Creating value in global innovation networks: A study of smartphone industry

Abstract

The development and growth of industries in the developing and newly industrialized countries, such as Taiwan and South Korea, has been solely emphasizing on cost-leadership strategy. Although such capital-intensive, volume-driven and cost-down strategies have been successful measured by industrial and economic growth, but the amounts of value created and captured in global value chain and innovation networks are insignificant. Recently, companies in South Korea, such as Samsung, Hyundai, LG, and Kia, and Taiwanese firms, such as HTC and Asus, have been able to create and capture extra value through innovation and branding strategies to differentiate their products in the global marketplace. This research applies Lee and Ho's [1] global industry value creation framework to study the value creation strategies in both developed and newly industrialized countries. We examine the value creation strategies of three smartphone companies in South Korea, Taiwan, and the United States, and evaluate the effectiveness of each company's ability to capture value in the global innovation network. Several managerial and policy implications will also be discussed.