No abstract

No abstract

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.

No abstract

The growth in the number of emerging market firms with a global presence highlights the need to better understand how suppliers influence the governance in global value chains (GVCs). However, existing frameworks do not sufficiently elaborate this phenomenon's standing at firm level. Using a multi‐case study of six suppliers in China, this research explains how suppliers can reshape the governance structure with capability development, and thus change the power balance in GVCs. This study highlights governance changes from a supplier‐centric perspective: external governance with decentralized control and internal governance with control integration. More specifically, through the underlying mechanism from a value‐based perspective, suppliers can take greater control of specific value chain activities and move from being a value creator to becoming a value innovator.