Local Firms Within Global Value Chains
The focus of this chapter is on local firms in emerging markets as participants in global value chains (GVCs), and how some of them make the transition from local assembler to value chain. The purpose of this chapter is not to provide a comprehensive literature review; rather, the authors discuss key GVC concepts that are relevant to their focus. The chapter begins with an overview of the GVC notion highlighting the issues of governance and upgrading. Next, it briefly reviews the following key drivers of GVCs in emerging markets: level of economic development, maturity of institutions, science and technology level, and company management capabilities. The authors then highlight the rise of EM firms within GVCs in three phases: (1) local assemblers, (2) component manufacturers, and (3) value-adding innovators and partners. The chapter closes with a discussion on the implications for international theory and future research, noting the rise of anti-globalization sentiments and the imperative for innovation within GVCs.