Value chain

About: Value chain is a research topic. Over the lifetime, 7206 publications have been published within this topic receiving 224183 citations.

Servitization and Competitive Advantage: The Importance of Organizational Structure and Value Chain Position: A Survey of Multinational Companies Shows That Increased Differentiation and High Customer Satisfaction Are Fundamental to Achieving Competitive Advantage with Services

Abstract: Manufacturing strategy has traditionally been based on one, or a combination, of three paradigms: vertical integration of supplier-buyer production and delivery of processes for controlling and predicting the flow of inputs and outputs, investment in research to bring to market products that are superior to the competition's, or the generation of a sustainable market position to strengthen economies of scale (Wise and Baumgartner 1999). As manufacturers move to service-focused strategies, which require additional and valuable capabilities for firms and reshape value creation channels, those foundations must be revisited. The addition of services, or the reconception of products as services, allows manufacturers to create value across the entire product life cycle and capture it, not just from the firm's current position in the value chain but along the entire value chain, generating new revenue streams (Vandermerwe and Rada 1988). From this perspective, servitization of business can be seen as a strategic alternative that generates superior performance. However, it is not clear how servitization strategies are related to performance. We undertook an extensive quantitative study to explore the mechanisms by which servitization delivers improved performance and sustainable competitive advantage. Background Servitization is an organizational change process that generates new revenue streams through the provision of services associated with a firm's traditional goods (Vandermerwe and Rada 1988). Firms are increasingly exploring the value of integrating goods and services (Baines and Lightfoot 2013), motivated by anticipated improvements in profit margins and the prospect of locking competitors out of their customer base (Bustinza, Parry, and Vendrell-Herrero 2013). Servitization offers the opportunity to generate sustainable competitive advantage, since it frees firms from competing on cost alone (Porter and Ketels 2003), allowing for greater differentiation and increased customer satisfaction. As a special issue of International Journal of Production Economics (Baines, Bustinza, and Vendrell-Herrero, forthcoming) makes clear, recent studies analyzing the relationship between servitization and performance have shown a complex relationship between various performance measures and developing service innovations. Suarez, Cusumano, and Kahl (2013), analyzing the performance of 464 US software firms from 1990 to 2006, found a U-shaped relationship between service revenue and profit margin, with initial service sales leading to growth in profit margins followed by a dip in margins as service sales grow and a subsequent return to growth as service offerings mature. Kohtamaki et al. (2013) found a similar U-shaped relationship between industrial service offerings and sales growth. Kastalli and Van Looy (2013), looking at 44 subsidiaries of a multinational firm for the period 2001-2007, also found a complex relationship between service sales and performance: initial increments of service sales had a positive impact on the subsidiary's performance, but this effect gradually decreased with the growth of service sales and then increased again once service sales became large. All of these studies reveal a positive, though nonlinear relationship, between an increasing scale of service inclusion and a company's performance. Overall, researchers generally agree that moving to a services focus can provide long-term advantages for manufacturers. Generally, companies provide services at three broad levels (Baines and Lightfoot 2013): base (product/equipment provision, spare parts provision), intermediate (help desk, training, maintenance, repair, overhaul), and advanced (customer support agreements, outcome-based contracts). Kastalli, Wiengarten, and Neely (forthcoming) argue that coupling servitization with product innovation processes, as advanced service offerings would require, can enhance long-term profitability. …

Internalizing Global Value Chains: A Firm-Level Analysis

Abstract: In recent decades, advances in information and communication technology and falling trade barriers have led firms to retain within their boundaries and in their domestic economies only a subset of their production stages. A key decision facing firms worldwide is the extent of control to exert over the different segments of their production processes. We describe a property-rights model of firm boundary choices along the value chain that generalizes Antras and Chor (2013). To assess the evidence, we construct firm-level measures of the upstreamness of integrated and non-integrated inputs by combining information on the production activities of firms operating in more than 100 countries with Input-Output tables. In line with the model's predictions, we find that whether a firm integrates upstream or downstream suppliers depends crucially on the elasticity of demand for its final product. Moreover, a firm's propensity to integrate a given stage of the value chain is shaped by the relative contractibility of the stages located upstream versus downstream from that stage, as well as by the firm's productivity. Our results suggest that contractual frictions play an important role in shaping the integration choices of firms around the world.

An empirical examination of the relationship between business strategy and socially responsible supply chain management

Abstract: Purpose – This paper aims to explore the effect of business strategy on socially responsible supply chain management (SR‐SCM).Design/methodology/approach – This study draws on data from 178 UK‐based companies, and 340 buyer‐supplier relationships. A novel data collection approach is used, which minimizes social desirability and common methods bias, to capture socially responsible supply chain management. The data are analysed through a set of OLS regressions.Findings – Business strategies significantly influence socially responsible supply chain management. Low‐cost producers largely neglect their social responsibilities in the supply chain. In contrast, firms pursuing differentiation strategies are considerably more engaged with these issues, partly because they have better supply chain processes.Practical implications – Practitioners should carefully consider the fit between strategic position and level of engagement with SR‐SCM, since our results emphasise the relationship between SR‐SCM and business s...