Key Value Chain Research Articles

Fit and Misfit of Plural Sourcing Strategies and IT-Enabled Process Integration Capabilities: Consequences of Firm Performance in the U.S. Electric Utility Industry

Recent work has shown that a firm's plural sourcing strategy, which determines how much it chooses to make versus how much it chooses to buy, requires consideration of the complementarities and constraints that affect the differential advantages of making and buying. Elaborating on this perspective, we theorize how (mis)fit between a firm's plural sourcing strategy of simultaneously making and buying and its development of information technology (IT) enabled interfirm and intrafirm process integration capabilities influences firm performance in deregulated markets. We position our theory development and empirical tests in the context of the power-generation segment of the U.S. electric utility industry (EUI), an asset-intensive industry that has been deregulated to promote the separation of key value chain activities (i.e., generation, transmission, and distribution) and the development of wholesale energy markets. We draw on the transaction cost economics, coordination costs, and IT capabilities perspectives to theorize that a firm achieves fit (realizing performance benefits) by increasing market sourcing intensity (MSI)--or, how much it buys relative to how much it makes-- and developing IT-enabled interfirm process integration capability for external coordination with the market, or misfit (realizing performance penalties) by increasing MSI and developing IT-enabled intrafirm process integration capability for coordinating internal production. We collated data from archival sources for 342 utility firms in the power-generation segment to construct a panel dataset for the period 1994--2004 on (1) firms' MSI from wholesale electricity markets, (2) firms' IT investment decisions to develop interfirm and intrafirm process integration capabilities, (3) measures of firm performance, and (4) several control variables related to exogenous shocks (i.e., regulatory change, oil crisis), region of operation, and firm-level factors. Our results suggest that fit between MSI and the development of IT-enabled interfirm process integration capability improves firm profitability, assessed by return on assets, and misfit between MSI and the development of IT-enabled intrafirm process integration capability extracts penalties in firm profitability. We also find evidence that fit between MSI and the development of IT-enabled interfirm process integration capability improves market valuation, assessed by Tobin's Q, and asset turnover, assessed by operating revenue/total assets. We discuss the implications of our findings for the development of IT capabilities to accompany a firm's plural sourcing strategy and the literature on IT business value.

Transparency in the Extractive Industries: Time to Ask for More

The quest for transparency spans countries, policymakers, NGOs, and industries.Transparency can be defined as disclosing to the public, in a timely and reliable manner, information that governments and/or corporations previously con-sidered confidential. Recent examples include the Carbon Disclosure Project,the Aarhus convention on access to environmental information, the Cartagena Protocol on Biosafety and its provisions on global genetically modified organism flows, and a wide array of financial information (e.g., in the G8 declaration of Lough Erne in 2013). Stemming from the “right to know,”advocates from NGOs and development organizations view transparency as a cure for corruption and a benefit for democratic accountability; transparency should lead to stakeholder empowerment and improve legitimacy, learning, investment certainty, and better governance. In this article I look at the efforts to establish financial transparency as a norm for the extractive sector. This sector is important because its activities are accompanied by a high level of corruption, especially in resource-rich developing countries. I show that those efforts are not enough and there is good evidence to demand more. I argue that such transparency norms should be extended to environmental pressures in order to facilitate progress on the circular economy and resource efficiency. My conclusions point at synergies between knowledge generation across financial and environmental information.

Evolution of input supply and service hubs in dairy development at Ada'a milk shed in Ethiopia

Efficient input supply and service delivery may call for a hub approach where all the necessary inputs and services are supplied in a coordinated manner, either by a single supplier or by several and separate entities in a given geographical location accessible to beneficiaries. Based on experience from Ada'a milk shed in central Ethiopia, this paper assesses the evolution of input supply and service provision in the dairy sub-sector, focusing on coordination and the degree of competition among different actors at different levels in the value chain over time. Data were collected from key value chain actors engaged in provision of input supply and output marketing services in Ada'a milk shed. The major lesson is that the development of coordinated input supply and service delivery by different business entities or under a single business entity may not emerge at once, but through a gradual evolution. This depends on the level of demand for the inputs and services as determined by the degree of demand for ...

Pharmacologically active: clinical trials and the pharmaceutical industry.

Multinational pharmaceutical companies ( 'pharmas') import and produce pharmaceuticals and also conduct clinical trials which are an important aspect of research and development (R&D). This may raise the question: Is South Africa a guinea pig for the pharmas? The Department of Trade and Industry National Industrial Policy Framework(1) designates chemicals, plastic fabrication and pharmaceuticals as a key value chain. So a second question could be: Can South Africa be a manufacturer for the pharmas, or can it leverage strengths in medical research and the conducting of clinical trials so as to develop a discovery-led industry? This paper analyses and quantifies the state of the clinical trials industry in South Africa, and concludes that: (i) a sizeable clinical trials industry exists, and that these trials are predominantly phase 3 and global in scope; (ii) South Africa is not a specific or unique guinea pig--a range of conditions is studied as part of global trials; and (iii) while South Africa has excellent prospects for increased clinical trials activity, R&D investment is too low to make it a major pharmaceutical contender.

The Internationalization of Small High-Technology Firms

This study of 196 small high-technology firms embraces the areas of the internationalization of entrepreneurially led firms and the early stages of the international growth and development of high-technology firms. The author's conceptual stance is that the early internationalization of small firms should be viewed as an holistic process, that is, one in which interrrelated and even integrated decisions and processes combine to accomplish a firm's individual pattern of internationalization. The study explores firms’ patterns of international development through their establishment of cross-border activity in key value chains and associated service activities.