Global Production Networks, Knowledge Diffusion and Local Capability Formation

13 Pages Posted: 7 Mar 2016 Last revised: 23 Apr 2016

See all articles by Dieter Ernst

Dieter Ernst

East-West Center; Centre for International Governance Innovation (CIGI)

Linsu Kim

Korea University - College of Economics and Commerce

Date Written: April 6, 2002

Abstract

This paper develops a conceptual framework that links knowledge about global production networks (GPNs), international knowledge diffusion and local capability formation. The authors analyze the forces behind the rise of GPNs, such as liberalization, information and communication technologies as well as global competition. They then discuss the network flagship model and examine through which mechanism knowledge diffuses. The authors conclude that the major determinant for successful knowledge conversion by local suppliers is their absorptive capacity. The authors advise such firms to invest in highly skilled labor and train also their own suppliers.

Keywords: International business strategy, Global production networks, Multinational Corporations, Organizational Knowledge, Knowledge diffusion, capability formation, local suppliers

JEL Classification: O3, O38, O53

Suggested Citation

Ernst, Dieter and Kim, Linsu, Global Production Networks, Knowledge Diffusion and Local Capability Formation (April 6, 2002). Research Policy, Vol. 31, No. 8/9, 2002. Available at SSRN: https://ssrn.com/abstract=2742956 or http://dx.doi.org/10.2139/ssrn.2742956

Dieter Ernst (Contact Author)

East-West Center ( email )

1601 East-West Road
Honolulu, HI 96848-1601
United States

Centre for International Governance Innovation (CIGI) ( email )

57 Erb Street West
Waterloo, Ontario N2L 6C2
Canada

Linsu Kim

Korea University - College of Economics and Commerce ( email )

Anam-dong, Sungbuk-Ku
Seoul, 136-701
Korea

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