No abstract

This paper investigates a widespread assumption in the upgrading literature that lead firms and higher‐tier suppliers perform better and capture a larger value than lower‐tier suppliers. In contrast to other studies, this analysis is based on a detailed examination of a cross‐sectoral sample of 251 companies (including companies outside production networks) nested in a small economy (Czechia). Our results indicate that the economic performance of companies varies profoundly according to a number of characteristics. Generally, domestic firms tend to capture larger value, that is, they spend more on capital investments, research and development (R&D), and personnel costs. Surprisingly, lead firms tend to spend significantly less on personnel costs, taxes and R&D than first‐tier suppliers. The highest value capture is by firms operating outside production networks. The results warn against overgeneralisations and indicate the need for a careful context‐sensitive analysis before the design of supportive policies.

In the paper, we employ a global value chain / global production network framework to examine value creation and especially value capture by various types of companies. The analysis is based on economic performance indicators from the 300 largest companies in Czechia based on turnover from 2014 to 2019. However, the hypothesized pattern of value capture was not confirmed in the case of foreign-owned companies. This finding suggests that an important role is played by the mandates multinationals assign to their national branches. The analysis also showed that companies operating in the service sector, broadly conceived, tend to capture less value than manufacturing firms. Finally, companies in both the manufacturing and service sector with access to the end market tend to capture greater value than companies without such access. Overall, our empirical analysis of value captured demonstrates that the assumption of a straightforward relationship between company position within a global value chain or global production network and value capture can be overly simplistic.