Retailer-driven value chains in the agri-food sector: An analysis of French firms

The present paper investigates the link between the decision of French agri-food firms to supply retailers with private-label (PL) products and their integration in global value chains (GVCs). In line with the recent literature, we identify firms that participate to GVCs by the ones that engage simultaneously in import and export activities. We consider the certification with the private International Featured Standard (IFS), required by all retailers operating in France, as an indicator of firms’ choice to become private label suppliers. We combine firm-level data from the AMADEUS database and French customs over the 2006-2011 period, and estimate the linkage betweens firms’ decision to engage in foreign trade and to integrate a retailer-driven value chain using a multivariate binary choice model. Results confirm a strong positive correlation of these decisions, and show that retailers’ PL suppliers (i.e. IFS-certified firms) are by 5.83 percentage points more likely to integrate GVCs (i.e. to jointly import and export) than other firms in the agri-food sector. This figure corresponds to an almost twofold increase in firms’ probability to participate to GVCs observed in the sector. We also show that the integration in GVCs is primarily driven by the higher probability to export of these firms. Our findings are robust to the control for endgeneity and the use of alternative estimation techniques.