Global Value Chains And International Business Research: Perspectives From Switzerland

The international division of labor and vertical specialization represented by Global Value Chains or GVCs have redefined global trade. The phenomenon has been studied by multiple disciplines, including economists, geographers, sociologists, and historians. This article synthesizes various lines of inquiry, and notes their respective assumptions. IB research on GVCs continues to focus on Multinational Enterprises or MNEs, assuming that they exert control over the network through buying power and superior knowledge. Structure and governance are, however, not necessarily destiny in a GVC. Porter's original definition of the Value Chain stated that competitive strategies manage not just local costs, but the linkages between dependent nodes. Two Swiss firms illustrate how small suppliers can be successful within GVCs by managing network effects. We conclude with the implication of new business models and strategies on IB research and practice.