Integration of African firms into global value chains

Abstract

PurposeThis paper aims to analyze the roles that African suppliers play in global value chains and the strategies that foreign firms adopt to integrate African firms into their supply chains.Design/methodology/approachThe empirical research of this paper is based on a multiple case study and on interview data of foreign buyers and their entry into African supply markets: five Finnish companies and five Chinese companies were interviewed in 2014-2015.FindingsThe authors find that Finnish firms make relatively small investments and start sourcing operations on a small scale, whereas Chinese firms are running large infrastructural projects, relying on local sourcing. African firms typically only play modest roles with little value capture in the chain, supplying raw materials and simple products. The African infrastructural and cultural context makes it challenging for foreign firms to provide local suppliers with more strategic roles in their chains, thus hindering integration of local firms into global value chains.Originality/valueThis paper is one of the first to offer a comparison of Finnish (Western) and Chinese (other emerging economy) firms’ sourcing from Africa and provides understanding of the role of African suppliers in current value chains. The authors offer a qualitative exploration of why companies invest in African suppliers and of the scope of African presence in global value chains.