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Early evidence on how Industry 4.0 reshapes MNEs’ global value chains: The role of value creation versus value capturing by headquarters and foreign subsidiaries
Abstract
In anticipation of the upcoming changes and turbulence caused by Industry 4.0, in which digital integration connects all value chain members, managers at leading multinational enterprises (MNEs) are scrambling to predict the associated changes in the market. This pioneering study advances our understanding by investigating the impact of an MNE’s Industry 4.0 orientation on the globalization of its value chain network. Identifying two types of value-generation activities as potential moderators, namely value creation and value capturing, we compare the moderation effects when these activities are conducted by headquarters versus foreign subsidiaries. We test the proposed model using a panel dataset comprising 5572 subsidiary-year observations from 358 Korean MNEs from 2011 to 2019. The results show that an MNE’s Industry 4.0 orientation leads to a more rapid expansion of its distribution network than of its supplier network. Furthermore, value creation by headquarters has a stronger positive impact on the globalization of its distribution network than that of its supplier network, whereas value creation by subsidiaries has a stronger positive impact on the globalization of its supplier network than that of its distribution network. However, value capturing has a stronger impact on the globalization of the MNE’s distribution network than that of its supplier network when performed by both locations. This study concludes by discussing the theoretical and managerial implications.
... The new OLI framework suggests that MNEs develop competitive advantages through strategic collaborations and alliances with other firms (Bhandari et al., 2023, Luo, 2021, Lee et al., 2023. Further, network theory suggests that while internationalizing, MNEs establish relationships with important suppliers, distributors, and customers Kurt, 2018, Kriz andWelch, 2018). ...
... The new OLI framework proposes that in the era of digital globalization, MNEs gain advantages by exploring and exploiting digitally enabled open resources, linkages, and integration while internationalizing (Lee et al., 2023, Luo, 2021. For digital platform firms, the new OLI framework helps in explaining rapid and successful internationalization. Since digital platform firms must overcome the lack of resources, reputational, and liability of foreignness challenges while internationalizing (Brouthers et al., 2016), they can utilize open resources, varied linkages, and multiple stakeholders to gain critical information and knowledge that can help digital platform firms ease penetration in the host country. ...
... Linkage aspect of new OLI deliberates on the alliances and collaboration with competitors, suppliers, and distributors to gain competitive advantage (Lee et al., 2023, Luo, 2021. This continues to be critical, as seen in our case evidence as well; however, we add on to this by exploring the network aspect of the linkages where digital platform firms can obtain advantages by exploring customers, partners, investors, opinion leaders, influencers, and ad hoc customers and partners. ...
PURPOSE: The aim of this paper is to explore the internationalization of digital platform firms, specifically to investigate the advantages digital platform firms build during the internationalization journey, which helps them overcome the liability of foreignness. More importantly, drawing on network theory and Luo’s framework of new OLI advantages, a new framework of Platform OLI (P-OLI) advantages is developed for digital platform firms.
METHOD: This study adopts a multi-case method to empirically understand the internationalization phenomenon of digital platform firms in the emerging economy of India, which is a less researched area. Twenty semi-structured interviews from top executives of 12 Indian headquartered digital platform firms were inductively analyzed based on Gioia’s method, and a cross-case examination was conducted to explore the respondent firm’s internationalization journey.
Findings: Several novel open resource and linkage advantages were identified for digital platform firms that are not covered by the new OLI advantages proposed by Luo. Furthermore, a new “I” advantage, which is information and knowledge advantage, has evolved from the data. This resulted in enhancing the scope of the new OLI framework and network theory and further enabled us to develop the P-OLI framework, a new framework for digital platform firms that reflects the specific advantages a digital platform firm builds during internationalization.
ORIGINALITY/VALUE: This is the first study which evaluates the new OLI framework from the perspective of a digital platform firm to develop a novel framework, P-OLI. Further, this study is among the few studies with an Indian digital platform firm focus and relies on primary interview data to study digital platform firms’ internationalization phenomenon.
... An emerging strategic priority for multinational enterprises (MNEs) in orchestrating their global value chains (GVCs) is understanding how to leverage digital sustainability. Until recently, discussions on digital transformation and sustainability efforts of MNEs have advanced in parallel (Lee, Kim, Choi & Jim enez, 2023). Sustainability efforts for MNEs involve attempts to balance economic, environmental, and social performance, and are often measured by contributions to the United Nations (UN) Sustainable Development Goals (SDGs) (Van Tulder, Rodrigues, Mirza & Sexsmith, 2021). ...
... On the other hand, these characteristics position MNEs at the forefront of Industry 4.0 and the adoption of advanced digital technologies remains concentrated in firms with global stature (Banalieva & Dhanaraj, 2019;Luo, 2021;McKinsey, 2019). When it comes to the formation, governance, and evolution of the GVC, MNEs play a central role in understanding how digital sustainability may transform their organization on a global scale (Lee et al., 2023;Ocel ık, Kolk & Ciulli, 2023). A GVC is defined as a "chain of sequential and progressive interconnected activities by which the MNE conducts all its operations, from corporate strategy and management to product/service conception and design, manufacturing, marketing, sales and distribution" (Srinivasan & Eden, 2021: 231). ...
... Specifically, orchestration involves MNEs continually engaging in collaboration and coordination to create and capture value via a multiplicity of relationships along their GVC (Ambos, Brandl, Perri, Scalera & Van Assche, 2021). Coordination and collaboration across a wider ecosystem of GVC partners are essential orchestration activities for MNEs in augmenting their sustainability efforts (Lee et al., 2023;Narula, 2019). As such, we propose that orchestration, which involves value-creating activities underpinning collaboration and value-capturing activities supporting coordination, is critical to how MNEs drive digital sustainability across their GVCs. ...
Digital sustainability has the potential to transform how multinational enterprises (MNEs) capture, create, and distribute value in their global value chains (GVCs). Yet, a real problem persists in understanding how MNEs drive digital sustainability across their GVCs. This is a complex and evolving process that requires MNEs to coordinate with and collaborate across a multiplicity of globally dispersed partners. Adopting an orchestration perspective, our paper constructs a novel take on digital sustainability in several ways. First, we reimagine the role of MNEs as “chief orchestrators” in GVCs, driving digital sustainability through orchestration activities underpinning coordination and collaboration, which in turn generates opportunities for value capture and creation along the GVC. Second, we disentangle the impact of MNE-driven digital sustainability, unpacking the undesired consequences for GVC partners relating to dependency, power dynamics, transparency, and supplier squeeze or exclusion. Our insights temper claims about the transformative potential of digital sustainability, challenging scholars, practitioners, and policymakers to reflect on and respond to the double-edged effects of MNE-driven digital sustainability in GVCs. Our arguments are demonstrated through three illustrative cases from firms across industries (agriculture, energy, and fast-moving consumer goods). We identify implications for management practice and policy and offer guideposts for future research.
... For example, virtual entry modes such as firm-specific websites or complementors in a platform enhance exporting opportunities, vastly increasing the potential scope of customers a firm can reach (Brouthers et al., 2022). Industry 4.0-related technologies enable the collection and analysis of large volumes of data on factory operations and value chains, thereby transforming internal and inter-firm coordination mechanisms (Dachs, Kinkel, & Jäger, 2019;Lee, Kim, Choi, & Jiménez, 2023;Strange & Zucchella, 2017). Virtual communication tools enable instant cross-border information sharing via for example social media or video conferencing. ...
... The papers in this special issue address a wide variety of phenomena enabled by the digitalization of business (Table 5). Three papers analyze challenges of digital transformation in mature organizations and ecosystems: the impact of Industry 4.0 (Lee et al., 2023), solving wicked problems (Tatarinov et al., 2023) and management of digital human resources (Grimpe et al., 2023). Three papers analyze digital strategy from a platform user perspective, exploring how individuals and teams engage with partners around the world, including e-sport teams (Lin et al., 2023), crowdsourcing (Kumar et al., 2023) and cybersecurity (Madan et al., 2023). ...
... The three papers on aspects of digital transformation explore different settings. First, Lee, Kim, Choi and Jiménez (2023) analyze the Industry 4.0-orientation of MNEs as a driver of external business relations at the subsidiary level. They find that Industry 4.0-orientation increases the external/total ratio of both sales and purchasing of MNE subsidiaries. ...
Digital technologies are changing how businesses strategize and organize internationally. They not only enable cost reduction in businesses crossing national boundaries but also enable novel types of products and business models. Yet, barriers to cross-border businesses persist or even re-emerge, such that the study of international business remains important in the digital age, but may have to shift focus. We argue that businesses operating internationally develop digital business strategies that are interdependent with their internationalization strategies. In doing so, they have to account for differences across national contexts including informal institutions, formal institutions, and resource endowments. We offer a conceptual framework linking external and internal antecedents to digital business and internationalization strategies. We focus in particular on three digital strategies: owning digital platforms, participating in digital platforms, and transforming traditional businesses for the digital world. On this basis, we discuss the contributions of the papers in this special issue and conclude by outlining an agenda for future research.
... The aforementioned developments have led to significant scholarly interest that delves into the dynamics of internationalization via emerging and advanced technologies (Bosma and Witteloostuijn 2024;Lee et al. 2023). Often referred to as "Industry 4.0" it emphasizes the critical role of intelligent machines and smart automation of business activities, advancing a vision of a workplace that values interconnectivity, smart automation, machine learning, and real-time data (Luo and Zahra 2023, p. 404). ...
... • Big Data Analytics: Analyzing massive datasets (i.e., big data) is crucial in Industry 4.0. This data is generated through various sources like sensors, social media, videos, and business records (Lin et al. 2022;Lee et al. 2023). Businesses can gain valuable insights by leveraging big data analytics to optimize their operations and gain competitive advantage. ...
Industry 4.0 is transforming businesses offering multinational companies a technological framework to structure their global operations. This has attracted the attention of internationalization scholars and practitioners on the use of emerging technologies for it. In this paper, we seek to consolidate and synthesize the scholarly evidence published in leading international business journals on this issue. We identified 108 articles published in eight high-quality international business journals on major themes and applications of emerging technologies for internationalization. Our analysis, using the “coupling by document” method, identified the major application areas, including internationalization of research and development (R&D) activities, international ambidexterity, IoT-enabled global value chains, reshoring and location choice, digitized governance, global smart factory, global project management, global human resource management, and international relations and cybersecurity. We end our investigation by suggesting future research avenues.
... According to Zhu et al. [15], effective supply chain leadership may mitigate the adverse impacts of supply chain risks through superior competitive advantage. Conversely, Lee et al. [68] posit that supply chain leadership can moderate the relationship between supply chain performance and innovation. These findings imply that a robust SCLS can strengthen the positive association between supply chain performance and organizational agility. ...
... For instance, executives who are dedicated to sustainability and who can convince their staffs regarding the significance of GSCMPs are more likely to benefit from them. Effective leadership abilities may also lessen some of the difficulties firms may have when introducing GSCM techniques, such as employee opposition or problems arising when determining how these policies affect performance, which is supported by [15,68,69]. Thus, our findings support all five research hypotheses, and three research questions were successfully answered through the statistical analyses based on the respondents' expressed data. ...
Abstract: This study highlights the rising significance of green supply chain management practices (GSCMPs) in elevating organizational performance (OP) within the Bangladeshi manufacturing sector. GSCMPs, structured as the single second-order independent construct, were formed by three first-order independent constructs: green eco-design (GED), green supply chain partnering (GSCP), and internal green orientation (IGO). This study proposes that GSCMPs can contribute to the overall OP, structured as the single second-order dependent construct, comprising financial performance (FP), marketing performance (MP), and environmental performance (EP) as its first-order dependent constructs. Furthermore, this research involved the mediating role of perceived competitive advantage (PCA) on the relationship between GSMPs and OP as well as the moderating role of supply chain leadership skill (SCLS) on the relationship between PCA and OP. Primary data were gathered from 340 Bangladeshi respondents involved in higher-level and mid-level management roles at different manufacturing firms using a structured survey questionnaire. Partial least square-based structural equation modeling (PLS-SEM) was employed for statistical analysis using Smart-PLS 4.0. GSCMPs exhibited a significant positive correlation with OP. Additionally, PCA was found to partially mediate the relationship between GSCMPs and OP, while SCLS was found to strengthen the positive relationship between PCA and OP. This study explores the GSCMPs-OP nexus in the Bangladeshi manufacturing sector, aiming to inspire further theoretical and empirical studies. The findings offer insights for policymakers and managers in formulating and executing GSCM-related policies and strategies.
... Information and communication technologies (ICT) have long been recognized for their important role in enabling communication and information sharing to coordinate geographically dispersed activities (Mani et al., 2014) and these digital communication technologies have played a central role in lowering coordination costs associated with the global disaggregation of value creation in GVCs (Autio et al., 2021;Mani et al., 2014). A growing body of work is now seeking to understand how 'newer' digital technologies, associated with the fourth industrial revolution, might impact the organization and coordination of GVCs (Lee et al., 2023). For instance, Laplume et al. (2016) focused on understanding the impact of 3D printing technologies on the geographic dispersion and density of GVCs. ...
... Egwuonwu et al. (2022) provide evidence that blockchain technology has a positive effect on scalability, security and traceability for retailers participating in GVCs. Despite the progress signaled in these studies, not only with the adoption of digital technologies, but also our understanding of the impact of these digital technologies on GVCs, insights from research remain at a very early stage (e.g., Chen et al., 2022;Lee et al., 2023). It is the contention of this paper that the decision-making on technology adoption is understudied in this respect. ...
The business potential of blockchain technology in global value chains (GVCs) includes the creation of permanent records of information, to facilitate specifications regulation, to mitigate risk using smart contracts and through full, transparent transaction traceability at reduced costs. Blockchain as a general-purpose technology (GPT) thus has the potential to increase the effectiveness and efficiency of value creation for firm specific advantages owned and/or controlled by multinational enterprises (MNE), yet adoption of blockchain is uneven. This study adopts a micro-foundational lens to explain the non-adoption of blockchain technology in multinational enterprises’ (MNE) global value chains (GVC), emphasizing the influence of the technology, organization and environment (TOE) influences on the technology acceptance (TAM) for blockchain, due to the impact on managers’ perception of blockchain's usefulness and ease of use. The empirical results are based on a multiple-case study research design, that collected interview data from supply chain managers in small, medium, and large-sized manufacturing MNEs that participate in global value chains that differ in their governance patterns. The results identified fifteen different drivers of the non-adoption of blockchain technology across the technological, organizational and external environments of the MNE. The results of the study allow a parsimonious model of blockchain technology non-adoption that is aligned with the digital technology adoption literature using a TOE–TAM approach.
... The use of industrial robots enhances the digital capabilities of companies and the efficiency of resource allocation [13], and increasing the proportion of industrial robot applications in developing countries can lead to higher technical efficiency, better sales and higher value added, enhancing the status of GVC [14]. The use of industrial robots also significantly expands the distribution network of multinational companies' headquarters and the value creation of their subsidiaries, effectively enhancing their overall global value chain position [15]. The application of industrial robots has brought about improvements in productivity, optimization of factor structures, and green technology innovation in the global manufacturing sector [16], thereby improving energy efficiency, reducing carbon intensity, and enhancing the position of GVC [17]. ...
... Industrial robots are the core component of Industry 4.0, which combines intelligent sensors with industrial equipment to improve productivity, enhance reliability, and reduce operating costs. Industrial robots can also collect and analyze data about themselves and adjust production progress to ensure maximum production efficiency, allowing robots to manage and coordinate production [15]. Therefore, industrial robot application is more effective in improving the GVC of labor-intensive and technology-intensive industries. ...
The fast growth in the installation of industrial robots has had a major impact on the comparative advantage of nations and the division of labor in global value chains in the era of smart manufacturing. Using various econometric models and panel data from 18 industries in 38 countries from 2000 to 2014, this paper empirically examines the impact of industrial robot applications on the status of countries in manufacturing global value chains and its mechanisms. The study demonstrates that industrial robot application can effectively improve the status of countries in manufacturing global value chains, and this improving effect is more obvious for developing countries and labor-intensive and technology-intensive industries. Mechanism testing shows that industrial robot application can effectively enhance the development level of highly skilled human capital and productive service industries, thereby improving the status of the manufacturing global value chain. This study provides a theoretical basis and policy reference for countries to enhance their status in the global value chain through industrial robot applications in the future.
... There is a lack of research studies investigating how dynamic capabilities support organizational digital transformation (Arcidiacono et al., 2022) and digital technology adoption, extending empirical research on dynamic capabilities mediating more variables and enterprise innovation (Han & Chen, 2018), and examinations of dynamic capabilities as mediators in different countries (Gonzalez, 2021). Research has neglected the pivotal role of digital technology and its associated capabilities in enterprise internationalization, mainly due to its novelty (Lee et al., 2023) and a dearth of comprehensive insights (Vadana et al., 2019). Specifically, a conspicuous gap in understanding the influence of digitalization capabilities on internationalization persists. ...
The rapid evolution of digital technologies has underscored the need for firms to develop robust digitalization capabilities to remain competitive in the global market. This study investigated the development of digitalization capabilities and their effects on digital technology adoption and internationalization in Chinese manufacturing. Additionally, the mediating role of digitalization capabilities in the relationship between commitment and knowledge development processes regarding digital technology adoption is examined. Using a survey of 322 respondents, the hypothesized model is tested via partial least squares structural equation modeling (SEM-PLS). Commitment and knowledge development processes significantly influence digitalization capabilities and digital technology adoption. Digitalization capabilities positively influence internationalization and mediate the relationship between commitment and knowledge development processes and digital technology adoption. Beyond advancing scholarly understanding of how specific dynamic capabilities facilitate technology adoption and international expansion, these findings provide key insights for policymakers and industry stakeholders. Policy measures that encourage firms’ commitments, support knowledge-development initiatives, and incentivize investments in digitalization capabilities can accelerate digital transformation in manufacturing. By integrating dynamic capabilities theory with the Uppsala model in an Industry 4.0 context, this study offers a novel contribution to the literature and provides the first empirical examination to combine these elements in Chinese manufacturing.
... These macro factors include investments in automation, opportunities for digitalising production processes, proximity to final markets, adoption of favourable public policies, and establishing partnerships with key suppliers. Notably, these factors align with the principles of Industry 4.0, suggesting a shift towards valuing manufacturing activities more and challenging the viability of cost reduction through offshoring (Barbieri et al., 2022;Lee et al., 2023). By enhancing production efficiency, manufacturing firms gain better control over the production process, enabling them to upgrade products and improve overall production lines. ...
Due to the ongoing political instability and economic disruptions in the environments where firms operate, the shift towards regional value chains is redefining global supply chains. Driven by economic policies in regions such as the EU and North America that aim to enhance autonomy and resilience, factors influencing supply chain location decisions have become increasingly important for both business leaders and policymakers. In this context, our paper integrates international business, economic geography, and the global value chain framework to investigate the efficiency-seeking, knowledge-seeking, and supplier-seeking factors that influence home-shoring strategies within manufacturing activities. Our work specifically focuses on identifying which of these factors underpin three key manufacturing home-shoring strategies. Utilising unique primary sub-national-level data and a multinomial logit model, our work examines these strategies across three regions: Veneto (Italy), England (UK), and California (US). Our findings highlight the importance of efficiency-seeking factors as central pull drivers of manufacturing home-shoring strategies. For policymakers, this study underscores the need for a nuanced and regionally tailored approach, as local supplier dynamics and the availability of supportive public policies impact the success of full manufacturing home-shoring strategies across different locations.
... This shows that scale and speed are two crucial aspects of manufacturing capacity in GVCs. Their interplay shapes efficiency, competitiveness, and overall resilience of these interconnected production networks (Lee, Kim, Choi, & Jiménez, 2023;Morris, Oldroyd, Allen, Chng, & Han, 2023). • Distributed innovation systems. ...
How are emerging market multinational enterprises (EMNEs) able to innovate and compete with developed market multinational enterprises (DMNEs) in green global value chains (GVCs)? Focusing on the rapid growth of the electric vehicle (EV) industry in China, we introduce the novel concept of GVC envelopment. This concept explains how EMNEs strategically integrate into GVCs dominated by DMNEs, forming cooperative relationships with key suppliers and partners to create synergies and achieve economies of scale. Through a three-stage process, EMNEs not only contribute to the global green transition but also challenge traditional global players. The paper offers critical insights for both multinational enterprise managers and policymakers, highlighting the evolving dynamics of competition and collaboration in global green transitions.
... The IT function itself needs to transition from a mere production line function to a more proactive and coordinated role that supports digital value creation through rapid and exploratory responses (J. Y. Lee et al. 2023). Moreover, companies must enhance the digital skills of their employees in marketing and service operations to enhance value creation (Rachinger et al. 2018). ...
... Sedang sebagai instrumen dalam Teknik analisis data, penulis memilih analisis konten, analisis isi dan matriks. Tabulasi diterapkan sesuai peruntukannya semisal EFE, IFE, CPM, SWOT, IE dan QSPM (Lee, Kim, Choi and Jiménez (2023)). ...
Karya ilmiah ini dilakukan di perusahaan perkebunan tembakau skala menengah-kecil dengan Komoditi Tembakau yang berlokasi di Kabupaten Jember dengan tujuan untuk meningkatkan keunggulan bersaing melalui implementasi dari rumusan strategi yang diformulasikan berdasarkan analisis terhadap kondisi internal (Kekuatan dan Kelemahan) serta kondisi eksternal (Peluang dan Ancaman). Dalam studi ini, karena menggunakan Kualitatif maka pengumpulan data dilakukan dengan cara interview dan melalui penyebaran kuisioner dengan penentuan sampel menggunakan teknik purposive sampling. Responden pada studi ini adalah Pemilik dan karyawan PT Mangli Djaja Raja (MDR), yaitu perusahaan perkebunan berskala menengah yang ada di Kabupaten Jember. Dalam analisis data, dilakukan dengan SWOT Analisis, dan selanjutnya, dari pembahasan menunjukkan bahwa hasil analisis terhadap semua faktor, disimpulkan yang dapat meningkatkan keunggulan bersaing di pasar global adalah: Meningkatkan kualitas SDM secara terus-menerus menyesuaikan dengan perkembangan Teknologi processing, Meningkatkan kualitas marketing di pasar global baik secara manual maupun IS/IT Based untuk melakukan ekspansi pasar multinasional, Menjalin Kerja sama dengan rekanan yang mempunyai akses global dalam pemasaran komoditi tembakau, Menyesuaikan luasan lahan produksi dengan quota kebutuhan pasar global.
... Each of the acquisitions happened at a different point in time. This means that changes in the external environment, technology or industry would differ depending on when the acquisition occurred (Lee et al., 2023). Thus, this control helps to capture time heterogeneity among the observations (Feinberg and Gupta, 2009). ...
Purpose
This study aims to explore how the absorptive capacity of emerging market multinationals (EMNEs) facilitates increased acquirer performance in industry exploration and technology exploration cross-border acquisitions (CBAs).
Design/methodology/approach
The research context for this study is Brazilian EMNEs and their CBAs. The final database contains 101 CBAs.
Findings
The authors find that industry exploration strategies negatively affect financial performance, but technology exploration strategies have a positive effect. The acquirer’s absorptive capacity can exacerbate the negative effects, except in instances of technology exploration strategies, where there is a demonstrable benefit from the acquirer’s absorptive capacity.
Originality/value
The study contributes first by providing a more nuanced understanding of the effects of absorptive capacity on postacquisition performance, depending on the type of knowledge explored. Second, by drawing on EMNE learning perspectives, the authors demonstrate the versatility of absorptive capacity in emerging markets.
... In a different direction, advances in Industry 4.0 have demonstrated impacts on the way GVCs are organized and distributed internationally, concentrating value creation activities in home countries of leading companies (Lee et al., 2023). This is yet another driving force towards 'nearshoring' trends (Ayadi et al., 2022). ...
Over recent years, the world has witnessed unexpected challenges - including the COVID-19 pandemic and significant geopolitical tensions. These events have had substantial impacts on both Global Value Chains and Regional Innovation Systems – two complementary analytical scopes that compose the complex geography of innovation. This has led governments to take drastic measures on different fronts and scholars to argue about the surging of a phase of de-globalization in which Global Value Chains are being transformed and restructured, potentially altering the geography of economic activity that has been forged over the last decades. It is uncertain how countries, regions, firms and individuals will respond to multifaceted crises and productive rearrangements, which ones will be more resilient and better capable of doing so than others. In this introduction to the Special Issue “Global Value Chains and Regional Systems of Innovation: Towards a Critical Juncture?” we discuss the local-global dynamics of innovation and propose a critical appraisal on how key contextual parameters have changed, on the one hand, and the potential outcomes of these shifts, on the other. We outline pressing issues for debate among scholars, policymakers and practitioners as well as offer elements to begin a discussion on the critical junctures that lay ahead. We also present the insightful articles that compose this Special Issue.
... It is crucial for companies to ensure that their supply chain partners maintain robust relationship ties and adhere to relevant laws and regulations. Importantly, Industry 4.0 technologies can be advantageous for optimising supply chain networks (Lee et al., 2023). For example, employing open-source cloud-based physical systems with IoT and digital twins can foster transparency and enhance visibility into processes, essential for a resilient supply chain (Lampón & Rivo-López, 2022;Leng et al., 2021). ...
The phenomenon of reshoring and its impact on global trade has recently garnered the attention of not only practitioners but also policymakers and scholars. Numerous scholars have highlighted the challenges of reshoring, such as supply chain disruption, labour shortages and sustainability issues, from various perspectives. Some have pinpointed technological advancements as enablers for addressing these challenges through the deployment of cloud-based artificial intelligence (AI) technologies and efficient remote management as part of the Industry 4.0 transformation. As Industry 4.0 shifts from being technology-driven to value-driven, this introductory essay for the special issue on reshoring delves into the current boundaries of our understanding and proposes recommendations for future research on this topic.
Artificial intelligence (AI) profoundly influences value creation by boosting efficiency, fostering innovation and driving new business models and technological advancements, all while nurturing human intelligence (HI). However, the collaboration between AI and HI, crucial for augmenting the creation of green value and achieving sustainable development in manufacturing firms, remains ambiguous. We employed panel data from 935 A-share
listed manufacturing firms in China (2010− 2022) to reveal the potential influence mechanism of AI and HI collaboration on green value creation. Our findings revealed that AI technology adoption facilitated manufacturing firms in harnessing their HI for green value creation. Under the influence of AI technology adoption, HI, as with manufacturing firms’ human and structural capital, contributed positively to green value creation. It is noteworthy that while higher-quality relational capital served as a potential driving force for manufacturing firms in creating green value, heightened AI technology adoption significantly impeded enthusiasm for this mechanism. The conclusions elucidate the intricate relationship between AI and HI collaboration and green value creation, expanding the application of technology adoption within the green innovation ecosystem. Furthermore, they offer practical insights for manufacturing firms in their pursuit of green value creation.
Purpose
Despite wide awareness of the importance of digital transformation (DT) for emerging market firms, we have limited understanding of the drivers, the process or the outcomes of DT in emerging market firms.
Design/methodology/approach
We conducted a qualitative study on 24 case companies in Thailand and embraced thematic analysis to generate our research findings.
Findings
The framework shows that the DT process in emerging market firms proceeds over three stages—market-opportunity sensing, digital technology acquisition and leading DT—which are driven by technological dynamism, business ties and institutional support. Once DT is successfully implemented, emerging market firms can improve their operational efficiency, customer relationship management, business model innovation and human resources management.
Originality/value
This study thus contributes to the DT literature by offering a three-stage model of DT and identifying important antecedents and consequences of DT, which together specify how emerging market firms transform themselves digitally.
This chapter delves into the transformative impact of AI on business model innovation, exploring how it redefines value creation and how it impacts nine common components of business models. It offers an in-depth examination of AI's role as a dynamic catalyst, reshaping strategic thinking and operational approaches within contemporary business landscapes. By presenting an archetype model, it delineates the strategic pathways through which companies evolve as they embed AI into their business modeling, underscoring AI’s significant role in crafting novel value propositions, value creation, and redefining traditional business models. The analysis ventures beyond mere technological integration to highlight the imperative of adapting business strategies in the face of AI advancements, offering insights into leveraging AI for enduring competitive advantage. This discourse aims to equip scholars and practitioners with the acumen to navigate the complexities of AI in business, fostering innovation that resonates with the modern digital economy's demands, while fostering sustainable growth and innovation.
This perspective paper, including the role of an editorial, systematically reviews extant studies on ‘multinational corporations’ corruption’ and ‘digitalization’ in the international business (IB) domain, revealing why this special issue is both timely and necessary. We chronologically identify recent key studies that have been influential in the research on corruptive practices and digitalization in IB, and examine their main findings. We find that interdisciplinary research simultaneously exploring corruptive practices and digitalization is still in its infancy, and while some contributions have been made, there is still a large research vacuum. In addition, we introduce the twelve papers chosen for this special issue, which we believe represent meaningful breakthroughs and offer useful academic implications. We conclude by suggesting invaluable paths for future research to extend our understanding of the theme.
This study examines the changes in international business strategies at Toyota Motor Corporation, one of the largest multinational enterprises (MNEs) in Japan, that enabled it to continue improving its performance during the global pandemic. This study analyzes Toyota’s alliance strategy over the past 50 years to understand the companies they have formed alliances with and identify changes in their strategies. The analysis reveals that Toyota changed its direction significantly after the Lehman’s collapse, especially after 2010, by actively pursuing alliances with companies in other industries. This marks a departure from Toyota’s past strategy of building strengths within the scope of its control, as seen in keiretsu. The study clarifies the reality of alliance strategies that cross national and industry borders, referred to as the “inter-industrialization of international business.” Through this case study, the transformation of Toyota’s strategy is explored, providing insights for other multinational enterprises seeking to adapt to changing market conditions.
Nowadays, the value creation process is based on management of a large amount of data, the Big Data, which are able to connect businesses and customers from all over the world (Xie et al., 2016). Considering the managerial and industrial points of view, Industry 4.0 is a new economic model for the industrial world (Peressotti, 2016), based on the evolution of production paradigm, technological change and process logic adoption: companies should change their business models, invest in staff training, adopting new managerial tools. As a result, the change of the market (from standardized to diversified) with the production of customized products. Machines and robots are able to communicate each other, to take decisions and to self-update. The production lines are automated: control and maintenance tasks can be performed remotely. As a consequence, the creation of the agile value chain: it allows you to...
Integrating new institutional economics and resource dependence theory, this study investigates whether in transition economies, characterized by shifting from centrally commanded to more market-oriented economies, there are performance differences among family firms (FFs), nonfamily firms (non-FFs), and former state-owned enterprises (former SOEs), and whether political connections affect these differences. Our findings suggest that FFs outperform non-FFs and former SOEs, unless non-FFs have politically connected CEOs. The performance gap in favor of FFs increases at high levels of board political connection intensity. Among FFs, the top-performing ones either promote nonfamily leadership or combine family leadership with politically connected boards of directors.
RESEARCH SUMMARY
We contend that a synthesis between the literatures on global strategy and global value chains (GVCs) is mutually beneficial. A typology of four themes—managed cross‐border activities, network optimization, bottom‐up upgrading, and strategic coevolution—illustrates the underlying concepts and mechanisms that these two approaches share in common. Our integrative typology provides an analytical framework to understand the interplay between the statics of GVC governance and the dynamics of firm strategy. Firm‐level actions are a key factor in effective GVC‐level policy making, and our framework provides a roadmap to analyze how major disruptions, such as digitalization and pandemics, affect the symbiotic relationships between GVCs and firm strategy.
MANAGERIAL SUMMARY
While the global strategy literature has underplayed the interdependence among firms and other actors in global value chains (GVCs) and highlighted the scope for firm agency, the GVC literature limits the attention to firm strategies per se but puts more emphasis on the governance structure of global industries. In their strategic decision making, managers must take into consideration how firms are positioned along the value chain in terms of four themes: managed cross‐border activities; network optimization; bottom‐up upgrading; and strategic coevolution. Integrating the GVC view adds a further impetus to global strategy beyond the analysis of intra‐firm determinants. Conversely, integrating global strategy into GVC analysis entails a more dynamic view on behaviors of different actors in the value chain. Understanding these interactions enable managers and policy makers to better incorporate how changes and disruptions affect firm strategies within the governance of GVCs.
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Integrating insights from the literature on the multinational corporation into current perspectives on resource allocation, we argue that the ability of headquarters to create value through resource allocation to subsidiaries within the multinational corporation is contingent on the complementary fit between the resource allocation strategy and the dominant behavior of the receivers of the resources. We expound on a theory and an explanation for the volatility of value creation generated by headquarter resource allocation that includes multiple layers of hierarchy. As a corollary, we extend and contribute to the theorizing on headquarters-subsidiary relations and resource allocation by illustrating different scenarios of the resource allocation process. More specifically, we develop a two-by-two matrix of the resource allocation process that corresponds to different resource allocation strategies of headquarters (winner-picking and cross-subsidization) and subsidiary behavior (collaboration or competition) in multinational corporations. We argue that, depending on which scenario within the matrix is brought to the fore, our understanding of how the resource allocation process plays out between headquarters and subsidiaries will differ and therefore influence value creation within the multinational corporation.
This article reviews the rapidly growing domain of global value chain (GVC) research by analyzing several highly cited conceptual frameworks and then appraising GVC studies published in such disciplines as international business, general management, supply chain management, operations management, economic geography, regional and development studies, and international political economy. Building on GVC conceptual frameworks, we conducted the review based on a comparative institutional perspective that encompasses critical governance issues at the micro-, GVC, and macro-levels. Our results indicate that some of these issues have garnered significantly more scholarly attention than others. We suggest several future research topics such as microfoundations of GVC governance, GVC mapping, learning, impact of lead firm ownership and strategy, dynamics of GVC arrangements, value creation and distribution, financialization, digitization, the impact of renewed protectionism, the impact of GVCs on their macro-environment, and chain-level performance management.
Research Summary
Although computerization has been enabling changes in the structure and economic geography of industries for decades, recent public discourse has become focused on a set of “new” advanced digital technologies and technology applications that appear poised to dramatically reduce demand for routine tasks and transform the organization and content of work. How are these changes shaping the strategic options for companies and policy‐makers in less‐developed economies? This paper disentangles the old and new features of the digital economy; distills three key business strategies underpinning its organization: modularity, open innovation, and platforms; and summarizes some of the benefits and risks for society. It explores the strategy and policy options available for firms and policy‐makers in less developed places, with a focus on innovation and market positioning.
Managerial Summary
How is the digital economy shaping strategic options for managers in less‐developed economies? This paper disentangles the old and new features of the digital economy and distills three key business strategies underpinning its organization: modularity, open innovation, and platforms. It then explores strategic options available for firms in less developed places, with a focus on innovation and market positioning. While core platform owners will have the capability and authority to accumulate, access, and analyze large pools of data, access to all of the world's relevant data is not required to speed innovation or carve out new market space in the digital economy. The opportunities may be greatest in industrial applications, where the continued importance of physical systems and industry‐specific domain knowledge drives adaptation and customization.
Digitization, due in large part to the suite of technologies commonly referred to as Industry 4.0 or the Fourth Industrial Revolution, is changing the frontier of what tasks can be performed by machines and what must be completed by humans, challenging the extensiveness of production in geographic space and the density of interactions among buyers and suppliers. In this chapter, we argue that technological change is introducing new, highly capable digital technology multinational enterprises (“digital economy MNEs”)
into the manufacturing and service sectors. These firms are unique in that they value non-physical assets higher than physical assets, indicative of a competitive strategy valuing more asset-light forms of international production. “Lightness” among these firms has development implications for regions, especially if lightness among digital economy MNEs is a harbinger of increased lightness among all industries.
Purpose
Technology uncertainty poses significant challenges to manufacturers, as rapid changes in product and/or process standards and specifications can disrupt the smooth flow of materials in extended supply chains. Practitioners and researchers alike who take a relational perspective widely regard supplier involvement as a potentially effective strategy to cope with technology uncertainty, as focal manufacturers can tap into their upstream supply networks for complementary resources and capabilities. However, the literature lacks a nuanced understanding of the supplier involvement processes. Specifically, the role of resource dependence for supplier involvement has yet to be systematically understood. To fill this gap, this study aims to combine the relational perspective with the resource-dependence perspective to explore how buyer dependence, supplier dependence and buyer–supplier interdependence influence buyers’ decision-making on tapping into upstream supply networks for coping with technology uncertainty.
Design/methodology/approach
To test the hypotheses, a survey is conducted among Dutch firms with more than 50 employees in the discrete manufacturing industries (ISIC 28-35), resulting in a sample of 125 manufacturers.
Findings
First, there is a significantly positive relationship between technology uncertainty and supplier involvement, giving support to the expectation that buyers are indeed involving their key suppliers in the product/process design and improvement, as a response to technology uncertainty. Second, buyer dependence and interdependence are found to be positively moderating the relationship between technology uncertainty and supplier involvement. In contrast, supplier dependence has a negative moderating effect on the baseline relationship.
Research limitations/implications
The authors contribute to a relational view on buyer–supplier relationships by showing that the validity of this view, in the context of technology uncertainty, is contingent on the resource dependence between buyers and suppliers, and the authors contribute to the supply chain management literature more generally by combining a relational perspective with a resource-dependence perspective.
Practical implications
The findings provide several nuanced insights into the effect of resource dependence (buyer dependence, supplier dependence and interdependence) on supplier involvement for coping with technology uncertainty.
Originality/value
This study contributes to the supply chain management research by going beyond the benefits of supplier involvement and highlights the circumstances under which supplier involvement is likely to occur.
Purpose
The rise of new information and communication technologies forms the cornerstone for the future development of work. The term Industry 4.0 refers to the vision of a fourth industrial revolution that is based on a network of autonomous, self-controlling, self-configuring, knowledge-based, sensor-based and spatially distributed production resources. All in all, different forms of the application of the Industry 4.0 concept can be observed, ranging from autonomous logistic transport systems drawn upon the idea of swarm intelligence to smart knowledge management systems. This paper aims to develop a theoretical framework to analyze different applications of Industry 4.0 on an organizing continuum. The general research questions are: What forms of organizing digitalized work lead to the reproduction of routines, and what forms foster innovation within Industry 4.0? The authors thus analyze the consequences of different forms of organizing work on workers’ perceptions and the results of the working process.
Design/methodology/approach – This paper provides case studies for different stages of the organizing continuum in the context of Industry 4.0. The cases and a further analysis of all 295 funded projects are based on the Platform Industry 4.0 Map, which is part of the Industry 4.0 initiative of the German Federal Ministry of Economic Affairs and Energy and the German Federal Ministry of Education and Research. The consequences for people acting in such organizational and digitally supported structures are discussed.
Findings
A variety of applications of Industry 4.0 can be found. These applications mainly vary in the dimensions of the degree of formalization, the location of control authority, the location of knowledge and the degree of professionalization. At the right side of the organizing continuum, the digitalization organizes a work environment that supports highly qualified humans. They have broad leeway and a high degree of autonomy to design and create innovative forms of digitalization for tomorrow. At the left side of the organizing continuum, Industry 4.0 structures a work environment with narrow leeway, a low degree of autonomy and a top-down structure of control authority predetermined by digital applications. In this case, employees fill the gaps the machines cannot handle.
Research limitations/implications
As the paper focuses on Industry 4.0 developments in Germany, the comparability with regard to other countries is limited. Moreover, the methodological approach is explorative, and broader quantitative verification is required. Specifically, future research could include quantitative methods to investigate the employees’ perspective on Industry 4.0. A comparison of Industry 4.0 applications in different countries would be another interesting option for further research.
Practical implications – This paper shows that applications of Industry 4.0 are currently at a very early stage of development and momentarily organize more routines than innovations. From a practical point of view, professional vocational and academic training will be a key factor for the successful implementation of digitalization in future. A joint venture of industry and educational institutions could be a suitable way to meet the growing demand for qualified employees from the middle to the right-hand of the organizing continuum in the context of Industry 4.0.
Social implications – Industry 4.0 is designed by men, and therefore, humans are responsible for whether the future work situation will be perceived as supportive or as an alienated routine. Therefore, designers of Industry 4.0, as well as politicians and scientists, absolutely must take the underlying outcomes of digitalized work into account and must jointly find socially acceptable solutions (e.g. unconditional basic income to absorb negative societal effects of unemployment caused by digitalization).
Originality/value
This paper provides a promising avenue for future research on Industry 4.0 by analyzing the underlying organizational structures of digital systems and their consequences for employees. Moreover, the paper shows how Industry 4.0 should be organized to simply reproduce routines or to support innovation.
In this paper, we consider learning by human beings and machines in the light of Herbert Simon’s pioneering contributions to the theory of Human Problem Solving. Using board games of perfect information as a paradigm, we explore differences in human and machine learning in complex strategic environments. In doing so, we contrast theories of learning in classical game theory with computational game theory proposed by Simon. Among theories that invoke computation, we make a further distinction between computable and computational or machine learning theories. We argue that the modern machine learning algorithms, although impressive in terms of their performance, do not necessarily shed enough light on human learning. Instead, they seem to take us further away from Simon’s lifelong quest to understand the mechanics of actual human behaviour.
The implementation of Industry 4.0 has a far-reaching impact on industrial value creation. Studies on its opportunities and challenges for companies are still scarce. However, the high practical and theoretical relevance of digital and connected manufacturing technologies implies that it is essential to understand the underlying dynamics of their implementation. Thus, this study examines the relevance of Industry 4.0-related opportunities and challenges as drivers for Industry 4.0 implementation in the context of sustainability, taking a differentiated perspective on varying company sizes, industry sectors, and the company’s role as an Industry 4.0 provider or user. A research model comprising relevant Industry 4.0-related opportunities and challenges as antecedents for its implementation is hypothesized. In order to test the model, partial least square structural equation modeling is applied for a sample of 746 German manufacturing companies from five industry sectors. The results show that strategic, operational, as well as environmental and social opportunities are positive drivers of Industry 4.0 implementation, whereas challenges with regard to competitiveness and future viability as well as organizational and production fit impede its progress. Moreover, it is shown that the perception of Industry 4.0-related opportunities and challenges as antecedents to Industry 4.0 implementation depends on different company characteristics.
The objectives of this paper are (1) to have a detailed, practical discussion of Industry 4.0, and (2) to suggest policy implications to transition toward Industry 4.0 in Korea. Companies should consider Industry 4.0 very seriously as they develop their future initiatives since traditional manufacturing business models do not fit with the emerging technologies of Industry 4.0. Some issues should be addressed with care: IT security, reliability and stability needed for critical machine-to-machine communication; a need to maintain the integrity of production processes, avoid IT snags, and protect industrial knowhow; and the lack of adequate skill-sets, general reluctance to change by stakeholders, and loss of many jobs to automatic processes and IT-controlled processes. To successfully transform Korean industry toward Industry 4.0, it is necessary to (1) refine and elaborate the strategies enacted by the central government to build economic and social systems that can flexibly respond to changes, (2) establish some kind of operational system to maximize the effectiveness of initiatives and policies, (3) develop concrete and workable action plans to transition toward economic and social systems that can accommodate innovative changes, and (4) establish infrastructure to lead all initiatives.
Purpose
This paper aims to provide an assessment of how the widespread adoption of new digital technologies (i.e. the Internet of things, big data and analytics, robotic systems and additive manufacturing) might affect the location and organisation of activities within global value chains (GVCs).
Design/methodology/approach
The approach in this paper is to review various sources about the potential adoption and impact of the new digital technologies (commonly known collectively as Industry 4.0), to contrast these technologies with existing technologies, and to consider how the new technologies might lead to new configurations involving suppliers, firms and customers.
Findings
The authors report that the new digital technologies have considerable potential to disrupt how and where activities are located and organised within GVCs), and who captures the value-added within those chains. They also report that Industry 4.0 is still in its infancy, but that its effects are already having an impact upon the nature of competition and corporate strategies in many industries.
Social/implications
In particular, the authors draw attention to the potential cyber-risks and implications for the privacy of individuals, and hence, the need for regulation.
Originality/value
This is the first published paper to consider the likely separate and joint impacts of the new digital technologies on the practice and theory of international business.
Research summary: We examine the value of political ties on firm performance in an emerging economy. Using social exchange theory, we posit that political connections lead firms to engage more in proself and prosocial activities, which mediate the relationship between political ties and firm performance. The institutional environment moderates the dual mediations such that as the institutional environment improves, the mediation effect through proself engagement weakens, whereas the mediation effect through prosocial engagement strengthens. We found support for these propositions by analyzing two samples of firms in China: A surveyed sample of 363 small- and medium-sized firms and data from 2,780 publicly listed firms from 1999–2014. Our findings shed light on whether political ties lose strategic value with the development of institutional environments.
Managerial summary: Political ties have been considered important for firm survival and performance in emerging economies, as they enable firms to obtain critical information and resources to buffer uncertainty and build up competitive advantages. Our study demonstrates that what truly matters may not be a firm’s political ties themselves but the firm’s strategic engagement in both proself and prosocial activities that were conducted to remain its ongoing social exchange with governments. In addition, our study reveals that institutional development alters the business–government exchange and influences a firm’s proself and prosocial engagement differently, making the value of political ties in a firm’s performance hard to predict.
In recent years, Internet connectivity has greatly improved across the African continent. This article examines the consequences that this shift has had for East African firms that are part of global value chains (GVCs). Prior work yielded contradictory expectations: firms might benefit from connectivity through increased efficiencies and improved access to markets, although they might also be further marginalized through increasing control of lead firms. Drawing on extensive qualitative research in Kenya and Rwanda, including 264 interviews, we examine 3 sectors (tea, tourism, and business process outsourcing) exploring overarching, cross-cutting themes. The findings support more pessimistic expectations: small African producers are only thinly digitally integrated in GVCs. Moreover, shifting modes of value chain governance, supported by lead firms and facilitated by digital information platforms and data standards are leading to new challenges for firms looking to digitally integrate. Nevertheless, we also find examples in these sectors of opportunities where small firms are able to cater to emerging niche customers, and local or regional markets. Overall, the study shows that improving connectivity does not inherently benefit African firms in GVCs without support for complementary capacity and competitive advantages.
The growing market globalization, increasing global competition, and more complex products results application of new technologies, methods and business processes. Fast changing market environment and fluctuating customer demands require efficient operation of logistical processes. In this study the logistical tendencies and challenges are introduced with reasons and driving forces. Tendencies in the changes of customer demands, production requirements, formation of supply chains, inventory strategies, transportation activities and activity of the logistics service sector are analyzed. Finally the Industry 4.0 conception is introduced which will change the production and logistical processes drastically.
We examine the role of debt as a governance mechanism in balancing exploration and exploitation. We argue that while equity is conducive to uncertain exploration critical for innovation, debt provides countervailing incentives for engaging in exploitation by imposing cash flow obligations and the threat of bankruptcy. As a consequence, debt becomes a vital instrument in directing innovation along the optimal trajectory, while preventing the balance from shifting too far toward suboptimal exploration. To support our arguments, drawing on patent data, we first demonstrate that a firm's leverage is positively related to knowledge exploitation activity as reflected in its self-citations. Next, we show that firms that have potentially engaged in suboptimal exploration, as manifest in underutilized stocks of proprietary knowledge, are likely to experience leverage increases in the short run, and these leverage increases in turn result in subsequent increases in self-citations. These effects are consistent with firm value indicating that equity holders value the role of debt in stimulating exploitation. Our study draws attention to the complementary roles of equity and debt as governance mechanisms in balancing exploration/exploitation, while outlining the role of debt in innovation in greater depth.
The capabilities of supervised machine learning (SML), especially compared to human abilities, are being discussed in scientific research and in the usage of SML. This study provides an answer to how learning performance differs between humans and machines when there is limited training data. We have designed an experiment in which 44 humans and three different machine learning algorithms identify patterns in labeled training data and have to label instances according to the patterns they find. The results show a high dependency between performance and the underlying patterns of the task. Whereas humans perform relatively similarly across all patterns, machines show large performance differences for the various patterns in our experiment. After seeing 20 instances in the experiment, human performance does not improve anymore, which we relate to theories of cognitive overload. Machines learn slower but can reach the same level or may even outperform humans in 2 of the 4 of used patterns. However, machines need more instances compared to humans for the same results. The performance of machines is comparably lower for the other 2 patterns due to the difficulty of combining input features.
The emergence of Internet business‐to‐business (B2B) platforms offers exporters an effective and low cost means to meet the needs of their foreign buyers. However, the online marketplace is noisy and crowded, and the information asymmetry between exporters and foreign buyers is significant. Little research has been done to investigate how exporters can best use these different platform services and their boundaries and conditions. Drawing on signaling theory, we categorize an exporter’s use of platform services as marketing‐ and trade‐risk‐focused services (less and more credible signals, respectively). We further investigate how these platform services influence export sales in different institutional environments, specifically exploring the moderating roles of formal and informal institutional distance between the home and host countries. We test our hypotheses using a unique dataset made up of survey and archival data on Chinese exporters’ using Alibaba.com. Findings indicate that using marketing‐ and trade‐risk‐focused services positively affect export sales performance. The effect, however, is contingent on the differences in the formal and informal institutional environments between home and host countries. Trade‐risk‐focused services are more pronounced under greater formal and informal institutional distance. In contrast, marketing‐focused services are less pronounced under greater informal institutional distance. Taken together, our findings extend signaling theory to an online and international context. We deepen our understanding of how firms can utilize online signals with different levels of credibility and of how differences of institutional environments differently impact their effectiveness. We also advance corporate strategy literature by highlighting the importance of geographic markets and institutional differences in shaping firm’s online signaling strategies.
Research Summary
Digitalization has three fundamental characteristics, reprogrammability infrastructural elementality, and intangibility. Based on these characteristics, it is transforming how firms organize for value creation, delivery, and capture. Its intangibility and infrastructural character largely free economic and business activities from the constraints of physical geography like those imposed by transportation and collocation. Digital communication technologies typically reinforce the centrifugal forces that favor dispersing the firm's high knowledge activities. Digital in situ technologies strengthen the centripetal forces toward concentrating the firm's low knowledge activities. Location dependence and product modularity are crucial moderators for tangible products, while institutional barriers are important for intangible ones. Finally, digital technologies increase the resilience of firms during disruptive events that impose restrictions on the movements of people and goods, as during the COVID‐19 pandemic.
Managerial Summary
Digitalization is a general purpose technology on the scale of the steam engine and electricity, and affects every aspect of business and society. It is transforming how firms organize for value creation, delivery, and capture. Freeing businesses from the constraints of transportation and collocation, it increases their resiliency in the face of global disruptions like those associated with the COVID‐19 pandemic. Digital communication technologies typically reinforce the centrifugal forces that favor dispersing the firm's high knowledge activities. Digital in situ technologies like advanced robotics strengthen the centripetal forces toward concentrating the firm's low knowledge activities. Location dependence and product modularity are crucial moderators for tangible products, while institutional barriers are important for intangible ones.
Despite the prominent role played by B2B electronic platforms (E-platforms) in assisting exporters, extant research pays scant attention to how, and under what conditions, exporters can deploy B2B E-platforms to enhance their sales performance. Drawing on signaling theory, we examine how the deployment of E-platforms affects export sales performance via foreign buyer contact. We also explore the moderating roles of institutional environment and export growth strategy. We test our model with a dataset composed of a survey and archival data on Chinese exporters that subscribe to Alibaba.com. The findings indicate that E-platform use positively affects foreign buyer contact and, in turn, export sales performance. This positive effect is even more substantial when exporters originate from regions with less-developed market intermediaries or when the institutional distance between the home and host countries is greater. In contrast, this effect becomes weaker when the level of export market diversification or product diversification is higher.
Digitization and globalization have converged to create a new normal of digital globalization, fortifying deeper, broader, and more intricate connections between nations, businesses, and individuals. This connectivity has redefined who participates in globalization and how international expansion unfolds. This new reality raises a series of complex issues that challenge existing IB theories and conclusions. I submit a new lens toward internationalization advantages for multinationals: new O (open resource advantage), L (linkage advantage), and I (integration advantage). While these new OLI advantages are complementary and coupled with traditional OLI (ownership, location, and internalization) advantages, digital globalization slackens conventional OLI benefits and solidifies the new ones. This article offers insights into how multinationals leverage new OLI advantages and manage global business with digital connectivity in order to improve speed, flexibility, orchestration, and efficiency for both interfirm and intrafirm activities.
This article introduces the concept of a stock value gap—the shortfall of a firm's actual market value from its optimal market value, as measured by a best-performing benchmark. Using a large-scale, real-world database, the authors test the effects of both customer satisfaction and customer complaint on the stock value gap of firms. The results show that customer complaint has a stronger effect than customer satisfaction on the value gap. Furthermore, there is some support for the moderating influences of working capital and firm specialization. The results provide actionable guidelines to build a more complete customer equity dashboard and encourage managers to provide a supportive organizational environment to create shareholder value.
Research summary
This study combines transaction cost economics and network learning literature to examine the moderating effect of knowledge from internal versus external local supplier on subsidiary‐level intrafirm trade within multinational enterprises' (MNEs') global value chain networks. We conceptualize knowledge in a multidimensional way, disentangling it into institutional knowledge in high‐risk countries and internationalization knowledge in all countries. Empirical results from 5,660 observations of 487 Korean MNEs (1995–2013) show that MNEs' institutional knowledge with external local suppliers in high‐risk countries has a stronger negative effect on the relationship between political risk and subsidiaries' intrafirm trade integration than with internal suppliers. Internationalization knowledge from external local suppliers in all countries also has a stronger negative effect on the relationship between political risk and subsidiaries' intrafirm trade integration than with internal suppliers.
Managerial summary
A host country's political risk is a critical consideration for MNEs when entering institutionally hazardous countries. This study shows how MNEs' strategies for operational integration of subsidiaries within global value chain networks respond to challenges of political risk in host countries. We studied 5,660 observations of 487 Korean MNEs (1995–2013) and found that MNE capabilities to manage under institutionally hazardous conditions can be developed through various types of knowledge from internal versus external local suppliers, and, consequently, operational integration in the MNE global value chain in high‐risk countries is less needed. MNEs need to acquire and expand new business opportunities in host countries by accepting heterogeneity through varying institutional and internationalization knowledge and active partnership development based on their global value chain networks.
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An analysis of the competitive priorities that may lead backshoring companies to adopt new technologies is developed and tested using secondary data from 495 relocation initiatives to Europe. Findings suggest that backshoring is associated with the adoption of Industry 4.0 when the firm's priorities are high quality and the reduction of costs tied to non-conformance. Backshoring initiatives prioritizing the reduction of direct costs or responsiveness are not significantly tied to Industry 4.0 adoption. The analysis further highlights that the adoption of new technology by firms that compete on quality is more likely when they are involved in product innovation.
Research Summary
We introduce to the upper echelons literature a novel, linguistic measure of CEOs’ Big Five personality traits that we specifically developed and validated using a sample of CEOs. We then provide a predictive test of the measure by applying it to a sample of more than 3,000 CEOs of S&P 1500 firms to explore the direct and interactive effects of CEOs’ Big Five personality traits and firm performance on strategic change. Our validated, unobtrusive measure of CEO’s Big Five traits provides a strong foundation for future theory development on the firm‐level effects of CEOs’ personality traits. Our specific findings also extend our understanding of how CEO personality influences firm‐level change and how both person and situation‐based factors interact to jointly influence firm strategy.
Managerial Summary
This paper introduces a language‐based tool we developed to measure the Big Five personality traits (i.e., openness, conscientiousness, extraversion, agreeableness, and neuroticism) of more than 3,000 CEOs of S&P 1500 firms. After describing our process to develop and validate the tool, we test it by examining how CEOs’ Big Five traits influence strategic change, both in isolation and in combination with recent firm performance. Our results suggest that CEOs’ personality traits have a meaningful impact on strategic change, but that the nature of these effects differs based on the firms’ recent performance. Our tool also provides a strong basis for scholars seeking to measure the personality traits of large samples of public‐company executives.
In recent years, a market-oriented corporate culture increasingly has been considered a key element of superior corporate performance. Although organizational innovativeness is believed to be a potential mediator of this market orientation–corporate performance relationship, much of the evidence to date remains anecdotal or speculative. In this context, the authors present a systematic framework to test the postulated “market orientation–innovation–performance” chain. To this end, the direct causality assumption of market orientation on organizational performance is examined with Narver and Slater's (1990) market orientation framework. Moreover, the authors take a componentwise approach and examine how the three core components of market orientation (customer orientation, competitor orientation, and interfunctional coordination) affect the two core components of organizational innovativeness (technical versus administrative) en route to affecting corporate performance. Using banking industry data, the authors empirically test and substantiate innovation's mediating role in the market orientation–corporate performance relationship.
Research summary
Platform owners sometimes enter complementors’ product spaces and compete against them. Using data from Amazon.com to study Amazon’s entry pattern into third‐party sellers’ product spaces, we find that Amazon is more likely to target successful product spaces. We also find that Amazon is less likely to enter product spaces that require greater seller efforts to grow, suggesting that complementors’ platform‐specific investments influence platform owners’ entry decisions. While Amazon’s entry discourages affected third‐party sellers from subsequently pursuing growth on the platform, it increases product demand and reduces shipping costs for consumers. We consider the implications of these findings for complementors in platform‐based markets.
Managerial summary
Platform owners can exert considerable influence over their complementors’ welfare. Many complementors with successful products are pushed out of markets because platform owners enter their product spaces and compete directly with them. To mitigate such risks, complementors could build their businesses by aggregating non‐blockbuster products or focusing on products requiring significant platform‐specific investments to grow. They should also develop capabilities in new product discovery so that they could continually bring innovative products to their platforms.
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We calculate the foreign value-added ratio (FVAR) to measure the global value chain (GVC) participation of Chinese exporting firms from 2000 to 2006. Motivated by the heterogeneous firm model of trade, we empirically explore the effects of firm productivity and financial constraints on firms' GVC participation. We find that (1) productivity increases and financial constraints reduce FVAR; (2) productivity affects FVAR for both first-time and continuous exporters, while financial constraints only significantly affect first-time exporters; and (3) financial constraints dampen the positive effect of productivity on FVAR. Our findings thus suggest that productivity and financial constraints play important roles in determining firms' GVC participation.
We are witnessing an increasing adoption of digital technologies in manufacturing industries around the globe. This trend is often debated under the label Industry 4.0. A key claim put forward in these debates is that Industry 4.0 represents a revolution that will reshape manufacturing industries akin to previous industrial revolutions. Despite the popularity of this claim, it provides little help to clarify the identity of Industry 4.0. Such a clarification is however much needed given the worldwide proliferation of digital technologies in manufacturing industries. I address this gap by arguing to view Industry 4.0 as policy-driven innovation discourse in manufacturing industries that aims to institutionalize innovation systems that encompass business, academia, and politics. This clarification of the identity of Industry 4.0 adds to a better understanding of the relationship between manufacturing and politics as well as technological change in manufacturing.
In this paper we explore how the MNE subsidiary’s role internally within its corporation evolves through knowledge creation in accordance with an evolving external local knowledge network, and the extent to which the interwoven coevolving context matters for, and may be guided by the subsidiary. We conducted a qualitative investigation of purposely selected subsidiaries as case studies and longitudinally tracked the interwoven co-evolving contexts of their internal corporate role and external knowledge network. We show why role evolution may be differential and illustrate how competence-creating subsidiaries can balance and simultaneously manage the guided co-evolution of both contexts to advance their roles for knowledge creation. We develop a dynamic framework of subsidiary role evolution at the nexus of these interwoven co-evolving contexts. This advances theory on the dual embedded subsidiary as previous studies have predominantly been cross-sectional and static rather than evolutionary.
This paper discusses production systems with a focus on the relationships between product supply and customer demand in the context of Industry 2.0–4.0. One driver of production evolution is changes in customer demand over time, which is categorised into several dimensions. Major production systems – flow line, Toyota production system (TPS), job shop, cell, flexible manufacturing system and seru – have been developed and applied to supplies to match different demand dimensions over time. For each production system, two questions are addressed: what and how. Comparisons between seru with TPS and cell are given. The possibilities of a future smart factory equipped with internet of things are discussed. The demand dimensions of Industry 4.0, the product architecture change in the automobile industry and the impact of 3D printing are elaborated. Potential applications of lean and seru principles for Industry 4.0 are presented.
We analyze how research and development (R&D) collaborations affect product innovation for subsidiaries of foreign multinational firms and domestic firms. We build on the knowledge-based view to propose that subsidiaries and domestic firms differ in their ability to benefit from alternative R&D partners as a result of the variation in their knowledge complementarities. Specifically, we propose that subsidiaries may benefit more from undertaking R&D collaborations with customers and competitors, whose deeper knowledge of local conditions better complements the more global knowledge base of subsidiaries. In contrast, we argue that domestic firms may benefit more from engaging in R&D collaborations with suppliers and universities, whose more global nature of knowledge better complement the deeper local knowledge base of domestic firms.
PART I THE LOGIC OF HIERARCHICAL LINEAR MODELING Series Editor 's Introduction to Hierarchical Linear Models Series Editor 's Introduction to the Second Edition 1.Introduction 2.The Logic of Hierarchical Linear Models 3. Principles of Estimation and Hypothesis Testing for Hierarchical Linear Models 4. An Illustration PART II BASIC APPLICATIONS 5. Applications in Organizational Research 6. Applications in the Study of Individual Change 7. Applications in Meta-Analysis and Other Cases where Level-1 Variances are Known 8. Three-Level Models 9. Assessing the Adequacy of Hierarchical Models PART III ADVANCED APPLICATIONS 10. Hierarchical Generalized Linear Models 11. Hierarchical Models for Latent Variables 12. Models for Cross-Classified Random Effects 13. Bayesian Inference for Hierarchical Models PART IV ESTIMATION THEORY AND COMPUTATIONS 14. Estimation Theory Summary and Conclusions References Index About the Authors
Industry 4.0 heralds the profound transformation of business models by enabling the fusion of virtual and real worlds and the application of digitization, automatization and robotics in manufacturing. We review the basic premises of Industry 4.0 and map them against the clusters’ features with the aim to establish the kind of relations between these two categories. By exploring the likely impact of clusters on Industry 4.0, our discussion revolves around the broader question of the role of regional ecosystems in industrial transformation. Clusters, thanks to the advantages such as knowledge base and mechanisms, agglomeration economies and externalities (labour pool and critical mass of firms) and favourable more stable, less uncertain environment of trust and cooperation, may facilitate the digital transformation, particularly its phasing-in and testing phases. Notwithstanding this potential, it should be stressed that not all clusters would be able to play such prominent role. Only these equipped with adequate knowledge base and providing some expertise in the field of IT solutions, robotics, automatics, and so on, i.e. the technologies crucial to Industry 4.0 seem predestined to contribute to the emergence of fully fledged industrial internet. Despite seemingly some inconsistency between these two categories, clusters can facilitate the business transformation towards Industry 4.0.
JEL CLASSIFICATION: R1, O3, M2, L1, L2
Dear Colleagues,
below the link to free copies - for those who are intereseted in.
http://www.tandfonline.com/eprint/CGPfxqBNQnWXwBq8WxDe/full
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Purpose
Despite the variety of supply chain management (SCM) research, little attention has been given to the use of Big Data Analytics for increased information exploitation in a supply chain. The purpose of this paper is to contribute to theory development in SCM by investigating the potential impacts of Big Data Analytics on information usage in a corporate and supply chain context. As it is imperative for companies in the supply chain to have access to up-to-date, accurate, and meaningful information, the exploratory research will provide insights into the opportunities and challenges emerging from the adoption of Big Data Analytics in SCM.
Design/methodology/approach
Although Big Data Analytics is gaining increasing attention in management, empirical research on the topic is still scarce. Due to the limited availability of comparable material at the intersection of Big Data Analytics and SCM, the authors apply the Delphi research technique.
Findings
Portraying the emerging transition trend from a digital business environment, the presented Delphi study findings contribute to extant knowledge by identifying 43 opportunities and challenges linked to the emergence of Big Data Analytics from a corporate and supply chain perspective.
Research limitations/implications
These constructs equip the research community with a first collection of aspects, which could provide the basis to tailor further research at the nexus of Big Data Analytics and SCM.
Originality/value
The research adds to the existing knowledge base as no empirical research has been presented so far specifically assessing opportunities and challenges on corporate and supply chain level with a special focus on the implications imposed through Big Data Analytics.
This paper attempts to explain why innovating firms often fail to obtain significant economic returns from an innovation, while customers, imitators and other industry participants benefit. Business strategy - particularly as it relates to the firm's decision to integrate and co1laborate - is shown to be an important (actor. The paper demonstrates that when imitation is easy. markets don't work wen, and the profits (rom innovation may accrue to the owners of certain complementary assets. rather than to the developers of the intellectual property. This speaks to the need, in certain cases, for the innovating firm to establish a prior position in these complementary assets_ The paper also indicates that innovators with new products and processes which provide value to consumers may sometimes be so iJt positioned in the market that they necessarily win fai1. The analysis provides a theoretical foundation (or the proposi. tion that manufacturing often matters. particularly to innovating nations_ Innovating finns without the requisite manufacturing and related capacities may die. even though they are the best at innovation_ Implications for trade policy and domestic economic policy are examined.
Purpose
– Endogeneity is a potential threat to the validity of international marketing (IM) research. The purpose of this paper is to draw the attention of IM researchers to issues of endogeneity, to provide a comprehensive overview of the sources of endogeneity, and to discuss the statistical solutions.
Design/methodology/approach
– The authors conduct the research in two steps. In the first step, the authors review the nature and sources of endogeneity specifically in IM research. In the second step, the authors review 60 IM papers on endogeneity published in the period 1995-2014 and assess the current practice of addressing endogeneity in the IM literature.
Findings
– Sample selection bias and simultaneity are prevalent sources of endogeneity in IM research. Internationalization-performance relationship and innovation-export nexus are the two most frequently adopted models subject to potential endogeneity. Simply lagging the main independent variable is statistically flawed in dealing with endogeneity despite its popularity in IM research.
Research limitations/implications
– First, a careful choice and application of methods are critical when addressing endogeneity. Second, the authors suggest the employment of multiple study methods to address endogeneity robustly. Third, to prevent or solve endogeneity in structural equation modeling, researchers may either collect data on independent and dependent variables from different respondents or employ a two-stage least squares approach. Finally, it is helpful to design dedicated models to prevent proactively potential endogeneity a priori.
Originality/value
– The contribution of this study is twofold. First, it is the first in the literature to discuss the endogeneity issue specifically in IM research. In particular, the study elaborates the origins and consequences of the three most frequently confronted types of endogeneity in IM research. Second, the authors assess the four major methods of addressing endogeneity in IM research with a systematic discussion of the literature from the last two decades. The authors offer suggestions on how to minimize endogeneity in model design and empirical implementation for future IM research.