Developing innovation capabilities for upgrading in global value chains: evidence from China

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jingqin Su ◽  
Huanhuan Ma ◽  
Shuai Zhang
Keyword(s):  
Process Model ◽  
Emerging Market ◽  
Value Added ◽  
Global Value Chains ◽  
Value Chains ◽  
Special Focus ◽  
Firm Level ◽  
Content Type ◽  
Innovation Activities ◽  
Study Results

PurposeIn the face of fierce international competition for those participating in global value chains (GVCs), upgrading has been a central concern of emerging market firms (EMFs) that are trying to occupy higher value-added positions. However, although the innovation capabilities (ICs) have been generally considered critical to upgrading in GVCs, few studies have examined how IC is built up and then applied to the EMF upgrading process over time. To this end, the purpose of this paper is to investigate why and how EMFs can upgrade in GVCs through the development of their IC.Design/methodology/approachThis paper adopts a multiple-case study of three supplier firms in China and their IC development processes, with a special focus on the nature of the firm-level upgrading in GVCs.FindingsThe results generate a process model of EMFs upgrading with respect to the development of IC. The model reveals how IC is built up through the firms' underlying systematic innovation activities, which enable firms to successfully upgrade within GVCs. In particular, the role played by contextual vulnerability in guiding firms to develop the appropriate IC, and the corresponding upgrading, is highlighted.Research limitations/implicationsThis study contributes to the micro-foundation in GVCs literature, especially the traditional static upgrading research of EMFs. The authors also contribute to existing IC development research. Meanwhile, the study focuses on the upgrading of three Chinese firms in the phone and LED industries. The generalizability to other emerging markets and industries may therefore be limited.Practical implicationsThe study results show that EMFs could initially develop endogenous IC that focuses on process innovation as a means to establish a foundation for further upgrading. In addition, firms need to improve their ability to accurately sense contextual changes. As such, it would be valuable to understand their positions and characteristics within GVCs.Originality/valueThis paper investigates a process model of upgrading in GVCs through IC development in EMFs. This study also adds a dynamic micro-foundation to existing, rather macro and static GVCs studies.

Manufacturing and value-added dynamics in global value chains: the case of Italy

2020 ◽  
Vol 30 (4) ◽  
pp. 457-470
Author(s):  
Chiara Burlina ◽  
Eleonora Di Maria
Keyword(s):  
Design Methodology ◽  
Value Added ◽  
Global Value Chains ◽  
Value Chains ◽  
Content Type ◽  
New Methods ◽  
Trade In Value Added ◽  
Revealed Comparative Advantage Index ◽  
Over Time ◽  
Made In

Purpose This paper aims to provide a snapshot of various countries’ contributions to value produced along global value chains (GVCs). It focusses on manufacturing activities and their evolution over time, in the context of GVC regionalisation. Design/methodology/approach The Trade in Value Added (TiVA) and World Integrated Trade Solution databases for the period of 2005-2015 were used to explore the case of Italy and its industries’ specialisations (Made in Italy): fashion, furniture, automotive and machinery traditionally organised into clusters. Various analyses were used to show the dynamics of gross import–export and imported–exported value-added. Moreover, the revealed comparative advantage index was computed to test whether the Made in Italy sector remains a source of competitive advantage for Italy within GVCs. Findings The results highlight how the geography of value-added is changing over time, with growing importance placed on the countries close to Italy and with a different pace according to each considered GVC. Originality/value The paper applied new methods to compare trade and analyse value-added dynamics through a recent database released by the Organization for Economic Co-operation and Development within the TiVA initiative that is useful for scholars and policymakers.

scholarly journals Measuring Global Value Chains

2018 ◽  
Vol 10 (1) ◽  
pp. 207-236 ◽  
Author(s):  
Robert C. Johnson
Keyword(s):  
Multinational Firms ◽  
Bilateral Trade ◽  
Value Added ◽  
Global Value Chains ◽  
Value Chains ◽  
Production Networks ◽  
Input Output ◽  
Firm Level ◽  
Level Data ◽  
Production Stages

Recent decades have seen the emergence of global value chains (GVCs), in which production stages for individual goods are broken apart and scattered across countries. Stimulated by these developments, there has been rapid progress in data and methods for measuring GVC linkages. The macro approach to measuring GVCs connects national input–output tables across borders by using bilateral trade data to construct global input–output tables. These tables have been applied to measure trade in value added, the length of and location of producers in GVCs, and price linkages across countries. The micro approach uses firm-level data to document firms’ input sourcing decisions, how import and export participation are linked, and how multinational firms organize their production networks. In this review, I evaluate progress in these two approaches, highlighting points of contact between them and areas that demand further work. I argue that further convergence between these approaches can strengthen both, yielding a more complete empirical portrait of GVCs.

Global value chains in the MedTech industry

2019 ◽  
Vol 15 (1) ◽  
pp. 70-92
Author(s):  
Jana Vlckova ◽  
Bublu Sarbani Thakur-Weigold
Keyword(s):  
Czech Republic ◽  
Core Competencies ◽  
Value Added ◽  
Global Value Chains ◽  
Business Environment ◽  
Economic Outcomes ◽  
Weak Links ◽  
Value Chains ◽  
The Czech Republic ◽  
Content Type

Purpose Medical technology (MedTech) is a growth industry, which like other manufacturing sectors has undergone fragmentation of production and emergence of Global Value Chains (GVCs). The purpose of this paper is to compare how two open European economies position themselves competitively within MedTech GVCs: highly developed Switzerland and the emerging Czech Republic. Design/methodology/approach The research applies a mixed methodology to analyze the performance of each location in the MedTech GVCs. It draws on macroeconomic, industry, trade and a proprietary sample of firm data, combined with onsite interviews. Findings The economic outcomes and GVC positions differ in both cases, whereas Switzerland focuses on high value-added activities such as R&D and after-sales service. Specialized manufacturing is also located here in spite of high costs. By contrast, the Czech Republic focuses mostly on low value-added activities, like manufacturing disposables, although some domestic innovative companies are notable. The authors generalize four types of firms in the industry, comparing their presence in both locations. Practical implications The competitive positions and challenges faced by each location when engaging in MedTech GVCs are summarized and related to economic outcomes. In the Czech Republic, the barriers to upgrading include its business environment, and weak links between education institutions and industry. Switzerland’s high cost structure is offset by adding high value in core competencies. Both countries should protect the inherent advantage their locations offer within responsive European supply chains. Originality/value GVC research in the MedTech sector has been limited. There is no comparison of two European countries, and their position in MedTech GVCs, nor of how firms, participate successfully in them.

scholarly journals Effect of the integration into Global Value Chains on the employment contract in Central and Eastern European countries

Equilibrium ◽  
2020 ◽  
Vol 15 (2) ◽  
pp. 275-294
Author(s):  
Dagmara Nikulin ◽  
Sabina Szymczak
Keyword(s):  
Value Added ◽  
Global Value Chains ◽  
European Countries ◽  
Labor Standards ◽  
Value Chains ◽  
Eastern European ◽  
Decent Work ◽  
Firm Level ◽  
Employment Contract ◽  
Eastern European Countries

Research background: In the era of globalization, there is a need to address decent work deficits in Global Value Chains (GVCs). The forms of working conditions reveal a broad dispersion of contents. The literature review exposes hardly any Europe-focused research assessing the socio-economic impact of global production links and going beyond their pure economic effects assessed in terms of employment, productivity or wages. Purpose of the article: This paper investigates how involvement in GVCs affects labor standards. In particular, we assess how the integration into GVCs impacts the probability of having indefinite type of employment contract, which stands for one of the decent work indicator. Moreover, we draw individual and firm-level characteristics determining the type of employment contract. Methods: We use linked employer-employee data from the Structure of Earnings Survey merged with industry-level statistics on GVCs based on World Input-Output Database — the sample is composed of over 5 million workers from 10 Central and Eastern European countries (CEEC) observed in 2014. The involvement into GVCs is measured using a novel approach based on the concepts of global import intensity (GII). We employ logistic regression with robust standard errors. Findings & Value added: Controlling for individual and firm-level characteristics (sex, age, education level, length of service in enterprise, size of the enterprise) we find that greater integration into GVCs increases the probability of having temporary type of employment contact, mainly in tradable sectors. However, across CEE countries the relation between GVC and employment type is mixed. In this way we expand the existing literature by reporting the effects of GVCs on labor standards in CEEC.

Lead firm’s reconfiguration decision and performance of the value chain

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Andrea Gelei ◽  
Magdolna Sass
Keyword(s):  
Value Chain ◽  
Business Performance ◽  
Organizational Design ◽  
Value Added ◽  
Global Value Chains ◽  
Value Chains ◽  
Content Type ◽  
Performance Consequences ◽  
And Performance ◽  
Lead Firm

Purpose This paper aims to trace the performance consequences of within-lead firm reconfigurations of global value chains with respect to business performance and upgrading. Design/methodology/approach The study is based on two detailed company case studies which are analysed in an organizational design approach. Findings Lead firms systematically separate and internalize high value-added activities in otherwise low value-added processes leading to constant reconfigurations and reorganizations of the production processes in global value chains. The study finds that similar reconfigurations may trigger different changes and changes and performance consequences may differ considerably according to the level of analysis. The two cases help to understand the specific roles of the outsourcing and offshoring decisions in shaping actual global value chain structures. Originality/value The consequences of within-lead firm reconfigurations are rarely analysed in the literature.

scholarly journals Industry 4.0, global value chains and international business

2017 ◽  
Vol 25 (3) ◽  
pp. 174-184 ◽  
Author(s):  
Roger Strange ◽  
Antonella Zucchella
Keyword(s):  
International Business ◽  
Industry 4.0 ◽  
New Technologies ◽  
Digital Technologies ◽  
Value Added ◽  
Global Value Chains ◽  
Value Chains ◽  
Content Type ◽  
Corporate Strategies ◽  
The Internet Of Things

Purpose This paper aims to provide an assessment of how the widespread adoption of new digital technologies (i.e. the Internet of things, big data and analytics, robotic systems and additive manufacturing) might affect the location and organisation of activities within global value chains (GVCs). Design/methodology/approach The approach in this paper is to review various sources about the potential adoption and impact of the new digital technologies (commonly known collectively as Industry 4.0), to contrast these technologies with existing technologies, and to consider how the new technologies might lead to new configurations involving suppliers, firms and customers. Findings The authors report that the new digital technologies have considerable potential to disrupt how and where activities are located and organised within GVCs), and who captures the value-added within those chains. They also report that Industry 4.0 is still in its infancy, but that its effects are already having an impact upon the nature of competition and corporate strategies in many industries. Social/implications In particular, the authors draw attention to the potential cyber-risks and implications for the privacy of individuals, and hence, the need for regulation. Originality/value This is the first published paper to consider the likely separate and joint impacts of the new digital technologies on the practice and theory of international business.

scholarly journals Are multinationals and governments from emerging economies configuring global value chains in new ways?

2019 ◽  
Vol 15 (1) ◽  
pp. 111-130 ◽  
Author(s):  
Claes Alvstam ◽  
Inge Ivarsson ◽  
Bent Petersen
Keyword(s):  
Emerging Economies ◽  
Value Chain ◽  
Multinational Firms ◽  
Global Value Chains ◽  
Value Chains ◽  
Special Focus ◽  
Content Type ◽  
Political Actors ◽  
Advantages And Disadvantages ◽  
Cost Efficiencies

Purpose The hallmark of today’s global value chains (GVCs), still dominated by multinationals from advanced economies, is a sophisticated international division of labor based on scale economies and prevailing factor endowment differences between countries. However, GVCs led by multinationals from large emerging economies may be configured on the basis of considerations that supplement factor cost efficiencies, namely, those of societal objectives as formulated by political actors in the home country. In this context, the purpose of this paper is to examine the implications of political and socio-economic factors on GVC configuration of multinational firms. Design/methodology/approach This paper provides an in-depth case study of a leading Chinese car manufacturer, Zhejiang Geely Holding Group (ZGH) and its value-chain configuration, with a special focus on the acquisition of Volvo Car Corporation. Findings The authors show how ZGH’s configuration of its GVC, including that of acquired Volvo Car Corporation, takes place in symbiosis with political actors. The advantages and disadvantages of this symbiosis are highlighted. Research limitations/implications The study focuses on GVC configuration of one company, ZGH, in one industry, the automotive industry, in one emerging economy. The external validity of the study may therefore be limited. Furthermore, the focus is on the geographical/locational configuration of GVCs and ignores the ownership aspects. Originality/value The paper provides novel empirical evidence to better understand GVC configuration of multinational firms from emerging economies.

Motives for foreign direct investment: a view from emerging market multinationals

2015 ◽  
Vol 23 (1) ◽  
pp. 77-86 ◽  
Author(s):  
Pavida Pananond
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Multinational Enterprises ◽  
Emerging Market ◽  
Global Value Chains ◽  
Value Chains ◽  
Content Type ◽  
Emerging Market Multinationals ◽  
Emerging Market Firms ◽  
Selection Of

Purpose – The purpose of this paper explains how the framework on motives of foreign direct investment (FDI) needs to be rethought when analyzing emerging market multinational enterprises (EMNEs). It argues that the weak position of emerging market firms and their interdependent relationship with lead firms in global value chains (GVCs) modify the selection of internationalization motives. Design/methodology/approach – The arguments are illustrated through a critical review of the literature on FDI motives and a discussion on how the literature can be extended from looking through the lens of emerging market multinationals, particularly those with early development as suppliers in global value chains. Findings – The weak position of emerging market firms and their interdependent relationship with lead firms in global value chains modify the selection of internationalization motives on two aspects. First, internationalization decisions of EMNEs in GVCs are not undertaken in an independent manner. Rather, decisions are influenced by the initial position along the value chain and the dynamic relationships that these EMNEs have with lead firms. Second, the selection of FDI motives of these EMNEs reflects both their international expansion strategy and the upgrading effort they wish to pursue to undertake higher value-adding activities along the GVCs. Originality/value – These implications addressed in this paper add more nuances to the interpretation of FDI motives. Previously viewed mainly from the perspective of lead firms, FDI decisions are considered as independent alternatives that multinational enterprises (MNEs) can undertake to fulfill their internationalization strategy. Revisiting the FDI motives from the perspective of EMNEs reveals further insights on the interdependent nature of their internationalization, particularly reflecting the weaker position of EMNEs and their interdependent relationship with lead firms in their industry.

scholarly journals The Nexus among Competitively Valued Exchange Rates, Price Level, and Growth Performance in the Turkish Economy; New Insight from the Global Value Chains

2021 ◽  
Vol 14 (11) ◽  
pp. 528
Author(s):  
Umar Aliyu Shuabiu ◽  
Mohammed A. M. Usman ◽  
Behiye Çavuşoğlu
Keyword(s):  
Exchange Rates ◽  
Growth Performance ◽  
Price Level ◽  
Value Added ◽  
Global Value Chains ◽  
Value Chains ◽  
Annual Data ◽  
Turkish Economy ◽  
Study Results ◽  
Bound Test

Currently, global value chains (GVCs) are increasingly shaping the global economy, covering a growing share of international trade, GDP, and employment globally. Global trade is impacted by the emergence of GVCs in areas as diverse as commodities, electronics, and business service outsourcing, among other areas, since the countries involved in the GVCs hold some value(s) and benefit(s) from the exports of the finished product. In this study, the nexus among Competitively Valued Exchange Rates, Price level, and Growth Performance in the Turkish Economy; New insight from the GVCs is investigated using annual data from 1980 to 2020 within the framework of the ARDL bound test, Bayer and Hanck Cointegration (BHC) test, and ECM. The study results revealed that the relationship among real effective exchange rate, exports, and imports induced economic performance and external trade competitiveness particularly when directed at GVCs in both the short and long run. The study recommends that policies enhancing a 10% equilibrium convergence are required annually to competitively minimize the dependence on foreign value-added inputs by importing only world-class inputs for value addition and exports benefits in the competitive GVCs world. Furthermore, monetary policy, GVCs, and economic growth should be investigated.

scholarly journals What matters for firms’ participation in Global Value Chains in Central and East European countries?

Equilibrium ◽  
2019 ◽  
Vol 14 (3) ◽  
pp. 481-502
Author(s):  
Andrzej Cieślik ◽  
Jan Jakub Michałek ◽  
Krzysztof Szczygielski
Keyword(s):  
Empirical Evidence ◽  
Core Competencies ◽  
Estimation Method ◽  
Value Added ◽  
Global Value Chains ◽  
Value Chains ◽  
Skilled Workers ◽  
Firm Level ◽  
Data Set ◽  
East European

Research background: There has been an extensive body of literature on the growing importance of global value chains (GVCs) in developed and emerging economies. This literature argues that GVCs significantly affect international trade patterns and open new possibilities for participating economies to increase both their exports’ quantity and quality, acquire advanced production technologies and improve the overall economic performance. However, the empirical evidence from the Central and East European (CEE) countries, especially at the firm level is still relatively scarce. The majority of existing empirical studies on GVCs in the CEE countries are based on sectoral input-output data. Purpose of the article: In this article, we study the determinants of firm participation in GVCs using firm-level BEEPS data for 29 CEE countries. We hypothesize that larger, foreign-owned, more productive and innovative firms producing a limited range of products and employing skilled workers are more likely to be involved in GVCs. Methods: The intensity of participation in GVCs is measured by the usage of imported inputs and the intensity of exports. The empirical study uses the BEEPS firm-level data set for the period 2011–2014 and the probit estimation method. Findings & Value added: The assembled empirical evidence generally supports these hypotheses. In addition, we find that firms which participate in GVCs pro-duce a smaller  range of products, which means that they concentrate on their core competencies. In particular, we find that the EU membership may facilitate participation in GVCs, especially for smaller firms in the CEE countries. This article adds to the existing literature by examining the firm-level determinants of participation in GVCs using the cross-country firm-level survey conducted by the EBRD and the World Bank.

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