IDEAS home Printed from https://ideas.repec.org/a/krk/eberjl/v5y2017i3p95-117.html
   My bibliography  Save this article

SME Roles in Modular Value Chains: Perspectives for Growth and Innovativeness

Author

Listed:
  • Marta Gancarczyk

    (Institute of Economics, Finance and Management, Jagiellonian University in Krakow, Poland)

  • Jacek Gancarczyk

    (Institute of Entrepreneurship, Jagiellonian University in Krakow, Poland)

  • Joanna Bohatkiewicz

    (Institute of Economics, Finance and Management, Jagiellonian University in Krakow, Poland)

Abstract

Objective: The aim of the paper is to present modular value chains (MVCs) as a technological and organisational phenomenon that affects industrial organisation and innovation, and to identify the characteristics and types of SME positions (roles) in modular value chains that are associated with innovation development and growth. Research Design & Methods: The study employs two methods, which are literature review and a multiple-case study approach based on two SMEs in the IT industry of which one acts as an independent innovator generating proprietary solutions and the other one is a supplier of production capacity in the area of lower to medium value-adding solutions. Findings: SME roles in modular value chains range from lowest-tire subcontractors in captive or market-based governance to major roles typical of large players in modular governance, e.g., quasi-lead firms and quasi-contract manufacturers. The latter two roles are associated with innovation and high growth. Implications & Recommendations: The recommendations as to the role of public policy and geographical context are provided regarding how to facilitate SMEs’ integration into MVCs with a focus on innovativeness and expansion. The question for further research is whether the roles identified in the case studies can be treated as SME-specific models of participation in modular value chains, or are they only development stages of growth SMEs towards the roles of large firms – leader firms and contract manufacturers (system integrators). Contribution & Value Added: The paper contributes by identifying the roles that SMEs can play in modular value chains and by identifying governance arrangements that SMEs apply to accomplish innovation and high growth.

Suggested Citation

  • Marta Gancarczyk & Jacek Gancarczyk & Joanna Bohatkiewicz, 2017. "SME Roles in Modular Value Chains: Perspectives for Growth and Innovativeness," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 5(3), pages 95-117.
    • Handle: RePEc:krk:eberjl:v:5:y:2017:i:3:p:95-117
    as

    Download full text from publisher

    File URL: https://eber.uek.krakow.pl/index.php/eber/article/download/277/pdf_1
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Langlois, Richard N., 2002. "Modularity in technology and organization," Journal of Economic Behavior & Organization, Elsevier, vol. 49(1), pages 19-37, September.
    2. Byron Gangnes & Ari Van Assche, 2004. "Modular Production Networks in Electronics: The Nexus between Management and Economics Research," Working Papers 200405, University of Hawaii at Manoa, Department of Economics.
    3. Marta Gancarczyk, 2015. "Enterprise- and Industry-Level Drivers of Cluster Evolution and Their Outcomes for Clusters from Developed and Less-Developed Countries," European Planning Studies, Taylor & Francis Journals, vol. 23(10), pages 1932-1952, October.
    4. Bancalari, Antonella & Berlinski, Samuel & Buitrago, Giancarlo & García, María Fernanda & Mata, Dolores de la & Vera-Hernández, Marcos, 2023. "Health Inequalities in Latin American and the Caribbean: Child, Adolescent, Reproductive, Metabolic Syndrome and Mental Health," IDB Publications (Working Papers) 13158, Inter-American Development Bank.
    5. Williamson, Oliver, 2009. "The Theory of the Firm as Governance Structure: From Choice to Contract," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, pages 111-134, December.
    6. Gancarczyk, Marta & Gancarczyk, Jacek, 2016. "SME supplier upgrading during the cooperation life cycle – Evidence from Central and Eastern Europe," Journal of East European Management Studies, Rainer Hampp Verlag, vol. 21(3), pages 318-351.
    7. Timothy J. Sturgeon, 2002. "Modular production networks: a new American model of industrial organization," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 11(3), pages 451-496, June.
    8. Timothy J. Sturgeon, 2003. "What really goes on in Silicon Valley? Spatial clustering and dispersal in modular production networks," Journal of Economic Geography, Oxford University Press, vol. 3(2), pages 199-225, April.
    9. Oliver E. Williamson, 2005. "The Economics of Governance," American Economic Review, American Economic Association, vol. 95(2), pages 1-18, May.
    10. Benjamin M. Oviatt & Patricia P. McDougall, 2005. "Defining International Entrepreneurship and Modeling the Speed of Internationalization," Entrepreneurship Theory and Practice, , vol. 29(5), pages 537-553, September.
    11. Artola, Ner & Zepeda, Eduardo & Rabellotti, Roberta & Gomes, Raquel & Amighini, Alessia & Maggi Campos, Claudio & Villaschi Filho, Arlindo & Pietrobelli, Carlo & Cassiolato, José Eduardo & Parrilli, M, 2006. "Upgrading to Compete: Global Value Chains, Clusters, and SMEs in Latin America," IDB Publications (Books), Inter-American Development Bank, number 247, November.
    12. Koen Frenken & Stefan Mendritzki, 2012. "Optimal modularity: a demonstration of the evolutionary advantage of modular architectures," Journal of Evolutionary Economics, Springer, vol. 22(5), pages 935-956, November.
    13. Pietrobelli, Carlo & Rabellotti, Roberta, 2011. "Global Value Chains Meet Innovation Systems: Are There Learning Opportunities for Developing Countries?," World Development, Elsevier, vol. 39(7), pages 1261-1269, July.
    14. Lyra J. Colfer & Carliss Y. Baldwin, 2010. "The Mirroring Hypothesis: Theory, Evidence and Exceptions," Harvard Business School Working Papers 10-058, Harvard Business School, revised Jun 2010.
    15. Ahlin, Branka & Drnovšek, Mateja & Hisrich, Robert D., 2014. "Exploring the moderating effects of absorptive capacity on the relationship between social networks and innovation," Journal of East European Management Studies, Rainer Hampp Verlag, vol. 19(2), pages 213-235.
    16. Carliss Y. Baldwin & Kim B. Clark, 2000. "Design Rules, Volume 1: The Power of Modularity," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262024667, December.
    17. Ner Artola & Eduardo Zepeda & Roberta Rabellotti & Raquel Gomes & Alessia Amighini & Claudio Maggi Campos & Arlindo Villaschi Filho & Carlo Pietrobelli & José Eduardo Cassiolato & Mario Davide Parrill, 2006. "Upgrading to Compete: Global Value Chains, Clusters, and SMEs in Latin America," IDB Publications (Books), Inter-American Development Bank, number 13158 edited by Roberta Rabellotti & Carlo Pietrobelli, February.
    18. Ram Mudambi, 2008. "Location, control and innovation in knowledge-intensive industries," Journal of Economic Geography, Oxford University Press, vol. 8(5), pages 699-725, September.
    19. John Humphrey & Hubert Schmitz, 2002. "How does insertion in global value chains affect upgrading in industrial clusters?," Regional Studies, Taylor & Francis Journals, vol. 36(9), pages 1017-1027.
    20. Belaya, Vera & Hanf, Jon Henrich, 2014. "Power and influence in Russian agri-food supply chains: Results of a survey of local subsidiaries of multinational enterprises," Journal of East European Management Studies, Rainer Hampp Verlag, vol. 19(2), pages 160-184.
    21. John Humphrey & Hubert Schmitz, 2004. "Governance in global value chains," Chapters, in: Hubert Schmitz (ed.), Local Enterprises in the Global Economy, chapter 4, Edward Elgar Publishing.
    22. Silvia Massini & Nidthida Perm-Ajchariyawong & Arie Lewin, 2010. "Role of Corporate-Wide Offshoring Strategy on Offshoring Drivers, Risks and Performance," Industry and Innovation, Taylor & Francis Journals, vol. 17(4), pages 337-371.
    23. Timothy Sturgeon & Johannes Van Biesebroeck & Gary Gereffi, 2008. "Value chains, networks and clusters: reframing the global automotive industry," Journal of Economic Geography, Oxford University Press, vol. 8(3), pages 297-321, May.
    24. Gancarczyk, Marta & Gancarczyk, Jacek, 2016. "SME supplier upgrading during the cooperation life cycle – Evidence from Central and Eastern Europe," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 21(3), pages 318-351.
    25. Oliver E. Williamson, 1999. "Strategy research: governance and competence perspectives," Strategic Management Journal, Wiley Blackwell, vol. 20(12), pages 1087-1108, December.
    26. Jeffrey Funk, 2009. "The co-evolution of technology and methods of standard setting: the case of the mobile phone industry," Journal of Evolutionary Economics, Springer, vol. 19(1), pages 73-93, February.
    27. Eric Rugraff, 2010. "Foreign Direct Investment (FDI) and Supplier-Oriented Upgrading in the Czech Motor Vehicle Industry," Regional Studies, Taylor & Francis Journals, vol. 44(5), pages 627-638.
    28. Lucia Cusmano & Maria Luisa Mancusi & Andrea Morrison, 2010. "Globalization of Production and Innovation: How Outsourcing is Reshaping an Advanced Manufacturing Area," Regional Studies, Taylor & Francis Journals, vol. 44(3), pages 235-252.
    29. Hoetker, Glenn, 2002. "Do Modular Products Lead to Modular Organizations?," Working Papers 02-0130, University of Illinois at Urbana-Champaign, College of Business.
    30. Pisoni, Alessia & Fratocchi, Luciano & Onetti, Alberto, 2013. "Subsidiary autonomy in transition economies: Italian SMEs in Central and Eastern European countries," Journal of East European Management Studies, Rainer Hampp Verlag, vol. 18(3), pages 336-370.
    31. Chuan-Kai Lee & Annalee Saxenian, 2008. "Coevolution and coordination: a systemic analysis of the Taiwanese information technology industry," Journal of Economic Geography, Oxford University Press, vol. 8(2), pages 157-180, March.
    32. Belaya, Vera & Hanf, Jon Henrich, 2014. "Power and influence in Russian agri-food supply chains: Results of a survey of local subsidiaries of multinational enterprises," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 19(2), pages 160-184.
    33. John Humphrey & Hubert Schmitz, 2004. "Chain governance and upgrading: taking stock," Chapters, in: Hubert Schmitz (ed.), Local Enterprises in the Global Economy, chapter 13, Edward Elgar Publishing.
    34. Benjamin M Oviatt & Patricia P McDougall, 2005. "The internationalization of entrepreneurship," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(1), pages 2-8, January.
    35. Coviello, Nicole & Munro, Hugh, 1997. "Network relationships and the internationalisation process of small software firms," International Business Review, Elsevier, vol. 6(4), pages 361-386, August.
    36. Nicole E Coviello, 2006. "The network dynamics of international new ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(5), pages 713-731, September.
    37. Barringer, Bruce R. & Jones, Foard F. & Neubaum, Donald O., 2005. "A quantitative content analysis of the characteristics of rapid-growth firms and their founders," Journal of Business Venturing, Elsevier, vol. 20(5), pages 663-687, September.
    38. Edward Malecki, 2010. "Global Knowledge and Creativity: New Challenges for Firms and Regions," Regional Studies, Taylor & Francis Journals, vol. 44(8), pages 1033-1052.
    39. Pisoni, Alessia & Fratocchi, Luciano & Onetti, Alberto, 2013. "Subsidiary autonomy in transition economies: Italian SMEs in Central and Eastern European countries," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 18(3), pages 336-370.
    40. Johannes Winter, 2010. "Upgrading of TNC subsidiaries: the case of the Polish automotive industry," International Journal of Automotive Technology and Management, Inderscience Enterprises Ltd, vol. 10(2/3), pages 145-160.
    41. Heidi Wiig Aslesen & Gouya Harirchi, 2015. "The effect of local and global linkages on the innovativeness in ICT SMEs: does location-specific context matter?," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 27(9-10), pages 644-669, October.
    42. Ahlin, Branka & Drnovšek, Mateja & Hisrich, Robert D., 2014. "Exploring the moderating effects of absorptive capacity on the relationship between social networks and innovation," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 19(2), pages 213-235.
    43. Carliss Y. Baldwin, 2008. "Where do transactions come from? Modularity, transactions, and the boundaries of firms," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 17(1), pages 155-195, February.
    44. repec:idb:brikps:34578 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Marta Gancarczyk & Joanna Bohatkiewicz, 2018. "Research Streams in Cluster Upgrading. A Literature Review," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 4(4), pages 17-42.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gancarczyk, Marta & Gancarczyk, Jacek, 2018. "Proactive international strategies of cluster SMEs," European Management Journal, Elsevier, vol. 36(1), pages 59-70.
    2. Marta Gancarczyk & Joanna Bohatkiewicz, 2018. "Research Streams in Cluster Upgrading. A Literature Review," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 4(4), pages 17-42.
    3. Marta Gancarczyk & Jon Mikel Zabala Iturriagagoitia, 2015. "The Process of the Growth of Small and Medium-Sized Enterprises (SMEs)," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 11(4), pages 3-24.
    4. Emanuela Todeva & Ruslan Rakhmatullin, 2016. "Industry Global Value Chains, Connectivity and Regional Smart Specialisation in Europe. An Overview of Theoretical Approaches and Mapping Methodologies," JRC Research Reports JRC102801, Joint Research Centre.
    5. Ekaterina Turkina & Ari Van Assche, 2018. "Global Connectedness and Local Innovation in Industrial Clusters," CIRANO Working Papers 2018s-12, CIRANO.
    6. Cheng, Liang-Chieh (Victor), 2011. "Assessing performance of utilizing organizational modularity to manage supply chains: Evidence in the US manufacturing sector," International Journal of Production Economics, Elsevier, vol. 131(2), pages 736-746, June.
    7. Liena Kano, 2018. "Global value chain governance: A relational perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(6), pages 684-705, August.
    8. Güldem Özataǧan, 2011. "Shifts in Value Chain Governance and Upgrading in the European Periphery of Automotive Production: Evidence from Bursa, Turkey," Environment and Planning A, , vol. 43(4), pages 885-903, April.
    9. Marion Werner & Jennifer Bair & Victor Ramiro Fernández, 2014. "Linking Up to Development? Global Value Chains and the Making of a Post-Washington Consensus," Development and Change, International Institute of Social Studies, vol. 45(6), pages 1219-1247, November.
    10. Ekaterina Turkina & Ari Van Assche, 2018. "Global connectedness and local innovation in industrial clusters," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(6), pages 706-728, August.
    11. Vincent FRIGANT, 2013. "Une comparaison de l’internationalisation des chaînes d’approvisionnement automobiles allemande et française," Cahiers du GREThA (2007-2019) 2013-09, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    12. Ambos, Björn & Brandl, Kristin & Perri, Alessandra & Scalera, Vittoria G. & Van Assche, Ari, 2021. "The nature of innovation in global value chains," Journal of World Business, Elsevier, vol. 56(4).
    13. Emanuele Bacchiocchi & Massimo Florio & Anna Giunta, 2012. "Internationalisation and the agglomeration effect in the global value chain: the case of Italian automotive suppliers," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 5(3), pages 267-290.
    14. Vincent FRIGANT & Stéphanie PERES & Stéphane VIROL, 2012. "How do SMEs to rise at the top of the supply chain? An econometric exploration of the French auto industry (In French)," Cahiers du GREThA (2007-2019) 2012-16, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    15. Li, Haiyan, 2020. "Role of overseas ethnic and non-ethnic ties and firm activity in the home country in the internationalization of returnee entrepreneurial firms," Journal of International Management, Elsevier, vol. 26(1).
    16. Anika Laperrière & Martine Spence, 2015. "Enacting international opportunities: The role of organizational learning in knowledge-intensive business services," Journal of International Entrepreneurship, Springer, vol. 13(3), pages 212-241, September.
    17. Lema, Rasmus & Quadros, Ruy & Schmitz, Hubert, 2015. "Reorganising global value chains and building innovation capabilities in Brazil and India," Research Policy, Elsevier, vol. 44(7), pages 1376-1386.
    18. Jan Johanson & Martin Johanson, 2021. "Speed and synchronization in foreign market network entry: A note on the revisited Uppsala model," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(8), pages 1628-1645, October.
    19. Seyed Meysam Zolfaghari Ejlal Manesh & Alex Rialp-Criado, 2019. "International ecopreneurs: The case of eco-entrepreneurial new ventures in the renewable energy industry," Journal of International Entrepreneurship, Springer, vol. 17(1), pages 103-126, March.
    20. McWilliam, Sarah E. & Kim, Jung Kwan & Mudambi, Ram & Nielsen, Bo Bernhard, 2020. "Global value chain governance: Intersections with international business," Journal of World Business, Elsevier, vol. 55(4).

    More about this item

    Keywords

    modularization; growth; innovativeness; SMEs; global value chains;
    All these keywords.

    JEL classification:

    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:krk:eberjl:v:5:y:2017:i:3:p:95-117. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Piotr Stanek, PhD. (email available below). General contact details of provider: https://edirc.repec.org/data/aekrapl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.