 Value capture in global production networks: evidence from the Taiwanese electronics industryNamchul Shin, Kenneth L. Kraemer and Jason Dedrick Journal of the Asia Pacific Economy, 2014, vol. 19, issue 1, 74-88 Abstract: In today's global electronics industry, lead firms and suppliers of key components capture greater value than contract manufacturers. Using data from the Taiwanese Stock Exchange from 2002 to 2009, this research aims to examine if the pattern of value capture in the global electronics industry holds for Taiwan. We also test the impacts of research and development (R&D) spending on firm profitability and returns. Our results show that lead firms and component suppliers capture higher gross profits from their R&D spending, compared to contract manufacturers. However, contract manufacturers have higher return on equity. Component suppliers’ return to R&D as measured by return on equity is lower than contract manufacturers. These findings suggest that component suppliers capture higher profits as lead firms do, but the cost of R&D for component suppliers is so high that their returns on investment are not as great as contract manufacturers. This also suggests that Taiwanese component suppliers are unable to create entry barriers or gain pricing power from their R&D investments. Date: 2014 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:rjapxx:v:19:y:2014:i:1:p:74-88 Ordering information: This journal article can be ordered from DOI: 10.1080/13547860.2013.803844 Access Statistics for this article Journal of the Asia Pacific Economy is currently edited by Leong Liew More articles in Journal of the Asia Pacific Economy from Taylor & Francis Journals |
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