Contracts in global value chains in the context of corporate social responsibility clauses

Abstract

This paper aims to identify the role of contracts and the contractualization of corporate social responsibility (CSR) in the context of global value chains (GVCs). The key research problem concerns how contracts affect GVCs and how they are used to promote CSR. To conduct the research, literature from the fields of legal, political and economic sciences was analysed alongside model contracts and corporate policies of multinational enterprises. This allowed for an analysis of the chain structure, the role of lead firms, and the contractual relationship within GVCs. The study found that contracts have several roles. Contracts govern the chains and regulate  business relationships, optimize costs and minimize risks. Meanwhile, they create independent legal regimes, thus eliminating issues of fairness and the redistributive functions  of private law from contractual relationships. This is evident in the practice of lead firms implementing CSR through sustainability clauses in contracts. CSR clauses allow the costs and liability for negative externalities to be transferred to weaker actors. The paper proposes an analysis of individual contracts in the context of the whole chain, as this approach allows for a better understanding of both direct and indirect business relationships and facilitates a proportionate distribution of costs and responsibilities between the chain participants. The paper fills a gap in the Polish literature by focusing on the role of contract law in GVCs. The findings are relevant for understanding how GVCs function and how contracts shape business relationships and practices related to the implementation of CSR.