R&D, Value Chain Location and Firm Performance in the Global Electronics Industry (original) (raw)

The limits to upgrading and value capture in R&D global value chains: Indian and Chinese contract R&D firms in the integrated circuit design and pharmaceutical global value chains

Competition and Change, 2024

This article analyzes the interaction between lead firms and Chinese and Indian contract research and development (R&D) firms in integrated circuit (IC) and chemistry-based pharmaceutical global value chains (GVCs) in order to delineate what factors influenced the upgrading and value capture outcomes of these contract R&D firms in the two sectors. There are five main findings. First, the two sectors differed significantly in terms of the upgrading of contract R&D firms' activities and capabilities. More upgrading was found in chemistry-based pharmaceuticals than in ICs. Second, in both industries, lead firms utilized a range of strategies to control and limit upgrading and value capture by contract R&D firms. Third, level of R&D uncertainty (risk) and lead firms' level of market access control informed the strategies of lead firms. Lead firms generally adopted strategies to limit upgrading by contract R&D firms except in two situations: where R&D risk was high so that lead firms wished to offload costly risks onto contract R&D firms and where lead firms had significant market access control to limit value capture by upgrading contract R&D firms. Fourth, the strategies to limit upgrading included minimizing the flow of information possible in modular linkages and discouraging IP development by contract R&D firms. Fifth, the lead firm strategies to limit value capture included limiting upgrading and thus any associated potential value capture, enhancing lead firm bargaining leverage, and controlling market access via established market channels and continual engagement with regulatory agencies in relevant markets.

Global value chains and innovation

2017

This chapter provides an overview of how the globalization of value chains affects a firm’s innovation capabilities. It is highlighted that global value chains can stimulate innovation in a number of ways. They can help firms reduce production costs through offshoring, which allows them to free up resources that in turn can be invested in research and development. Furthermore, global value chains permit firms to tap into foreign pockets of knowledge, which lets them strengthen their knowledge base and innovation capabilities. The chapter warns, however, that one should be careful of drawing links between global value chains and innovation in an overly positive way. Firms face important challenges and costs when setting up global value chains, and if not managed correctly these “hidden costs” may overturn the positive link between global value chains and innovation. A particularly important hidden cost is the fallacy of fixed technology. Often ignored by firms, technology is not nece...

Network positioning and R&D activity: a study of Italian groups

R & D Management, 2003

Traditionally, R&D studies focus on organisational characteristics and internal context factor effects on a firm's R&D activities. This paper extends previous research by analysing firm–level R&D expenditures in the wider context of inter–organisational networks. Using sample of 2002 manufacturing firms in Italy, it provides evidence that R&D intensity is linked to a firm's positioning within an industrial group's hierarchy. Further tests on the antecedents of R&D expenditures are carried out in relation to the effects of firm characteristics and industry factors. Important findings include a significant and positive association between R&D intensity and the firm's size, performance, intangible assets and industry concentration. These findings suggest that, in addition to firm–level factors and its market environment, network resources and organisation may play an important role in driving the intensity of the firm's R&D expenditures.