the need to understand the distribution of
power along the chain. The cybercrime value chain is coordinated via the
Internet by both buyers and producers of crimeware.
Another central contribution from value chain analysis is the importance it places in
characterising the power asymmetries in global value chains. In value chain analysis
governance is defined as the power to determine who participates in the value chain,
what is produced, how and when, and asymmetries (imbalances) in market power. What
matters most is who determines the overall character of the chain and who governs it?
The concept of governance is crucial in for three main reasons. First, leading actors in
the chains can have a major impact in creating and shaping new markets. Second, they
can help determine the price, quality and speed of production. Third, they can help
determine the distribution of gains and profits along the chain.
Building on this concept of governance, a broad distinction can be made between three
types of value chain. The first describes the value chain where buyers set the rules,
namely, buyer-driven chains. Buyer-driven chains generally describe those industries in
which the specifications of the products are supplied by the large retailers or marketers
that order the goods. The second describes industries where key producers, generally
commanding vital technologies, coordinate the various links – producer-driven chains.
This latter is characteristic of capital and technology-intensive industries. 155
These two basic categories automatically expand if we consider that, first, some value
chains exhibit very little governance and, second, some chains may embody both
producer- and buyer-driven governance.
Given these limitations a third type of value chain has been defined, namely, the
Internet-oriented chains, representing the dynamics of firms operating in the expanding
digital economy and e-commerce. This distinct chain is composed of the firms that make
Internet transactions possible, from computer manufacturers to Internet service
providers. These chains are characterised by the virtual integration of their participants
155 Kaplinsky R, and Morris M., (2001), A Handbook for Value Chain Research. International Development
Research Centre: Ottawa.
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