Firm-Level Strategy and Global Value Chains

Abstract

This chapter draws on three branches of management studies – corporate strategy, technology strategy, and institutional strategy – in order to develop a framework aimed at analyzing and predicting the nature and structure of GVCs. First, corporate strategy informs how firms shape GVC governance by making decisions about their boundaries (what to make and what to buy) and their portfolio of trading partners. Second, technology strategy (particularly the profiting from innovation framework (Teece, 1986)) provides insights into how firms capture the value they create when upgrading, by owning or accessing specialized complementary assets. Third, institutional strategy is a useful tool for analyzing how firms proactively influence the institutions that govern economic transactions in global value chains. These approaches help GVC research to take account of firm-level agency, which contributes to theoretical rigour, policy, and practice.

Keywords: firm strategy, management, governance, innovation, outsourcing, economic development

JEL Classification: L20, O10, O30