Suppliers and Strategies for Upgrading in Global Production Networks: The Case of a Supplier to the Global Automotive Industry in a High-cost Location

Abstract

The paper analyses the possibilities for a Norwegian supplier incorporated into global production networks in the automotive industry to perform knowledge upgrading and innovation activity. A consistent finding is that different departments of the supplier are parts of different types of global network. The serial production of the supplier is distinguished by quasi-hierarchical governance by customers and by lean forms of work organization in the production that stimulate continuous, incremental upgrading of the production process. The development department has network relations with customers and learning forms of work organization, which triggers production and functional upgrading. The learning and innovation capacity of the supplier builds on its long tradition as a producer for the global automotive industry, on its location in a regional cluster with strong industrial traditions and on its involvement in a strong Norwegian “aluminium innovation system”. The supplier's capability complements the strategic needs of global automotive firms and contributes to embedding the supplier in a high-cost location.