Determinants of SME integration into global value chains: Evidence from Indian automotive component manufacturing industry

Abstract

Purpose

In recent years, due to intense competition, small and medium-sized enterprises (SMEs) are unable to meet performance expectations and find difficulty in fulfilling the needs of the original equipment manufacturers (OEMs). Consequently, the growth of the SMEs has slowed down considerably. Constrained by their infrastructural resources, SMEs’ participation in global value chains (GVCs) has the potential to bring significant benefits, such as enhancing technological learning and innovation and generating positive contributions to the development of the SMEs. The purpose of this paper is to explore competitive priorities, key factors, and causal relationships influencing SMEs to enter GVCs.

Design/methodology/approach

In this paper, the GVC framework is adopted and qualitative feedback loop analysis is used to identify the key factors influencing the competitive factors. A questionnaire survey was carried out with the automotive component manufacturers of a transnational corporation in India.

Findings

The survey in the automotive component manufacturing industry reveals product quality standards as the most important priority for joining global production networks, followed by price competitiveness, timely delivery, innovativeness, manufacturing flexibility, service, and dependability. The qualitative findings reveal continuous personnel training, capacity expansion, research development, and others as key factors influencing competitiveness.

Practical implications

To retain SMEs’ role in economic development and to accelerate the growth of global production networks in India, thereby realizing opportunities from the emerging GVCs, support is needed for SMEs regarding the aspects identified in this study.

Originality/value

The study explores the dynamics of each competitive priority of SMEs in Indian automotive component manufacturing industry to enter the GVCs. No study has explored the dynamics of SMEs competitiveness to enter GVCs in the automotive manufacturing industry.

Citation

Kotturu, C.M.V.V. and Mahanty, B. (2017), "Determinants of SME integration into global value chains: Evidence from Indian automotive component manufacturing industry", Journal of Advances in Management Research, Vol. 14 No. 3, pp. 313-331. https://doi.org/10.1108/JAMR-02-2017-0013