Global Lead Firms Research Articles

Strategic coupling, cross‐scalar tension and local upgrading in the globalizing automotive industry in Guangzhou, China

AbstractThis paper examines how latecomer firms manage to achieve industrial upgrading through strategic coupling with global lead firms in automotive production networks. Drawing upon the example of the Guangzhou Automotive Corporation in southern China, this paper theorizes ‘cross‐scalar tension’ as a key factor to explain why the four cases of strategic coupling between lead firms, the same domestic firm and state ended in different results, from decoupling to a sustainable coupling with local upgrading. This paper contributes to the pertinent literature by demonstrating that cross‐scalar tension is inherent to the nature of global production networks, and unreconciled tension concerning different corporate strategies on technological transfer, localization and product development could lead to decoupling. Importantly, good coordination and matching on corporate strategies between lead and domestic firms could relieve cross‐scalar tensions, thus fostering local industrial upgrading and sustainable strategic coupling.

Trajectories of value capture, strategic coupling and labour regime reconfiguration: Coal mining, automotives and business services in post-socialist Romania

Drawing on global production network research and conceptual explanations of the changing spatial divisions of labour, this article investigates the transformative effects of the dynamic interplay between strategic coupling and multiscalar changes across labour regimes in Central and Eastern European post-socialist sectoral trajectories. It interrogates critically whether sectors across peripheral regions have been able to slot themselves into lead firms’ transnational production systems, resulting in processes of value creation, value capture or value destruction. The empirical analysis reveals that the capacity of domestic resources to purposively match and align themselves to global lead firms and their strategic objectives is influenced by local historical legacies, spatiality, elite agency and labour agency, which combined to shape distinct meso-level transformations. The methodology is based on analysing the post-socialist transformation of three sectors in Romania, which have different historical legacies, institutional configurations, and spatial and temporal vectors of development, allowing us to trace interactions between different modes of strategic coupling or decoupling and labour regime reconfiguration. The central thrust of the article highlights how different modes of strategic coupling into global production networks, or decoupling from global production networks, are causally linked to the reconfiguration of labour regimes, leading to long-term regional socio-economic transformations.

Regionalisation or domesticalisation? Configurations of China’s emerging domestic market-driven industrial robot production networks

Abstract From global production network (GPN) theory, this study explores the configurations of emerging Southern market-driven production networks through the case of China’s industrial robot industry which has emerged with increasing automation in production. This paper argues that to serve the Chinese high- and middle-end customers, global lead firms from Western economies have established regional production networks by localising production, connecting with global component suppliers in/outside China and collaborating with Chinese system integrators. However, Chinese capable firms have organised domestic production networks for the low and middle-end through integrating with domestic component suppliers and system integrators. This study adapts the GPN framework, mostly highlighting Western markets, by examining markets and firms in the Global South and revealing new configurations of production networks.

Upgrading against the odds: How peripheral regions can attract global lead firms

Upgrading against the odds: How peripheral regions can attract global lead firms

Explaining Geographic Shifts of Chip Making toward East Asia and Market Dynamics in Semiconductor Global Production Networks

Few recent geographic studies have focused on how market dynamics might explain macroregional shifts in industrial production. This article examines the pivoting of semiconductor manufacturing toward East Asia during the 2010s, drawing upon proprietary data sets and interviews with leading semiconductor firms. Building on the existing conceptions of user-producer collaborations in economic geography, I conceptualize the relevance of market dynamics for explaining industrial-geographic change. In particular, I specify how customer intimacy in intermediate markets and demand responsiveness in end markets, as two critical dimensions of market dynamics, create strong demand for new chip-making capacity, and how spatial and relational proximity can strengthen interfirm collaboration and customer intimacy in semiconductor production networks. Empirically, market dynamics prompting massive growth in East Asian chip-making capacity are manifested in new product transition and chip demand from global lead firms in the information and communications technology sector and their manufacturing partners mostly located in East Asia. Demand responsiveness to new lead firms and end markets within East Asia has also induced chip design and new capacity to be colocated in the region. Customer intimacy between chip design firms and their foundry providers has led to massive growth of outsourced wafer fabrication in East Asia. Complementing supply-side explanations, such as state support and technological leveraging, this article’s core findings on demand-led market dynamics in explaining geographic shifts in semiconductor manufacturing contribute not only to the studies of global production networks in high-tech industries but also to the renewed interest among geographers in market dynamics and their consequences for uneven development.

After Rana Plaza: Governing Exploitative Workplace Labour Regimes in Bangladeshi Garment Export Factories

In 2013, the Rana Plaza disaster highlighted the highly exploitative conditions of the global garment supply chain centred on Bangladesh. Global lead firms and other stakeholders responded by reforming the labour governance system comprising public and private regulations. How can the effects of this new multi-level governance system on worker outcomes (wages, working conditions and workers’ rights) be conceptualized and explained? Using an inter-disciplinary framework integrating an industrial relations/sociology perspective and a global production network approach, we show how workplace relations (structural and relational workplace characteristics) mediate the relationship between the labour governance system and worker outcomes. A mixed methods research design that includes a factory management survey and case studies enables us to identify and analyse two predominant types of workplace labour regimes associated with different patterns of worker outcomes (procedural and substantive employment conditions). Referred to as the hardship and sweatshop regimes, respectively, these differ in the extent to which workers are exploited. With the emergence of the Covid-19 pandemic, we discuss the possibility that modern slavery, the worst form of worker exploitation, is emerging. The paper concludes by briefly considering several research and practical implications of our analysis.

The Constitutive Role of State Structures in Strategic Coupling: On the Formation and Evolution of Sino-German Production Networks in Jieyang, China

Research on the strategic coupling between regions and global lead firms has largely assumed that the regional assets for coupling are ready made and are largely unchanging throughout the coupling process. This article takes this assumption as its critical point of departure and presents a new framework that considers how regional assets are actively (re)configured across multiple scales in ways that could redefine the prevailing mode of strategic coupling. The empirical basis of this framework is derived from a long-term case study on the formation and evolution of Sino-German production networks in environmental goods and services (EGS) in Jieyang, a relatively peripheral city in Guangdong province in China. The analysis draws from thirty-three interviews and seven focus group discussions, conducted between 2014 and 2020, with nonstate and state actors in Jieyang. Findings highlight how Zhongde, a coalition of Jieyang-based firms, transcended the limitations of structural coupling, which exemplifies uneven power relations between regions and lead firms, and attained more balanced coupling relations with German-led EGS global production networks (GPNs) through realigning interests with those of national-level institutions. Responding positively to the structural constraints and opportunities within a Chinese state structure based on experimental governance, Zhongde connected German EGS lead firms to the highly profitable but protected EGS market in China. This ability to jump between scales underscores the cross-scalar and dynamic aspects of strategic coupling: Zhongde was able to meet German-led EGS GPNs’ demand for market access and enhanced localization economies through reconfiguring regional assets. ing from these findings, the article enhances the explanation of the evolution of strategic coupling by conceptualizing its intrinsic dynamism and incorporating state structural effects. Finally, it presents two directions for further research on GPN reconfigurations.

Economic and Social Upgrading in an Industrial Cluster in GVCs

In this study, we carry out an exploratory, in-depth case study on the economic and social upgrading in the Xiantao nonwoven fabric industrial cluster in China. By grounding our research in the lenses of global value chain (GVC) analysis and industrial cluster from a multi- stakeholder perspective, we identify the roles played by various stakeholders in the cluster in facilitating both economic and social upgrading. GVC analysis and industrial cluster provide the angles of both horizontal and vertical perspectives: horizontally we identify the local institutional factors and governance mechanisms that influence various stakeholders in the industrial cluster, and vertically we focus on the roles played by global lead firms in the global value chains.

Chinese Telecommunications Companies in Ethiopia: The Influences of Host Government Intervention and Inter-firm Competition

AbstractThis article examines Chinese engagement in Ethiopia's telecommunications sector. It argues that while theories of developmental state and global production networks contribute important insights on the roles of state agency and inter-firm relations in the rise of global lead firms from East Asia, they are insufficient to interpret the recent overseas ventures of Chinese companies in Africa. A case study of one flagship Chinese telecommunications company in Ethiopia advances the existing literature by highlighting the influences of host government intervention and inter-firm competition in shaping firms’ local operations. Specifically, this article analyses a myriad of changes in the case company's organizational structure and business practices in response to increased market competition administered by the Ethiopian government. Findings reveal that despite benefiting from official inter-state cooperation, Chinese overseas companies are neither static nor merely state-driven players but are flexible in adjusting strategies to improve their competitiveness in the local market.

Frontier Technologies in Non-Core Automotive Regions: Autonomous Vehicle R&D in Canada

For economically advanced locations, a primary response to deindustrialization has been to emphasize higher value-added activities, the target frequently being research and development (R&D). R&D tends to occur in locations proximate to corporate headquarters in general and the headquarters of global lead firms in particular. This pattern is especially evident in the automotive industry. Thus, for countries or regions lacking a targeted industry’s global lead firm, generating R&D is problematic. In the automotive industry, the introduction of frontier technologies—such as those supporting autonomous vehicles (AVs)—may reveal new patterns of R&D development, a consequence of firms engaging with innovation ecosystems disconnected from the traditional automotive industry and its headquarters-proximate geographic core or cores. This article explores these matters via a case study of Canada’s efforts to build an AV R&D profile. Canada does not host an automaker’s headquarters, but it does possess attributes that suggest it is well equipped to conduct such work. After constructing and analyzing a global database of patents related to AVs, this article demonstrates that Canada has contributed R&D focused on AVs at a rate above that which it has reached for automotive R&D overall. It also establishes that globally, even though AV-related R&D has emerged from non-traditional automotive locations, the preponderance of AV-related R&D is converging in core automotive locations: proximate to automakers’ global headquarters.

Strategies, Struggles, and Sites of Transformation in Korean Political Economy

Strategies, Struggles, and Sites of Transformation in Korean Political Economy

‘Made in China 2025’: the development of a new energy vehicle industry in China

ABSTRACTThis paper examines how the state can facilitate the establishment of a domestic production network in new energy vehicles (NEVs), from the making of electric vehicle batteries and battery management systems to the manufacturing of NEVs. The case of China illustrates how a non-firm actor was able to create the largest NEV market in the world by implementing proactive policies for market creation and new industrial regulations for cost and range parity. To facilitate the further development of domestic production networks for NEVs, the Chinese government shifted its regulatory parameters and leveraged the market size to drive the incumbent global automakers to rejig their product portfolios and form joint ventures with domestic NEV-makers in China. This provides a prima facie case illustrating how a proactive state can take a dominant role in establishing a domestic production network without coupling with global lead firms in global production networks.

Global production networks and foreign direct investment by small and medium enterprises in ASEAN.

This paper examines cross-border investments by small and medium enterprises (SMEs) from member states in the Association of South-East Asian Nations (ASEAN). It explains this relatively under-researched topic from the perspective of SMEs’ strategic coupling with or “plugging into” regional production networks coordinated by global lead firms. Facilitated by growing regional integration, these SMEs create and capture significant value added from their involvement in these production networks. The paper first highlights the different drivers of SME-specific FDI activities in ASEAN that contribute to strengthening regional economic integration through intra- and inter-firm activities in the region. The paper then explains the working of their strategic coupling with ASEAN-based production networks through different coupling mechanisms, such as international partnership, industrial specialization and production platforms. The key challenges confronting SME regionalization are highlighted. Finally, the paper considers the policy and practice of promoting SME regionalization so that they can plug into the growth dynamics of different regional production networks.

Beyond facilitator? State roles in global value chains and global production networks

AbstractDesigned to break with state‐centric approaches to understanding economic development, global commodity chain, global value chain (GVC), and global production network (GPN) analyses have deepened our understanding of the corporate governance of global lead firms and associated development outcomes in an era of globalisation. Although this research field is recognised to have provided considerable insight into private governance, a rapidly emerging body of research has given greater attention to the role of the state in GVCs and GPN. Although the state playing a role as facilitator towards firms participating in GPNs has often been an emphasis, this article argues that a variety of other roles are of increasing prominence, including as regulator, producer (state‐owned enterprises), and buyer (public procurement). A major challenge for both policymakers and researchers is to understand how a range of state initiatives not just shape but also are shaped by their positioning in GVCs and GPNs.

Transformation of China's ‘World Factory’: Production Relocation and Export Evolution of the Electronics Firms

AbstractSince 2000, particularly in the aftermath of the 2008 global financial crisis, China's ‘world factory’ has undergone dramatic transformation in response to the changing business environment at global, national, local and firm levels. A rich body of literature has examined the spatial transformation of manufacturing firms from coastal to inland China, while little attention has been paid to the market shift engaged by export‐oriented firms, particularly from exports towards China's domestic market. Taking electronics industry as a case, this study examines the process and trajectories of production relocation and market rebalancing of electronics firms during the period of 1998 and 2009. Drawing upon the global production networks (GPNs) framework, particularly the evolutionary strategic coupling, decoupling and recoupling dynamics, the study argues that China's ‘world factory’ has been restructured through divergent decoupling of electronics production and exports from coastal regions, for example, the Pearl River Delta (PRD) on the one hand, and selective recoupling with a small number of cities in inland regions and Yangtze River Delta. The spatial expansion of electronics exports and changing ratio of exports to sales outputs among various provinces elucidates the emerging attempts at developing domestic market‐oriented production networks, yet with limited penetration to the domestic market. Through transition from structural coupling to selective recoupling, electronics firms like Foxconn, a Taiwan‐based contract manufacturer for global lead firms, for example, Apple, have strategically leveraged among diverse regional production networks in China. The findings of the study could enrich the developing literature of GPNs, particularly the dynamic strategic coupling, decoupling and recoupling in the evolution of regional production networks in the changing global economy.

Local Company Contribution within Global Value Chain: A Case Study in the Indonesian Footwear Industry

Nowadays, Global Value Chain (GVC) theoretical framework has become a tool can be utilized by country and company to understanding its competitive advantage and position in global economy. By governing companies from various country around the globe into global network relationships, GVC has shown a great value added to the product. The competition among lead firms are built through their ability to gain the most efficient production by sourcing globally, in which involve local company, and Multi National Enterprise’s (MNE’s) located at developing country. Indonesia is a case of country in which many global lead firms include local company in its value chains. This study aim to understand the value chain governance of Indonesian local company within footwear’s industry organized by a global brand and its contribution to development of the local company. This paper revealed that the involvement of local company within Indonesian footwear industry is driven by global lead firm. The first tier suppliers are mostly from Taiwan and only one Indonesia local company on the value chain. While the lead firm undertaking process of design, distribution and marketing, Indonesian local company performing mostly manufacturing activities. However, there is a dynamic transformation in which local company start involving in development stage of the footwear. DOI: 10.5901/mjss.2015.v6n6s5p444

State-led technological innovation of domestic firms in Shenzhen, China: Evidence from liquid crystal display (LCD) industry

Since 2000, particularly in the aftermath of the global financial crisis, there has emerged revisit of the role of the state in technological upgrading of latecomer cities and regions in developing countries, including China. The effectiveness of a technological innovation strategy driven by transnational corporations (TNCs) has been questioned, despite its significant contribution to rapid industrialization via strategic coupling in the global production networks (GPNs). There has been a paradigm shift of innovation policy towards indigenous innovation through state-led explicit coupling of designated domestic firms and lead firms in the GPNs. The practice of this remains understudied, however. By examining the development of the liquid crystal display (LCD) industry, one of the strategic emerging industries (SEIs) in Shenzhen, this paper sheds light on the collective roles of various state authorities ranging from the central to provincial and municipal governments in fostering technological innovation of domestic firms (e.g. CSOT) through explicit coupling with global lead firms (e.g. Samsung). The empirical experience in Shenzhen indicates that indigenous innovation focused on domestic firms may unnecessarily exclude the participation of TNCs. This study urges more research to examine the changing dynamics of technological catch-up of domestic firms in an increasingly globalized and uncertain world economy.

Competitiveness and Technological Upgrading in Global Value Chains: Evidence from the Indonesian Electronics and Garment Sectors

Indonesia is a rapidly growing and internationally competitive economy that is well integrated into globalized production systems. The global value chain (GVC) model has proven to be a popular analytical framework to explain how global lead firms structure and organize global production through dispersed global suppliers. Indonesia's leading export sectors, garments and electronics, are well integrated into GVCs. Engagement in GVCs, often led by leading global brands, is seen as a basis for local producers to become globally competitive and to grow. It also comes with challenges—local producers must meet the demanding pressures from lead firms on prices, on-time delivery, product quality, and social, environmental and labour standards. The possibilities for local producers to learn, acquire new capabilities and upgrade to enhance their competitiveness are often conditioned by the nature of ties that they have with their global lead firms. Yet, this paper argues, the GVC model fails to recognize agency on the part of local firms in this learning process. Moreover, particular forms of governance arrangements within GVC ties can restrict the prospects for local producers to enhance capabilities and upgrade. Drawing on selected case study evidence from the Indonesian garments and electronics sectors, the paper explores the relationship between distinct types of GVC engagements and firm-level learning and upgrading, and considers how some GVC ties may restrict upgrading.

Global value chains, industry structure, and technology upgrading of local firms: the personal computer industry in Korea and Taiwan during the 1980s

This article argues that the modular value chains of the personal computer (PC) industry provide similar windows of opportunity to Korean and Taiwanese firms, however, the local firms have incorporated foreign technology and markets in different ways, and this has resulted in the development of distinctive innovation patterns in Korea and Taiwan. The structural coupling argument emphasizes the right strategies linking foreign technology with domestic conditions, given the governance structure of the industry. The paper compares the processes of different strategic coupling in the Korean and Taiwanese PC industries during the 1980s, individual but overlapping technology licences of big Korean firms versus joint licences by the public research institutes in Taiwan, original equipment manufacturing (OEM) as the momentum for the vertical integration within firms in Korea versus those for the expansion of subcontracting network in Taiwan, and overseas R&D investment on an individual firm basis in Korea versus co-funding and joint ventures in Taiwan. The Korean and Taiwanese cases have implications for other developing countries. The chances of successful technology upgrading are high when domestic assets such as industry structure, government policy and human resources are properly combined with the strategic needs of global lead firms in the industry. It is important for firms and governments in developing countries to find suitable ways of strategic coupling based on a good understanding of the global governance structure of the industry, as well as their domestic advantages.

Beyond the gpn–new regionalism divide in china: restructuring the clothing industry, remaking the wenzhou model

.This article attempts to advance the research on industrial districts and regional development through a study of the restructuring of the clothing industry in Wenzhou Municipality, a regional driver of the Chinese economy. Wenzhou is known for the Wenzhou model of development traditionally centred on family‐owned small businesses embedded in local institutions. The clothing industry is one of the leading industries in Wenzhou, and a cluster with national significance has emerged, where most of the production components can be purchased locally. However, the industry has been scaled up nationally and internationally, with the expansion of sales networks and production facilities across China, and to a lesser extent, abroad. This restructuring has changed the endogenous nature of industrial clusters/districts. The restructuring challenges the orthodox notion of the Wenzhou model and the New Regionalism literature, particularly the orthodox notion of Marshallian industrial districts that overly emphasizes small firms and local assets, and the global production network perspective that highlights coupling with global lead firms in regional development.