Value Creation by SMEs Participating in Global Value Chains under Industry 4.0 Trend: Case Study of Textile Industry in Taiwan

Abstract

ABSTRACTThe aim of this paper was to explore how small-and-medium enterprises (SMEs) employ technology to integrate industrial supply chains and to participate in global supply chains in the context of the fourth industrial revolution (Industry 4.0). This study chose four textile SMEs from Taiwan, using multiple case studies to explore their participation in global value chains. By focusing on the needs of the SME sector we also discuss why IoT as-a-Service (IoTaaS) might be an appropriate concept in the context of Industry 4.0. We found that textile SMEs can connect to global value chains through the following three roles: original equipment manufacturer of clothing, brand clothing manufacturer, and intermediate trader. They can also participate in global value chains by collaborating with supply chain partners. This participation occurs both vertically and horizontally through value creation models with one of the following four foci: (1) increasing production efficiency, (2) improving negotiation skills for larger and more orders from international suppliers, (3) grasping channel needs and management, and (4) creating novel customer service experiences.