To read the full version of this content please select one of the options below:

Developing innovation capabilities for upgrading in global value chains: evidence from China

Jingqin Su (School of Economics and Management, Dalian University of Technology, Dalian, China)
Huanhuan Ma (School of Economics and Management, Dalian University of Technology, Dalian, China)
Shuai Zhang (School of Economics and Management, Dalian University of Technology, Dalian, China)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 27 July 2020

Abstract

Purpose

In the face of fierce international competition for those participating in global value chains (GVCs), upgrading has been a central concern of emerging market firms (EMFs) that are trying to occupy higher value-added positions. However, although the innovation capabilities (ICs) have been generally considered critical to upgrading in GVCs, few studies have examined how IC is built up and then applied to the EMF upgrading process over time. To this end, the purpose of this paper is to investigate why and how EMFs can upgrade in GVCs through the development of their IC.

Design/methodology/approach

This paper adopts a multiple-case study of three supplier firms in China and their IC development processes, with a special focus on the nature of the firm-level upgrading in GVCs.

Findings

The results generate a process model of EMFs upgrading with respect to the development of IC. The model reveals how IC is built up through the firms' underlying systematic innovation activities, which enable firms to successfully upgrade within GVCs. In particular, the role played by contextual vulnerability in guiding firms to develop the appropriate IC, and the corresponding upgrading, is highlighted.

Research limitations/implications

This study contributes to the micro-foundation in GVCs literature, especially the traditional static upgrading research of EMFs. The authors also contribute to existing IC development research. Meanwhile, the study focuses on the upgrading of three Chinese firms in the phone and LED industries. The generalizability to other emerging markets and industries may therefore be limited.

Practical implications

The study results show that EMFs could initially develop endogenous IC that focuses on process innovation as a means to establish a foundation for further upgrading. In addition, firms need to improve their ability to accurately sense contextual changes. As such, it would be valuable to understand their positions and characteristics within GVCs.

Originality/value

This paper investigates a process model of upgrading in GVCs through IC development in EMFs. This study also adds a dynamic micro-foundation to existing, rather macro and static GVCs studies.

Keywords

Acknowledgements

National Natural Science Foundation of China 71632004. National Natural Science Foundation of China x 71872026.

71632004

National Natural Science Foundation of China x

71872026

Citation

Su, J., Ma, H. and Zhang, S. (2020), "Developing innovation capabilities for upgrading in global value chains: evidence from China", International Journal of Emerging Markets, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJOEM-12-2019-1014

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited