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Dear friends and colleagues,
The third issue of Global Strategy Journal in 2020 is available! It contains the special issue on Global Strategy and Global Value Chains edited by Gary Gereffi, Pavida Pananond, and Torben
Pedersen.
You can learn about the latest thinking on global value chains from the introduction (Pananond, Gereffi & Pedersen) five articles selected for the special issue (Lee, Jimenez, Yang & Song;
Dindial, Clegg & Voss; Ryan, Buciuni, Giblin & Andersson; Lechner, Lorenzoni, Guercini, & Gueguen; and Murphree & Breznitz) and another two regular articles on the topic (Li & Bathelt; Torres de Oliveira, Sahasranamam, Figueira & Paul).
The ideas are particularly useful for the current discussions on the resilience and governance of global value chains in the face of disruptions.
Best wishes,
Gabriel Benito, Alvaro Cuervo-Cazurra, and Ram Mudambi, Co-editors of Global Strategy Journal
Volume 10, Issue 3
Special Issue:
Global Strategy and Global Value Chains
Issue Edited by: Gary Gereffi, Pavida Pananond, & Torben Pedersen
We contend that a synthesis between the literatures on global strategy and global value chains (GVCs) is mutually beneficial. A typology of four themes—managed cross‐border activities, network optimization, bottom‐up upgrading, and strategic coevolution—illustrates
the underlying concepts and mechanisms that these two approaches share in common. Our integrative typology provides an analytical framework to understand the interplay between the statics of GVC governance and the dynamics of firm strategy. Firm‐level actions
are a key factor in effective GVC‐level policy making, and our framework provides a roadmap to analyze how major disruptions, such as digitalization and pandemics, affect the symbiotic relationships between GVCs and firm strategy.
This study combines transaction cost economics and network learning literature to examine the moderating effect of knowledge from internal versus external local supplier on subsidiary‐level intrafirm trade within multinational enterprises' (MNEs) global value
chain networks. We conceptualize knowledge in a multidimensional way, disentangling it into institutional knowledge in high‐risk countries and internationalization knowledge in all countries. Empirical results from 5,660 observations of 487 Korean MNEs (1995–2013)
show that MNEs' institutional knowledge with external local suppliers in high‐risk countries has a stronger negative effect on the relationship between political risk and subsidiaries' intrafirm trade integration than with internal suppliers. Internationalization
knowledge from external local suppliers in all countries also has a stronger negative effect on the relationship between political risk and subsidiaries' intrafirm trade integration than with internal suppliers.
Researchers have tried to understand how insertion into global value chains (GVCs) can lead to economic upgrading for the developing country firms (DCFs) involved. Many of these studies operationalize upgrading as a DCF's movement into higher value‐added activities,
where the creation and appropriation of value‐added are assumed to be symbiotic. In doing so, they divorce economic upgrading from its effect on interfirm bargaining power. We address this core assumption by introducing insights from theories on power‐dependence
relations. We argue that pursuing an economic upgrading trajectory can be positioned a necessary but insufficient condition for DCF value‐added appropriation. In so doing, we theoretically explicate the conditions under which an economic upgrading trajectory
is likely to result in DCF value‐added capture.
Upgrading and governance in global value chains (GVCs) have been understood mainly through studying the buyer–supplier transaction, where the supplier is typically an independent contractor from a developing economy. Little is known about how subsidiaries of
multinational enterprises (MNEs) can upgrade in a GVC, whose core activities are coordinated through the “hierarchy” governance model. Using an in‐depth longitudinal single case study in the medical devices industry, we explain how a subsidiary can accomplish
upgrading in an intra‐MNE GVC and, over time, increase its control of this GVC reaching a joint coordinator role for its governance. Our findings show that partaking in innovation may not be the final stage of a subsidiary's upgrading but can represent the
start of a new phase that culminates with joint coordination of the GVC.
Suppliers from emerging economies have been particularly active in acquiring brands from advanced economies. We analyze changes in the global value chain (GVC) of the sports shoe industry and show how hollowing out the asset bases of brand‐holding firms through
increasing outsourcing has enabled the emergence of rising power firms, as well as a new brand game and a market for brands. These developments in the GVC might be a future challenge for traditional brand‐holding lead firms. We show that managers focused on
branding and distribution issues were myopic towards the strategic initiatives of suppliers. Managers need to pay attention to the potential long‐term consequences of outsourcing and offshoring activities, as suppliers could become competitors or acquirers
of their order‐giving firms, leading to the question: Are we approaching a state of dual GVC leadership, or do lead firms risk being kicked out by their suppliers?
How do multinational enterprises (MNEs) address host‐country challenges after the initial investment? And when does foreign direct investment (FDI) result in local upgrading? Using a study of FDI and global value chain participation in Dongguan, China, we find
a mechanism in which FDI results in sustained local economic upgrading and improved MNE subsidiary performance: a collaborative public space (CPS). A CPS is a social space based on trust that enables different and divided actors to engage, sharing concerns
and information in ways that they otherwise would be disinclined to consider. Using the CPS concept, we expand understanding of the effectiveness of MNE strategies in host‐country environments and the conditions in which FDI leads to change in global value
chains.
This article examines how multinational enterprises (MNEs) leverage knowledge across clusters. Based on the geographical sources and the contextuality of knowledge, we construct a typology of four MNE knowledge strategies across space: replicating, scouting,
connecting, and integrating, and take into consideration their spatial, industrial, and leadership contexts. A fuzzy‐set qualitative comparative analysis of 49 pairs of headquarters‐subsidiary linkages between Canada and China suggests that replicating strategies
occur in cluster‐to‐non‐cluster contexts or in fields with a knowledge gap between the two countries, whereas scouting strategies are typical in non‐cluster‐to‐cluster investments. Connecting and integrating strategies are focused on cluster‐to‐cluster contexts.
We also find that while connecting occurs in fields where knowledge is locally bounded, integrating takes place in nonlocally bounded contexts. Finally, scouting and integrating strategies are associated with home nationals as subsidiary leaders.
By adopting a phenomenon‐based research approach, we examine the case of an emerging market (EM) supplier upgrading its position in the automotive global value chain (GVC) through the acquisition of a technologically advanced firm from a developed market (DM).
Drawing on GVC and social integration literature, we explore the role of social integration adopted by the EM acquirer to achieve upgrading through acquisition. We develop a conceptual framework where we explain the different social integration mechanisms
that EM multinationals employ before and after acquisitions to achieve upgrading.
Alvaro CUERVO-CAZURRA
Professor, International Business and Strategy, Northeastern University
Co-editor, Global Strategy Journal
D'Amore-McKim School of Business, 360 Huntington Avenue, Boston MA 02115, USA
[log in to unmask]. +1-617-373-6568. www.cuervo-cazurra.com.
Recent articles:
State ownership and internationalization: The advantage and disadvantage of stateness. Journal of World Business
State ownership and international expansion: The S‐Curve relationship. Global Strategy Journal
Skepticism on globalization and global strategy: Increasing regulations and countervailing strategies. Global Strategy Journal
Pro-market institutions and global strategy: The pendulum of pro-market reforms and reversals, Journal of International Business Studies
Recent books:
State-Owned Multinationals: Governments in Global Business. Palgrave
Mexican Multinationals: Building Multinationals in Emerging Markets. Cambridge University Press
Emerging Market Multinationals: Solving Operational Challenges in Internationalization. Cambridge University Press.
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