The research project investigates whether automotive component manufacturers located in South Africa are taking advantage of their participation in global value chains to functionally upgrade. Two factors, namely position in the value chain and global connectedness are assessed in terms of their effect on the propensity for firms to innovate and upgrade. Continuous pressure from value chain leaders to reduce costs coupled with increasing competition from other low-cost, developing economies means that South African automotive component manufacturers have to upgrade to improve their competitiveness and maintain their positions in the global value chain. This quantitative study analysed data collected through interviews from 76 companies in the National Association of Automotive Component and Allied Manufacturer‟s database of firms. The results support previous literature and demonstrate that indigenous innovation does occur under certain conditions. Whilst participation in global value chains seems to stimulate innovation, it does not necessarily guarantee that innovation will occur nor does it mean that innovation will automatically result in upgrading. Questions that require further investigation include among others the upgrading trajectory firms over time and a deeper understanding of the mechanisms used by innovation leaders to absorb and deploy the knowledge and technology obtained from global interactions. Copyright / Dissertation (MBA)--University of Pretoria, 2010. / Gordon Institute of Business Science (GIBS) / unrestricted

To counteract the colonial division of labour and equalise trade relations across the global North and South, Global Value Chains (GVC) analysts have advocated value chain upgrade. Such upgrade would entail a much-needed financial improvement for Southern producers. Rather than turning to governments and IGOs, GVC analysts have generally addressed their policy suggestions to firms directly. There is an idea that firms can actively disentangle and disrupt prevalent hierarchies in their own activities. This thesis looks closer at prefigurative politics as a political strategy and asks: are prefigurative upgrade projects a successful tool for equalising trade relations across colonial divides? Can individual firms disentangle colonial inequalities in trade? As marxists and decolonial theorists have argued, global trade inequalities are about more than money: economic relations are inherently political. The 'value' in Global Value Chains should be understood not only as return on investment or profit, but also as something broader, a question of what makes a good life and a balanced division of work in society. GVC analysis has hitherto paid insufficient attention to these insights. As a remedy this thesis proposes the addition of a new concept to the GVC toolbox, voice' upgrade', i.e. an improvement of the ability of all actors in the chain to speak and listen about the political questions of value. Two case studies are used to ground the discussion: firstly, the trading of coffee from the Zapatistas in Mexico to Café Libertad in Germany. Secondly, the export of spice blends and sauces from the Western Cape of South Africa via the firm Turqle. These prefigurative projects both subvert and reproduce prevailing hierarchies. Importantly, while the former is possible,it requires deliberate facilitation.

This thesis explores the mechanics of governance within several layers of participating firms in the global value chain of the automotive industry, and how new forms of governance shape the development of the Brazilian and Chinese automotive industry. In particular, it examines how the local supply firms from Brazil and China can integrate and upgrade in the globalized automotive industry. By using the global value chain (GVC) framework, the changing inter-firm dynamics between buyer and supplier are analyzed, and their impact on the indigenous supply firms from Brazil and China examined. The results highlight the role of product architecture in defining the value chain governance approach. Through the evolution of product architecture, the lead-firms can globalize their approaches to procurement and supply chain management. Moreover, the globally harmonized products allow the lead-firm to effectively restructure the global supply base to establish a globally harmonized components supply industry by internationalizing the most capable supply firms. Oligopolies along the entire GVC are consciously created by the lead firm. The dynamics of competition between supply firms are changing, as the market for integral components with high asset-specificity are merging into one global market with oligopolistic and oligopsonistic features. While some supply firms from the emerging markets have been able to utilize their business ties with western assembly firms to upgrade within the GVC, most are under pressure to be squeezed out of the GVC through increased global competition. The thesis contributes to the field of development studies by analyzing the prospects for emerging market firms to participate and upgrade in the GVC of western lead-firms. Furthermore, it contributes to the economic theory of governance by presenting evidence of forms of influence outside the realm of supplier-buyer contracts. The thesis further extends the global value chain framework by introduction a fine-tuned approach to ‘power’ as a determinant of governance.

The Indonesian manufacturing sector faces significant challenges in its attempt to upgrade and remain competitive in both domestic and global markets. Indonesian manufacturing firms are increasingly integrated into global markets via global value chain ties. Yet, little is known about how such involvement impacts upon the ability of Indonesian firms to upgrade. This study aims to understand the nature of upgrading processes within the Indonesian manufacturing sector through a comparison of the Indonesian garment and consumer electronics manufacturing firms. To gain a better understanding of upgrading processes, this study integrates the conceptual frameworks of technological capability (TC) and global value chains (GVC) in its analysis. While the GVC literature provides useful insights into the role played by global value chain leaders in assisting, or constraining, through the ways in which they govern value chain ties, the upgrading processes of local producers, the TC framework gives a valuable understanding of the role of capabilities of local manufacturing firms and their ability to undertake upgrading processes. By combining these two frameworks, this study asks the following question: what roles do governance and technological capability play in upgrading processes within the Indonesian garment and consumer electronics value chains?To address the research question, this study gathered both quantitative and qualitative data through surveys and in-depth interviews of Indonesian garment and consumer electronics firms. Firm level case studies are analysed to obtain detailed insights into the process and dynamics of upgrading, value chain governance and capability acquisition undertaken by Indonesian garment and consumer electronics manufacturing firms. Based on the evidence drawn from the survey and eleven case studies within the Indonesian garment and consumer electronics sectors, this study suggests that forms of value chain governance and types of technological capability both play important roles in upgrading processes. Furthermore, upgrading processes and dynamics take place not only in global value chains but also in domestic value chains. Insertion into domestic value chains may, in fact, promote the ability of some Indonesian garment and consumer electronics manufacturing firms to undertake functional upgrading. By demonstrating that the technological capability of the Indonesian garment and consumer electronics manufacturing firms can play an important role in upgrading especially when firms are engaged in domestic value chains but is less pronounced when firms are engaged through hierarchical ties into global value chains, the study provides a more dynamic perspective then standard studies on upgrading and value chain linkages. In terms of policy, this paves the way for a more active role of local manufacturing firms from developing countries to be recognised as contributing to upgrading processes.

The desegregation of global value chains has accelerated the development of a fabric of connectedness between firms, locations, and inventors. The modern global business world is now characterized by these connections, which serve as conduits of high value knowledge between specialist repositories, or centers of excellence. The properties of knowledge repositories are a function of the co-evolution of their constituent firms and the locations themselves. Thus, it is of great interest to scholars of international business, economic geography, and innovation studies to understand the roles and characteristics of the firms and locations that participate in global value chains. This dissertation explores the movement of knowledge from seemingly disparate locations and firms as it coalesces into ideas, and then follows the path of transformation into a commercialized product or service. In the first chapter, I laid the theoretical groundwork for the dissertation and review how the different studies contribute to the our understanding of how firm and location characteristics interact with global innovation connectedness, and vice versa. Three chapters that study innovation dynamics at within global value chains then follow. In the second chapter, I explore the characteristics of orchestrating firms, high order specialists that coordinate the movement of knowledge and activities in global value chains. With evidence from the pharmaceutical industry I find that not all orchestrating firms are created equal: a core insider group, known as “majors”, possess a unique legitimacy that enables the absorption of risk and grants access to greater resources that are required to control the value capture from market-defining innovation. In the third chapter, I discuss the interdependencies of orchestrating firms and industrial change by examining the Detroit auto cluster. I argue that the very forces that led to significant manufacturing loss in the Detroit area may also be behind the resilience of its knowledge production, a finding underwritten by significant innovation connectedness to other auto clusters. In the fourth and final chapter, I find that knowledge connectivity is a crucial driver of exploration into new technological areas, and that firms may be connected both internationally and domestically. Further, I find that the operational footprint of the firm is a vital amplifier of its connectivity efforts. / Business Administration/Strategic Management

This thesis deals with the globalization of production, a salient feature of the modern economy. The development of international outsourcing as a widespread business practice and the simultaneous decrease in trade and transport costs have contributed to the growth of a phenomenon known as global value chains. The main aim of the thesis is to understand how global value chains alter the location of economic activity. The thesis also studies the extent of firms' participation in global value chains and its consequences for firm performance.   The thesis consists of four papers studying the behavior of firms in global value chains. Paper 1 analyzes how production fragmentation influences the importing and exporting behavior of Swedish firms in the manufacturing sector. Paper 2 focuses on manufacturing firms in the ICT sector and analyzes the effect of global sourcing on firm performance. In Paper 3, the thesis examines deeper implications of global production by investigating whether exposure to trade raises firms' sensitivity to external shocks. The final paper in the thesis studies the location patterns of multinational firms and analyzes the effect of institutional distance on the number of multinational entries in developing countries.   A number of patterns emerge from these studies. The first is that Swedish manufacturing firms increasingly participate in global value chains by sourcing production inputs from overseas to create products for local and foreign customers. As a result, global value chains help to alter the specialization patterns of manufacturing firms. The second finding is that firms reap benefits from global sourcing in the form of greater efficiency. However, global sourcing may also raise the responsiveness of firms to negative external shocks. The final key result points to a developing trend in the location of activity in which emerging market multinational firms are becoming significant sources of foreign direct investment flows and their investment patterns challenge existing theories of multinational location choice.

Given growing concerns regarding the chocolate sector's long-term future, ever more private-sector, public-sector and civil-society stakeholders have become involved in initiatives aiming to make cocoa production more 'sustainable'. However, despite the omnipresent term, stakeholders' understandings of associated environmental, commercial and socio-economic priorities diverge: while transforming cocoa into a more attractive livelihood for farmers is paramount for some, others prioritise links to global environmental challenges. A third dimension encompasses commercial concerns related to securing supply, an increasing qualm given projected cocoa shortages and ever-rising concentration in the marketplace. This research argues there are considerable tensions between different stakeholders' commercial, socio-economic and environmental priorities in cocoa sustainability initiatives especially in light of the sector's intensifying challenges. Further tensions emerge between underlying drivers and representations, as public-facing communication continues to emphasise altruism rather than commercial necessity, locating engagements in 'nice-to-have' rather than 'business imperative' territory. Based on documentary analysis, semi-structured interviews, focus group discussions and participant observation, this thesis aims to capture how cocoa-sector changes have driven shifts in stakeholder priorities and representations, incorporating voices from across the initiatives ranging from cocoa producers to chocolate consumers. Utilising a modified global production networks lens to represent the full spectrum of stakeholders involved, the research maps three cocoa sustainability initiatives incorporating conservation or carbon measures in terms of power and embeddedness, stakeholder drivers and representations. While identifying tensions, it also argues that acknowledging divergent understandings of the polysemic 'sustainability' concept constitutes an opportunity for a much-needed redressing of power and embeddedness asymmetries to address systemic issues threatening the sector's future. However, the thesis also observes that despite protestations of partnership, few actors are willing to contemplate the systemic changes in favour of more equitable treatment and power distribution which would be required to safeguard the sector's long-term viability. This thesis's contributions include its unprecedented critical exploration of the diverging socio-economic, commercial and environmental drivers which diverse stakeholders associate with cocoa sustainability, the meanings they create towards the public, and the link to underlying power and embeddedness structures. These analytical foci have proved instrumental in unpacking emerging tensions, which are likely to grow more marked as cocoa shortages become more acute and understandings of sustainability continue to diverge.

<p>This thesis aims to contribute to global value chain studies by examining an empirical case of vietnamese apparel firms in Swedish clothing value chains with a focus on insertion and upgrading issues . we apply mixed method of  both qualitative and quantitative tools from a holistic approach researching from both vietnamese suppliers and Swedish buyers perspective. Our findings show some progressive improvements of Vietnamese suppliers in GVC especially of private sector. In swedish value chain trust and long term cooperative business realtions for mutual benefits are among the key points for insertion and ugrading. On Vietnamese suppliers side, lack of information serves as the main reson for their reluctance in approaching Swedish market . Willingness to listen to buyer's advice or suggestions and management strategic Vision of development are critical for upgrading sucess of suppliers.</p>

This thesis aims to contribute to global value chain studies by examining an empirical case of vietnamese apparel firms in Swedish clothing value chains with a focus on insertion and upgrading issues . we apply mixed method of  both qualitative and quantitative tools from a holistic approach researching from both vietnamese suppliers and Swedish buyers perspective. Our findings show some progressive improvements of Vietnamese suppliers in GVC especially of private sector. In swedish value chain trust and long term cooperative business realtions for mutual benefits are among the key points for insertion and ugrading. On Vietnamese suppliers side, lack of information serves as the main reson for their reluctance in approaching Swedish market . Willingness to listen to buyer's advice or suggestions and management strategic Vision of development are critical for upgrading sucess of suppliers.

Throughout the history of capitalism, the process of industrialisation has been recognised as the engine of economic development. No region in the world ‘suffers’ more acutely from a lack of industrialisation than Africa, clearly highlighting the need for industrial policy. However, the formulation of such policies is not straightforward in the current era of globalised production. In recent years, a debate has taken hold over whether the geographical expansion and increased fragmentation of production networks—often referred to as the expansion of global value chains (GVCs)—calls for new approaches to industrial policy in developing countries. By drawing on the case of Ethiopia, this dissertation demonstrates that industrial policy in developing countries needs no new ‘magic bullet’ in the era of expanding GVCs. The dissertation applies a funnelling technique, meaning that each chapter builds on information presented and arguments made in the preceding chapters. Chapter 2 contextualises the importance of manufacturing and industrial policy for economic development in Africa. The chapter argues that the manufacturing sector continues to play an integral role in the process of economic development, and discusses the role of the state in the process of industrialisation, arguing that there are strong justifications for intervention through industrial policy. Chapter 3 looks at how the expansion of GVCs affects the productive structures of developing countries, particularly those in Africa, and asks if industrial policy has to change in this new global production environment. I argue that the fundamental problems of participating in GVCs are the same as when countries like South Korea and Taiwan industrialised between 1960 and 1990, although on a different scale. Chapter 4 analyses Ethiopia’s industrialisation trajectory and GVC-oriented industrial policies in the textile and leather industries. This analysis is based on 6 months of fieldwork in Ethiopia, where I carried out several interviews with stakeholders in the private and public sector and collected and collated datasets on industrial performance in collaboration with government agencies. While the findings of this chapter make an original empirical contribution to explaining the specific case of Ethiopia, the insights provided by the analysis offer broader conceptual conclusions as well.