Functional Upgrading Research Articles

The mirage of upgrading local automotive parts suppliers through the creation of vertical linkages with MNEs in developing economies

Purpose– This paper aims to explore inter-organizational linkages and the extent of technology transfer and develop propositions related to the linkages, technology transfer and upgrading of local suppliers in developing economies.Design/methodology/approach– The authors conduct a literature review and 50 exploratory interviews with senior managers and policymakers in the automotive parts industry of Pakistan.Findings– The data revealed that three major international joint ventures (IJVs) established in the automotive industry of Pakistan have created significant vertical linkages. However, advanced high-level technology transfer has not actually taken place due to the following reasons: IJV parents are reluctant to engage in technology transfer, there is limited support from local government and local suppliers exhibit limited improvement in their innovation capability. The vertical linkage creation and low-medium technology transfer contributes to incremental product upgrading of the local suppliers, rather than their process upgrading and insertion into the global value chain (GVC).Research limitations/implications– This research looked at technology interactions between IJVs and local tier-1 suppliers (not tier 2 and tier 3) in Pakistan’s automotive industry. This paper’ illustrative case indicates what is required for local suppliers in developing economies to make breakthrough upgrades of their products and processes through their vertical linkages with foreign-owned indigenous firms.Originality/value– Unlike prior research, the authors investigate the role of inter-organizational linkages and the extent of technology transfer, and how these affect local suppliers’ product/process upgrading in the local value chain. Highlighting the illusion of upgrading in the GVC, this paper reveals the difficulties involved in upgrading suppliers’ positions (e.g. insertion and functional upgrading in the GVC) through their vertical linkages with foreign multinational enterprises in developing economies. The illusion of upgrading sheds a rather disappointing light on the position of developing country suppliervis-à-vistheir powerful international partners.

Global Value Chains and Upgrading – Experiences of Hungarian Firms in the Machinery Industry

Global production networks and global value chains have become widespread today. In these cases firms locate the various stages of their value adding activities across different countries. The activities of global value chains form a new phase of globalization characterized by fragmented production, transfer of technology, and decreasing transport costs (Kaplinsky 2013). Developing countries are involved in these production networks, perceiving this as an important (if not the only) way to develop. The Central European countries have taken an active part in the chains of multinational firms since the nineties. The benefit derived from this participation varies across sectors and firms. In this article we analyze the experiences of Hungarian companies in the machinery industry. The structure of the article is the following. After a description of the basic research question and methodology, a literature review is provided. In the following section we introduce the companies surveyed and review their product-, process- and functional upgrading experiences. Finally, we discuss our findings and suggest some managerial and policy implications.
 Journal of Economic Literature (JEL) codes: F23, M21

Strategic transformation in the value-added wood products companies

Purpose– China is a leading country in the production, consumption and exports of value-added wood products. Despite this fact, the sources of competitiveness and the existing strategies in the Chinese wood products companies have not been profoundly studied in an international context. The purpose of this paper is to fill these gaps by exploring managerial perceptions of these issues.Design/methodology/approach– The theoretical ingredients originating from the value chain theory, functional upgrading, the dynamic capability perspective and the natural resource-based view were combined to explore the shift of business functions and sources of the firm-level competitiveness in the Chinese wood products companies. In the empirical part, data from qualitative semi-structured interviews made with 28 managers of seven companies in China based on the case study method were used.Findings– Our results indicate a transition from non-branded manufacturing to original equipment manufacturing to original brand manufacturing business model. With this strategic transformation, the amount of resources and the relative importance of intangible resources increased and the nature of tangible resources also changed.Practical implications– Chinese companies tend to shift from low-value-added to high-value-added products production. Our results are not only informative about the current situation of the Chinese wood products companies, but also can be used as a background for assessing the impact of China’s increasing competitiveness on the future international wood products market.Originality/value– The dynamic capability perspective was incorporated in a new empirical approach to study the strategic management of woodworking industries, and our results provide new information on the importance of intangible resources for firm competitiveness.

Forest protection and economic development by offshoring wood extraction: Bhutan’s clean development path

With globalization, virtual exchanges of natural resources embodied in traded commodities redistribute geographically land use and its environmental impacts. Benefits of national forest protection may be undermined at the global-scale by leakage through international trade. We studied land use displacement associated with national policies to protect forests in Bhutan. This case study provides a simple situation: a dominant forest cover almost unaffected by agricultural expansion, a rural economy dominated by the primary sector, centralized forest conservation policies, and a dominant trading partner. We assessed the net effects at the international level of the Bhutanese forest protection policies by accounting for trade in wood products with India. Our results show that these policies have been effective in maintaining a high forest cover, but have been accompanied by an increasing displacement of forest use to India. In 1996–2011, the difference between the total volume of wood imported from India and the total volume exported from Bhutan—i.e., the net displacement—corresponds to 27 % of the total volume consumed in Bhutan. In 2011, 68 % of the total forest area required to produce the wood consumed in Bhutan was located in India. The wood imported by Bhutan was likely originating from tree plantations in the northeastern Indian states. Since Bhutan has few tree plantations and very valuable natural forests, the net international-level ecological impacts of this land use displacement is arguably positive. Most of the wood imports of Bhutan were wood charcoal for its emerging chemical industries. This case of displacement reflects functional upgrading in the value-chain rather than an externalization of consumption-based environmental costs. Through its government policies, Bhutan has managed to support its economic development while protecting its forests and leapfrogging the negative impacts on forests generally associated with the early stages of modernization.

Export performance in emerging markets: upgrading evidence from a cluster in Brazil

This research addresses the impact of different types of upgrading on a firm's export performance. Consistent with research using the value chain approach and clusters, we showed ways in which small and medium enterprises (SMEs) in a dimension stone cluster upgraded to higher value added activities. Data were analysed using Mann–Whitney U statistics for the surveyed companies. The results supported the hypotheses and indicated a positive association between export performance and product upgrading. Process and functional upgrading also showed significant results. These findings highlighted some managerial contributions, such as the importance of product improvements and international marketing activities for SMEs considering target market demands. This study also indicates the need to upgrade for internationalisation.

What makes export manufacturers pursue functional upgrading in an emerging market? A study of Chinese technology new ventures

This study examines unique factors causing emerging market firms to pursue functional upgrading. Our analysis draws on the resource-based view and learning theory, and our study sample consisted of Chinese new technology ventures. We test the effect of governance mechanisms and internal resources on the functional upgrading of firms. The results indicate that trade shows and quality advantage facilitated the functional upgrading of firms. However, contrary to our expectations, electronic markets and technological advancement do not emerge as significant variables. The implications of the results are discussed in consideration of the existing literature, and future research opportunities are described.

Restoration of the façade of the Pirelli skyscraper in Milan and the repair of damage to reinforced concrete structures caused by a plane crash: An example of critic conservation

The restoration of the former Pirelli Tower in Milan, which dates back to the early 1950s, is an example of various issues in approaching the “conservation of the new”. This project was completed with the broad use of industrial products that evoked different kinds of reflections, if only within the same planning methodology, common to all interventions of architectural restoration. This restoration constitutes an exemplary episode where only a careful and critical evaluation facilitated the understanding of which elements are important in conservation and which can be substituted or updated. This approach uses case-to-case evaluations. The conservation of “new” architecture is similar to other restoration problems, except for the closeness in time to the original works and, sometimes, with its creator.The main intervention concerns the recovery of the structure with over 10,000m2 of continuous aluminum and glass façade in a skyscraper designed by Italian master Gio Ponti and the repair of the damage to the reinforced concrete (RC) structures (designed by another Italian master, Pier Luigi Nervi) caused by a plane crash. The straightening and repair of the RC using entirely innovative methods and the conservation of the structures of the whole façade also translates into financial savings. Approximately 20% of the savings is derived from the complete substitution of the curtain wall. This idea of authenticity results in a method of restoration in which all single parts may not always be replaced for every functional upgrade. This scenario is important news, especially for modern architecture that usually prefers the value of what appears to be new, showing parts that are always perfect since the time they were built. People also consider the conservation of items that were considered as merely industrial products a few years ago.

Neutron shielding and activation of the MASTU device and surrounds

A significant functional upgrade is planned for the Mega Ampere Spherical Tokamak (MAST) device, located at Culham in the UK, including the implementation of a notably greater neutral beam injection power. This upgrade will cause the emission of a substantially increased intensity of neutron radiation for a substantially increased amount of time upon operation of the device. Existing shielding and activation precautions are shown to prove insufficient in some regards, and recommendations for improvements are made, including the following areas: shielding doors to MAST shielded facility enclosure (known as “the blockhouse”); north access tunnel; blockhouse roof; west cabling duct. In addition, some specific neutronic dose rate questions are addressed and answered; those discussed here relate to shielding penetrations and dose rate reflected from the air above the device (“skyshine”). It is shown that the alterations to shielding and area access reduce the dose rate in unrestricted areas from greater than 100μSv/h to less than 2μSv/h averaged over the working day.The tools used for this analysis are the MCNP (Monte Carlo N-particle) code, used to calculate the three-dimensional spatial distribution of neutron and photon dose rates in and around the device and its shields, and the nuclear inventory code FISPACT, run under the umbrella code MCR2S, used to calculate the time-dependent shutdown dose rate in the region of the device at several decay times.

国指定文化財を除く全国の寺院本堂の建替えの実態

The following information was revealed about the reconstruction of main halls. 1. The main reasons for reconstruction of former main halls were deterioration, natural disasters, upgrading of functions and war. 2. The structure of the main hall was wooden in 80%. The use of non-wooden structures peaked in the sixties, but wooden structures have increased again since the eighties nationwide. 3. Reconstruction of main halls could be categorized into those attributable to deterioration, disaster, upgrading functions and no reconstruction. 4. Passing down over many generations and placing importance on tradition will be a guideline for reconstructing the main hall.

Car makers and upgrading: Renault in Romania

Purpose – Illustrated with the case of Renault-Dacia in Romania we aim to give insights in how and why foreign car makers contribute to upgrading. In addition, we analyse the spatial implications of this process for different parts of the value chain. Design/methodology/approach – We divide the investments of Renault in Romania in different stages. In each stage we analyse in which functions the car maker invests, in which place, why, and which implications this has for upgrading. The empirical data stems from in-depth interviews with Renault managers, engineers and designers in Romania and in France and from further corporate information, including annual reports, press releases and web sites. Findings – We show that Renault contributes to all types of upgrading, starting with product and process upgrading in the first stages, while in later stages it also invests in functional upgrading. It does not only upgrade its own subsidiary, but also suppliers and knowledge institutes. Concerning the value chain, we see that Renault keeps the basic research and control functions in the home base, while it performs all other functions in Romania as well. Practical implications – Via the concept of upgrading analysed in various investments stages we provide managers insights in which parts of the value chain they should invest when entering a new market. Originality/value – Although the case Renault-Dacia is relatively well known as an example of a low cost strategy, this article analyses the investment strategy in different stages in time and takes into account various parts of the value chain and upgrading.

Upgrading, Relocating, Informalising? Local Strategies in the Era of Globalisation: The Thai Garment Industry

The garment industry was once the leading manufacturing-based export sector of Thailand. While its international competitiveness has been diminishing since the 1990s primarily due to increases in wage levels, it nevertheless remains an important source of income for a large number of workers. Given this fact, we look at what survival strategies garment suppliers have adopted. In particular, this paper will examine the Thai garment industry from a global value chains perspective, and determine whether upgrading in process, products or functions has occurred. In this context, the paper shows that the Thai garment industry has been stagnating in terms of process and product upgrading. This, in turn, has induced suppliers to move to rural areas where cheaper labour, including migrant labour, is more readily available. We attempt to provide a more evidence-based account of this industrial relocation using unpublished data. Functional upgrading in more locally oriented production networks has occurred; however, competition in such functions has also increased, leading to price-based competition and the erosion of economic rents of network co-ordinators. The paper further argues that informalisation is becoming more common in production and employment relationships, and concludes that such strategies may not be viable in the long run.

Crisis and Upgrading: The Case of the Hungarian Automotive and Electronics Sectors

By triggering a wave of organisational restructuring, reconfiguration of supply chains and consolidation of business processes at multinational companies, the crisis offered significant upgrading opportunities for peripheral actors in globalised production networks (the so-called global value chains). Drawing on Hungarian case studies of local subsidiaries in the automotive and electronics industries, this essay investigates the crisis-induced product, process and functional upgrading opportunities in low-cost locations. We show Hungary's high level of integration into global value chains and document the rapidly ongoing process of functional upgrading.

Does Economic Upgrading Lead to Social Upgrading in Global Production Networks? Evidence from Morocco

Summary This paper contributes to the global production networks (GPNs) literature by analyzing the relationship between economic upgrading (increase in the value added of production) and social upgrading (improvements for workers in GPNs). It does so by drawing on primary data from Moroccan garment supplier firms, showing that economic upgrading can lead to social upgrading with mixed outcomes. Especially in a fast fashion model, the most advanced form of economic upgrading, functional upgrading, often translates into social upgrading and downgrading simultaneously for different workers. This is due to contradictory commercial requirements imposed by global buyers in GPNs.

Accommodating fluorinated amino acids in a helical peptide environment

Fluorinated amino acids represent useful building blocks for structural and functional upgrading of peptides and proteins. Here, we report the identification of a suitable environment for fluorinated aminobutyric acids in a central d-position of a heterodimeric coiled-coil assembly via phage display.

ESTRATÉGIA DE INTERNACIONALIZAÇÃO ATRAVÉS DE UPGRADING FUNCIONAL

Este artigo discute a participação de empresas brasileiras em cadeias globais de valor, tendo como foco do estudo uma empresa do setor calçadista. A maioria das empresas deste setor ainda concentra seus esforços na exportação indireta, participando de maneira reativa nas cadeias globais de valor calçadista. Neste estudo, destaca-se a estratégia adotada por uma empresa brasileira no mercado alemão que busca se internacionalizar com marca própria, desenvolvendo o chamado upgrading funcional. Este direcionamento rompe com a lógica da governança de cadeia exercida pelos varejistas internacionais (buyer-driven). Os métodos utilizados foram o grupo de foco e o estudo de caso da empresa “A”. O estudo encontra similaridades com conceitos propostos sobre cadeias globais de valor e analisa a mudança no posicionamento estratégico da empresa. Os resultados contribuem para o entendimento das mudanças estratégicas necessárias para estágios mais avançados de inserção das empresas brasileiras nos mercados externos.

Upgrading e riposizionamento delle imprese distrettuali nella catena internazionale del valore

The paper uses a unique dataset to address the issue of the functional and competitive upgrading of firms located in Italian industrial districts as a way to counter the growing competition faced by the suppliers of intermediate goods in global value chains (GVC). To maintain or enhance positioning in the global economy, firms use upgrading strategies to move from low-value to relatively high-value activities. An indepth empirical analysis of these upgrading patterns was conducted through a survey composed of questions designed ad hoc according to state-of-the-art GVC literature. In particular, the responses enable us to identify the various upgrading behaviours of firms located inside and outside districts, and how these strategies can boost the competitiveness of industrial districts to address the new challenges of globalisation.

Biocatalytic cross-linking of pectic polysaccharides for designed food functionality: Structures, mechanisms, and reactions

Recent research has demonstrated how cross-linking of pectic polysaccharides to obtain gel formation can be promoted by enzymatic catalysis reactions, and provide opportunities for functional upgrading of pectic polysaccharides present in agro-industrial sidestreams. This review highlights the mechanisms of formation of functional pectic polysaccharide cross-links, including covalent cross-links (notably phenolic esters and uronyl ester linkages) and non-covalent, ionic cross-links (which involve calcium and borate ester links). The treatise examines how such cross-links can be designed via specific enzymatic reactions, and highlights the most recent data concerning enzyme catalyzed engineering of cross-links for in situ structural design of functional properties of foods.

Core Characteristics of Server Virtualization and Functional Upgrading Issues

Server refers to computer software that manages resources and offers services to users. It is usually divided into a file server, database server and application program server. Server virtualization is an important trend of the server development. This paper makes relevant research on such aspects as the followings: the server virtualization technology; the characteristics of the server virtualization; and the difficult points of functional upgrading of the server virtualization and that optimization of the server performance is the fundamental aspect of upgrading. It hopes to play a promotion role for knowing the server virtualization in a better way.

Micro-level aspects of knowledge-based development: measuring quality-based upgrading in MNCs' Hungarian subsidiaries

With the fragmentation and the geographical dispersal of production, not goods but activities are the basic units of international trade analyses. Therefore, data about local subsidiaries’ business functions (BFs) produce a more reliable picture on local subsidiaries’ upgrading patterns than trade statistics with a ‘product approach’. This paper presents the first results of a Hungarian research project on local subsidiaries’ functional upgrading. Our results call for the refinement of the analytical framework and of data gathering methods. Three kinds of challenge have to be resolved. 1 BFs are decomposable, consisting of dozens of sub-functions, which results in sizeable inter-subsidiary differences in the contribution of ‘identical’ functions to MNC-level value added. 2 The impact of functional upgrading on subsidiaries’ performance indicators is ambiguous. 3 BF decomposability impacts subsidiary classifications. Subsidiaries can be classified innovative contributors in specific sub-functions, while at the same time they are implementers with basiccapabilities in other sub-functions of the same BF.

Research Regarding the Flow Rate and Pressure Variation for the Nozzles Mounted on the Eep-600m Spraying Machine

Reduced environmental pollution and ensuring fair treatment in crops can be achieved through constructive and functional upgrading of spraying machines.
 The paper studies the variation of the nozzle flow, liquid pressure and uniformity of distribution for the EEP-600M machine.
 The experimental results have shown changes in the functional parameters of the nozzle (flow and pressure) depending on the nozzle position on the ramp section. The way of connecting the hoses leading the solution to the ramp and the number of nozzles per segment can influence the uniformity of distribution of the solution.