Is there a trend towards global value chain specialization? — An examination of cross border sales of US foreign affiliates

By Sjoerd Beugelsdijk, Torben Pedersen, Bent Petersen. 2009

137 citations recorded by the source corpus.

In this study we discuss and empirically test the assertion that over the last two decades multinational enterprises' (MNEs') configuration of value-adding activities has shifted from a sparse and simple (host-home) international division of labor among the foreign affiliates to a more specialized and 'advanced' global value chain configuration in which MNEs locate fine-sliced parts of the value chain at the most efficient locations. Using data on trade flows of U.S. affiliates in 56 host countries between 1983 and 2003 we find some indications of a trend in the direction of global value chain specialization. In particular among US affiliates in developing countries the proportion of host-host, intra-firm trade has increased significantly during the observed period of time. Conversely, the proportion of host-home and inter-firm trade has diminished. We interpret this as indicating both value chain disaggregation (vertical specialization) and MNEs' systematic exploitation of factor cost differentials across countries. We also find that the absolute levels of all types of trade flows have increased. Hence, it is the relative, and not the absolute, changes in the trade flow patterns of US affiliates that gives credibility to the global value chain assertion.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/08a85d7c271bdfca72ce83795414e59f105268e1

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Citations in the corpus

Make, Buy or Ally? Theoretical Perspectives on Knowledge Process Outsourcing Through Alliances (2010, unknown): “When firms develop systems that disaggregate the value chain more completely, additional knowledge processes can be separated from physical production aspects and from each other (Beugelsdijk et al., 2008; Mudambi, 2008).”
Global Value Chain Configuration: A Review and Research Agenda (2017, background): “More recently, ome scholars have pointed out that the value chain can o longer be seen as a set of traditional activities, as rms have engaged in a process of fine-slicing activities Beugelsdijk et al., 2009; Contractor et al., 2010; Mudambi, 008; Mudambi and Puck, 2016).”
The relationship between international diversification and firm performance: Why it remains a puzzle (2011, background): “Due to a lack of 9 This finding is also supported in Beugelsdijk et al. (2009).”