This paper investigates whether and how the adoption of global quality standards (QS) changes inter-firm relationships and enhances the upgrading prospects of local producers in developing countries. It is based on primary research on the diffusion of QS and their effects in the Brazilian automobile value chain.
How might these standards affect technical cooperation between global buyers and local suppliers within the chain? Would QS contribute to tightening or loosening technical ties between suppliers and buyers? The research indicates that neither has happened. The certification of local suppliers to global quality standards has not improved the weak technical ties between transnational assemblers and Brazilian-owned suppliers. The buyers have neither made substantial efforts to help local suppliers conform to the quality standards nor has the adoption led to the development of technical collaboration in areas such as product and process design. On the other hand, quality assurance certification has not led to more arm’s-length relationships, because certification alone is not enough to give confidence to customers. Previous monitoring of suppliers by customers continues.
Moreover, the paper shows that the credibility of QS certification by local institutions has been questioned by customers. The result is ineffective governance of the auto chain and small quality improvements at high cost. The diffusion of global quality standards has contributed to local suppliers’ upgrading of quality processes, but it has contributed little to supplier competence in product development.