 Value Capture in the Global Electronics Industry: Empirical Evidence for the “Smiling Curve” ConceptNamchul Shin, Kenneth L. Kraemer and Jason Dedrick Industry and Innovation, 2012, vol. 19, issue 2, 89-107 Abstract: This research asks who captures the greatest value in the global electronics industry by testing the concept of the “smiling curve”, which predicts that the greatest value is captured by upstream and downstream firms, and the lowest value is captured in the middle of the value chain. We test the concept using the Electronic Business 300 data-set for 2000--2005. We find that lead firms and component suppliers earn higher gross margins and net margins compared to contract manufacturers. However, the differences are minimal for return on assets (ROA) and return on equity (ROE). We also find that active component suppliers gain higher profits than passive component suppliers. These findings suggest that the smiling curve is right if value is defined in terms of gross margins, but the cost of sustaining a position on either end of the curve is so high that returns on investment are similar across the curve. Date: 2012 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:indinn:v:19:y:2012:i:2:p:89-107 Ordering information: This journal article can be ordered from DOI: 10.1080/13662716.2012.650883 Access Statistics for this article Industry and Innovation is currently edited by Associate Professor Mark Lorenzen More articles in Industry and Innovation from Taylor & Francis Journals |
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