BMEA 11/12

1. Governance of global value chains

- Fragmentation : 'integration of trade' & 'disintegration of production' -> how to coordinate the activities?

- Coordination : 'Separability of ownership' & 'Transaction costs approach' & 'Core competence'

- Networks, Hierarchy, 

- 'Commodity supplier', 'Captive supplier' & 'Turn-key supplier'

- 5 basic types of value chain governance : 1. Markets, 2. Modular value chains(electronics), 3. Relational value chains(apparel), 4. Captive value chains(auto parts), 5. Hierarchy

- Modular -> replaceable, Relational -> inter-dependent.

2. Cross-border production network

3. What is a global production network?

- Global production network (GPN)

- Market - network - Helm

- Market lead firm vs technology lead firm

- US company usually control market & technology

- GPN, Cross-border contract manufacturing 

- Key : Dissemination of knowledge & experiences

- 2 Characteristics of GPN

 * Non-equity network

 * Fragmentation of value chain across dispersed locations

- GPN is a new phenomenon?

- Product characteristics of GPN

 * Foot-loose products : low transportation costs

 * Assembly-type products : break-up of value chain possible. Examples : electronics, automotive, apparel and light mafrs. Counter-examples : chemical, iron and steel, food products, pharmaceuticals, etc

- Enabler of GPN

 * Lower tariffs and NTBs?

 * Technology : transportation and IT?

 * Capabilities of subcontracting firms?

- Since when have these enablers become operative?

 * since the early 1990s?

 * But only in a limited number of industries

- Why East Asia, especially Taiwan?

 * Traditional destination for subcontracting

 * Export oriented growth strategy

 * Low labor costs and high labor productivity

 * Starting with NIEs and spreading to second-tier countries

- Why Taiwan?

- Firm theory and GPN

 * Bases for transaction cost economies(TCE)

   - Asset specificity

   - Opportunism

   - Coordination costs

 * How can a non-equity network(without ownership & control) provide protection against TCs?

   - Trust

   - Reputation

   - Reciprocity(mutual dependence)

 * GPN advantages 

   - Cost advantages

   - Flexibility

   - Advantage of open innovation

2010년 11월 12일