Global Value Chains and Production Networks: Case Studies of Siemens and Huawei

By Fengru Cui and Guitang Liu

Global Value Chains and Production Networks: Case Studies of Siemens and Huawei presents theories and frameworks that facilitate the evolution of GPN studies, from macro perspectives based on territory and industry to the use of micro (firm-level) data. The book explores these theories and frameworks through detailed case studies of two major corporations, Siemens and Huawei. With the GPN/GVC structure of Chinese firms not well known outside China, despite the growing importance of Chinese firms in the global economy, this guide plays a pivotal role in facilitating the use of data that promise to unlock economic cooperation and value.

• Emphasizes micro-data analytical models and their methodological underpinnings
• Illustrates how these data illuminate the economic structures of two comparable GPNs within highly divergent institutional contexts
• Suggests how companies can cooperate with foreign partners to enhance their global management capacity and reshape their advantages in international competition

• Language: English
• Publisher: Academic Press
• Release date: Dec 5, 2018
• ISBN: 9780128148488

Fengru Cui

Dr. Fengru Cui is a member of the research staff of the Party School of Beijing Municipal Materials Co., Ltd. She received a Ph.D. in Economics from the University of International Business and Economics in Beijing. Her research interests include global value chains, global production networks, international trade, international business, and multinational companies. Among her special skills are enterprise strategic planning, brand management and vocational education.

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Section I

Theoretical Basis and Analytical Framework of Microcosmic GPN Studies

Outline

Chapter 1 Overview of the Research into GPNs

Chapter 2 Theoretical Basis of Microcosmic GPN Studies

Chapter 3 Analytical Framework of Microcosmic GPN Studies

Chapter 1

Overview of the Research into GPNs

Abstract

This chapter begins with looking at previous definitions of global production network (GPN) and defining the concept of GPN in this book. After that, it examines the theoretical origins of GPN research, including division of labor theories like traditional division of labor theories and traditional international division of labor theories, chain theories like value chain, value-added chain, global commodity chain, and global value chain, and network theories like networks, embeddedness, and actor-network theory. Then it describes the research framework of the Managerial School and the Manchester School, explaining lead firms and local suppliers as two types of actors in a GPN according to the former, and value, power, and embeddedness as the three elements of GPNs according to the latter. The last part summarizes and comments on previous GPN studies, discusses the inadequacies of current studies, and notes the future direction of GPN research.

Keywords

Global production network; research overview; division of labor theories; chain theories; network theories; Managerial School; Manchester School

Chapter Outline

1.1 The Concept of Global Production Network 4

1.1.1 Previous Definitions of Global Production Network 4

1.1.2 The Definition of Global Production Network in This Book 5

1.2 Theoretical Origins of Global Production Network 7

1.2.1 Traditional Division of Labor Theories 9

1.2.2 Chain Theories 12

1.2.3 Theories of Network, Embeddedness, and Actor-Network 15

1.3 Framework of the Research Into Global Production Networks 16

1.3.1 The Managerial School 17

1.3.2 The Manchester School 18

1.4 Global Production Network Studies Worldwide 21

1.4.1 Global Production Network Studies in Other Countries 22

1.4.2 Global Production Network Studies in China 23

1.5 Summary 23

Global production networks (GPNs) represent a major organizational innovation in the international production system. In the context of globalization, they have brought development opportunities for the countries and enterprises actively involved and will exert greater impact on the politics, economy, and culture of these countries. From the perspective of economics, the issue of GPNs boils down to the division of labor, which also provides the essential theoretical basis. However, the development of GPNs has posed challenges to traditional division of labor theory and international division of labor theory. These traditional theories are no longer sufficient to explain the latest changes in the global production system and the driving forces behind them so it is pressing to create a new theoretical framework. Since the 1980s, many new theories have been derived from the meta-theory of division of labor in conjunction with theories in other fields such as economics, management science, sociology, and geography, including value chain, value-added chain, networks and embeddedness, and actor-network theory (ANT), global commodity chain (GCC), and global value chain (GVC).

On the basis of those theories, Dieter Ernst, Jeffrey Henderson, and other authors introduced the concept of GPN in 1999 and further improved its implications in later studies. Now there are two parallel approaches to GPN research, one adopted by the managerial school represented by Dieter Ernst and the other by the University of Manchester represented by Jeffrey Henderson. Comparatively speaking, Dieter Ernst and other like-minded researchers follow the route of GVC research and see three essential characteristics of GPNs, that is, scope, asymmetry, and knowledge diffusion. They put the focus of research on the scope of production, power asymmetry, and knowledge diffusion (mainly flagships) in GPNs, as well as the capacity upgrading of local suppliers and industrial upgrading of developing countries. Jeffrey Henderson and other researchers follow the route of GCC research and underscore three elements of GPNs, that is, value, power, and embeddedness.¹ They pay more attention to the whole social process that involves the production of products and services as well as the reproduction of knowledge, capital, and labor, and stress that local development could be achieved and social welfare improved amid the interaction between globalization and localization. GPNs make it possible to explain, in a wider context, the new changes in international production organizations today and provide a new analytical framework for the research into globalization, regional development, and industrial development. Within the frameworks designed by Dieter Ernst and Jeffrey Henderson, many scholars in China and other countries have studied GPNs in depth from various perspectives, be it theoretical, empirical, or case study. Their remarkable research findings have made the framework of GPN research even