The Transmission and Manifestation of Compliance Obligations in Global Value Chains under EU Sustainability Governance. Case Study of a Korean Tier 1 Automotive Supplier

Abstract

This study examines how compliance obligations are transmitted and manifested within a global value chain, from the perspective of a Korean tier 1 automotive supplier through their experiences navigating EU sustainability regulations. The study utilizes World System Theory, the cascading model, and Hard and Soft Governance as a collective theoretical framework to analyze themes relevant to its purpose and aim. The primary empirical data were collected through semi-structured interviews with employees at the tier 1 Korean automotive supplier under study. The empirical findings demonstrated how the compliance obligations manifest into financial burdens and supply chain disruption risk for the subject company, with an observation that the compliance pressure intensity varies by Original Equipment Manufacturer actor (OEM customer). Furthermore, inequality patterns are revealed through the concentration of compliance constraints at the upstream, lower-tiered suppliers, combined with the unintended consequences of the EU Deforestation Regulation, resulting in a category segmentation of rubber. Collectively, the empirical findings contribute to expanding the practical understanding of compliance obligation manifestation in the global value chains under the EU sustainability regulations, and with insights regarding regulatory implications for small suppliers and industry-specific impact.