Sourcing from Northern and Southern Countries: The Global Value Chain Approach Applied to Italian SMEs

Abstract

Global value chain literature has proposed alternative forms of governance in explaining the global structure of industries and their dynamics. Despite the interest of those studies on how lead firms organize manufacturing activities at the global level, this framework has not been used to describe internationalization processes at the firm level. The paper is oriented at improving the understanding of firm internationalization strategies by applying the global value chain perspective, with a specific attention to SMEs. We argue that this approach can contribute to further explain how a firm can arrange its manufacturing activities on a global scale taking into account, on the one hand, how to select and coordinate international suppliers and, on the other, how to orchestrate international activities among countries (locations). The paper aims at analyzing the relationships between foreign suppliers’ selection—both in terms of competences and location—and a firm’s strategy. Based on a quantitative analysis on 196 Italian SMEs, our results show that there is no univocal relationship between a firm’s strategic intent—efficiency vs. innovation—and global suppliers’ selections—and that firms mix different forms of governance in globally structuring their value chains.