Value Chains, Networks and Clusters: Reframing the Global Automotive Industry

Posted: 7 Jul 2008

See all articles by Timothy Sturgeon

Timothy Sturgeon

Massachusetts Institute of Technology (MIT)

Johannes Van Biesebroeck

K.U.Leuven; Centre for Economic Policy Research (CEPR)

G. Gereffi

Duke University - Department of Sociology - Director, Center on Globalization, Governance & Competitiveness

Date Written: May 2008

Abstract

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, R11

Suggested Citation

Sturgeon, Timothy and Van Biesebroeck, Johannes and Gereffi, Gary, Value Chains, Networks and Clusters: Reframing the Global Automotive Industry (May 2008). Journal of Economic Geography, Vol. 8, Issue 3, pp. 297-321, 2008. Available at SSRN: https://ssrn.com/abstract=1155914 or http://dx.doi.org/lbn007

Timothy Sturgeon (Contact Author)

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Johannes Van Biesebroeck

K.U.Leuven ( email )

Naamsestraat 69
B-3000 Leuven
Belgium
+3216326793 (Phone)
+3216326796 (Fax)

HOME PAGE: http://www.econ.kuleuven.be/public/N07057/

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Gary Gereffi

Duke University - Department of Sociology - Director, Center on Globalization, Governance & Competitiveness ( email )

Box 90088
Durham, NC 27708-0204
United States
919-660-5880 (Phone)
919-684-2855 (Fax)

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