EconPapers    
Economics at your fingertips  
 

Value Capture in the Global Electronics Industry: Empirical Evidence for the “Smiling Curve” Concept

Namchul 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
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (12) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1080/13662716.2012.650883 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

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
http://www.tandfonline.com/pricing/journal/CIAI20

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
Bibliographic data for series maintained by Chris Longhurst ().

 
Page updated 2018-04-07
Handle: RePEc:taf:indinn:v:19:y:2012:i:2:p:89-107