Value Chains, Networks and Clusters: Reframing the Global Automotive Industry
Massachusetts Institute of Technology (MIT)
Johannes Van Biesebroeck
K.U.Leuven; Centre for Economic Policy Research (CEPR)
Duke University - Department of Sociology - Director, Center on Globalization, Governance & Competitiveness
Journal of Economic Geography, Vol. 8, Issue 3, pp. 297-321, 2008
In this article, we apply global value chain (GVC) analysis to recent trends in the global automotive industry, with special attention paid to the case of North America. We use the three main elements of the GVC framework firm-level chain governance, power and institutions to highlight some of the defining characteristics of this important industry. First, national political institutions create pressure for local content, which drives production close to end markets, where it tends to be organized nationally or regionally. Second, in terms of GVC governance, rising product complexity combined with low codifiability and a paucity of industry-level standards has driven buyer supplier linkages toward the relational form, a governance mode that is more compatible with Japanese than American supplier relations. The outsourcing boom of the 1990s exacerbated this situation. As work shifted to the supply base, lead firms and suppliers were forced to develop relational linkages to support the exchange of complex uncodified information and tacit knowledge. Finally, the small number of hugely powerful lead firms that drive the automotive industry helps to explain why it has been so difficult to develop and set the industry-level standards that could underpin a more loosely articulated spatial architecture. This case study underlines the need for an open, scalable approach to the study of global industries.
Keywords: Automobiles, global value chains, networks, clusters, governance, institutions
JEL Classification: L23, L62, F15, R11Accepted Paper Series
Date posted: July 7, 2008
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