What is Economic Upgrading

Until now the Global Value Chains (GVCs) literature has highlighted the role of lead firms in the greening of GVCs, leaving the role of supplier firms under-theorized. This chapter contributes to this gap in the literature by providing empirical evidence to support the role supplier firms play in environmental upgrading in the context of the apparel industry in Sri Lanka. The findings reveal that an understanding of the process of environmental upgrading remains incomplete if the capabilities and strategic intent of suppliers are not taken into consideration. The role of the lead firm and the capability of the supplier firm cannot collectively ensure upgrading. Capabilities in the supplier base determine the relationship between supplier and buyer (governance), whereas a suppliers' strategic intent allows firms to be more inventive in situations where there is a misfit between resources (knowledge) and ambition. Thus strategic intent, coupled with capabilities, can provide competitive advantage to firms and pave ways toward environmental upgrading.