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The dilemma of domestic suppliers on the periphery of the automotive industry global value chain

Jesús F. Lampón (Department of Business Management and Marketing, University of Vigo, Vigo, Spain)
Marta Rodríguez De la Fuente (Department of Business Management and Marketing, University of Vigo, Vigo, Spain)
José Antonio Fraiz-Brea (Department of Business Management and Marketing, University of Vigo, Vigo, Spain)

Kybernetes

ISSN: 0368-492X

Article publication date: 31 August 2021

Issue publication date: 30 November 2022

223

Abstract

Purpose

Under the global value chain (GVC) approach, this paper aims to analyze how domestic suppliers on the periphery of the automotive industry are affected by their relationship with foreign multinationals.

Design/methodology/approach

A case study with primary data collected from foreign multinationals operating in the Mexican automotive industry was used to analyze their relationship with domestic suppliers.

Findings

The evolution of the suppliers has been characterized by improved quality and added value in their products and more asset-intensive, efficient processes. This evolution has been driven by improvement in production capabilities and investment in new equipment by domestic suppliers and facilitated by knowledge transfer from foreign multinationals. However, it has not involved the acquisition of innovation capabilities or the internationalization of production activities. This has limited their position on the first levels of the value chain and their global presence, which are essential aspects when climbing the industry value chain to lead some activities at a global level. At the same time, most of these suppliers have become strategic and have a greater dependence on foreign multinationals. This poses a dilemma for domestic firms, as the relationship with these multinationals becomes more intense and dependent and at the same time reduces the possibility of leading activities in the value chain.

Originality/value

The paper analyzes the impact on domestic suppliers of their relationships with foreign multinationals, integrating traditional product, process and functional upgrading and new elements, in particular, participation in the GVC and dependence on multinationals.

Keywords

Acknowledgements

The research has been funded by the Spanish Ministry of Science and Innovation under the reference project: PID2020-116040RB-I00, entitled “Users, companies and global value chain facing the new mobility ecosystem: Challenges and lines of action from multiple perspectives”.

The research presented in this paper is developed in the lines of investigation of the international networks in which Jesús F. Lampón is collaborating: GERPISA (http://gerpisa.org/en) and RSAI (https://www.regionalscience.org/).

Citation

Lampón, J.F., Rodríguez De la Fuente, M. and Fraiz-Brea, J.A. (2022), "The dilemma of domestic suppliers on the periphery of the automotive industry global value chain", Kybernetes, Vol. 51 No. 12, pp. 3637-3655. https://doi.org/10.1108/K-01-2021-0073

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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