Abstract
Extant literature concerns about industrial upgrading in developing countries, and stresses the importance of joining global production networks (GPN). Taking the perspective of the updating approach of GPN theory, this paper selects the case of China to combine local industrial upgrading with financial activities, and explores how going public triggers industrial upgrading in developing countries. In 2015, semi-structured interviews were conducted with 36 listed firms and their related partners in Jinjiang, a county-level city in China. The findings indicate that local lead firms in developing countries have been increasingly involved in the global financial market by going public, which in turn provides these countries with opportunities of industrial upgrading. However, it does not necessarily guarantee industrial upgrading. Whether or not going public can bring about industrial upgrading depends mainly on intrafirm coordination, reconfiguration of interfirm relationships, and extrafirm bargaining with local governments. This case study suggests that finance be integrated into GPN theory as some scholars suggest, and the impacts of local lead firms in developing countries on the dynamics or reconfiguration of GPN be taken consideration, especially in some specific sectors.
Highlights
Since its reform and opening-up in the late 1970s, China has made a great expansion in manufacturing sectors, and has created the miracle of “made in China”
Many manufacturing firms in China have integrated into global production networks (GPN) through original equipment manufacturers (OEM) with a low level of profit, and only a few can realize an upgrading towards being original design manufacturers (ODM) or original brand manufacturers (OBM)
Extant literature considers that integration into GPN as offshoring manufacturing destinations provides business opportunities, technological accumulation, and knowledge learning for local firms in developing countries, but pays little attention to the financial activities of lead firms in those countries and their effects on local development
Summary
Since its reform and opening-up in the late 1970s, China has made a great expansion in manufacturing sectors, and has created the miracle of “made in China”. Researchers rarely focus on industrial upgrading in a specific region within a developing countries with integration into GPN. Financial activities can provide firms with external capital support for reorganizing production, and enhancing competitiveness and innovation [9,10,11,12]. The research about financial activities provides little discussion of its connection to industrial upgrading. This article provides a case in China, combines industrial upgrading of local clusters with financial activities, and aims to explore whether going public of local firms can trigger the industrial upgrading of clusters in developing countries. The second section makes literature review on the relationships of GPN, financial activities, and industrial upgrading, and establishes the analytical framework of this article. The fifth part draws conclusions and discussion for further research
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