Financing GPNs through inter-firm collaboration? Insights from the automotive industry in Germany and Brazil

Kurzfassung/Abstract

Despite its obvious importance, finance is to date still a blind spot in GPN research (Coe et al. 2013, Coe 2012). This paper addresses this lacuna and focuses on the circulation of financial capital and forms of inter-firm financing in production networks in the automotive sector in Germany and Brazil. Conceptually, it takes the emerging body of literature in the field of supply chain finance (SCF) as point of departure which argues that a financial management blurring the boundaries of the single firm can increase the competitiveness of GPNs and their capacities to cope with external shocks. In empirical terms, it draws on qualitative work conducted in Germany and Brazil between 2011 and 2013. According to our explorations, instruments of inter-firm finance have been implemented in corporate practice only very recently, and with distinct variation by country. A number of observed restrictions may explain the inconsistency between SCF theory and corporate practice: On the level of the individual firm, the perception of risks, the interlinking of buying and financing relationships, divergent aims of involved departments as well as the corporate strategy and the persistence of financing practices have become evident as important influencing factors. On the level of networks power relations, conflicting interests and a lack of mutual trust represent obstacles. Thirdly, context-specific conditions – in particular the financial system and legal regulations – affect the design and use of such financing instruments. The paper concludes with a discussion of success factors of collaborative financing in GPNs and possible implications for regional development.