The rise of emerging market lead firms in global value chains

Alvaro Cuervo-Cazurra and Pavida Pananond

Journal of Business Research, 2023, vol. 154, issue C

Abstract: Extending the resource-based view that location characteristics influence firms’ resources and internationalization, we argue that the global value chains (GVCs) of lead firms from emerging and advanced economies differ in three dimensions: objectives, trajectory, and governance. First, because GVC objectives are driven to resolve home-country endowment deficiencies, we propose that emerging market lead firms use GVCs to upgrade resources while advanced economy lead firms do so to distribute activities. Second, as GVC trajectory reflects home country consumer characteristics, we argue that emerging market lead firms expand abroad to accumulate additional value-added segments of their GVCs to serve more sophisticated demands, while advanced economy lead firms disaggregate simplified segments to reduce costs. Third, since GVC governance reflects the home-country institutional quality, we propose that emerging market lead firms use more internalization, particularly acquisitions, to exert control in their GVCs, while advanced economy lead firms rely more on externalization, especially offshore outsourcing.

Keywords: Global value chains; Lead firms; Suppliers; Emerging market multinationals; Multinational enterprises (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:154:y:2023:i:c:s0148296322007925

DOI: 10.1016/j.jbusres.2022.113327

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