Enabling SMEs’ Learning from Global Value Chains: Linking the Logic of Power and the Logic of Embeddedness of Interfirm Relations

Abstract

Small-and-medium-sized enterprises (SME) often need to draw on the knowledge of their supply chain partners to remain innovative and competitive in the marketplace. In the context of global value chains (GVC), this study examines the factors enabling the learning of SMEs from their GVC dependence by applying the logic of power and the logic of embeddedness. Specifically, we identify the technical adaptation of SMEs in the GVC as a response to their interdependence on the GVC following the logic of power, and an action that heightens information exchange and interorganizational learning at the dyad level following the logic of embeddedness. Linking these logics, we hypothesize that the technical adaptation of an SME mediates the relationship between its GVC dependence and its learning outcome from the GVC, namely the knowledge transfer it receives. Furthermore, this mediating role is stronger when the SME has a longer history of transactional relationship with its GVC partners which amplifies the logic of power, and when it possesses a higher level of financial slack which strengthens the logic of embeddedness. Using multi-sourced survey data from 292 Thai manufacturing SMEs, we find substantial support for the hypothesized relationships. Our findings offer theoretical and practical implications in terms of enabling and supporting the learning pathway of SMEs participating in the GVC.