The purpose of this paper is to explore how emerging market firms (EMFs), in the face of intense international competition within global value chains (GVCs), continuously accumulate the knowledge and capabilities needed to support leapfrog upgrading. Based on this, this paper aims to construct a process model of the dynamic evolution of EMFs’ control over GVC core activities.
This paper conducts a longitudinal case study of Ninestar Corporation, a leading company in the Chinese printer industry, to investigate its leapfrog upgrading practices. From the perspective of dynamic capabilities theory, the study explores the dynamic processes and intrinsic mechanisms through which EMFs achieve the evolution of their control over GVC core activities.
It is revealed that the dual-dimensional expansion of controlling the core activities of GVC from vertical functional architecture to horizontal product architecture is the pathway for manufacturing enterprises in emerging economies to achieve leapfrogging upgrades. It is also found that the dynamic capabilities of EMFs undergo iterative evolution during the upgrading process. The self-reinforcing logic and the path-creation logic of dynamic capabilities are the internal mechanisms for controlling GVC core activities to achieve the breakthrough in both the vertical functional division chain and the horizontal product division chain.
This paper provides an insightful case for how EMFs can achieve leapfrog upgrading in the new normal of global trade patterns. It explores how these firms can gain control over GVC core activities through the evolution of dynamic capabilities. The research findings extend the boundaries of the theory of firm upgrading.
