Global Value Network Transformations: Exploring interactions between value chains and organisations

Abstract

Multinational corporations can be seen as the significant components of the contemporary business structure that are responsible for a considerable portion of the world’s economic, productive and investment activities. As the epitome of modern capitalism, the changes that happen in their operational and managerial methods are vital for both the academic community and practitioners. Also, the emerging new globalisation diagrams indicate that it is necessary to explore deeply the increasing internationalisation trends. Recent academic work has focused on and discussed the changing business environment of MNCs and further opened the black box of the global value network concept. However, it is relatively less known about the relationships and interactions of the two major systems- the supply chain systems and the organisational and administrative systems within MNCs, especially during their GVN transformations. Hence, this research is aiming at the specific question: How could MNCs reconfigure their global value networks during strategic transformations? To comprehensively understand the complex connections of the mentioned systems, this dissertation adopts a networked and processing model to investigate how MNCs strategically adapt their global value networks- an interconnected intra-firm network structure that contains two coordinated systems for its global management. The GVN model contains and equally focuses on both organisational systems and global functional systems in MNCs. By linking the two concepts- global operations management and organisational theory together within a single model, this dissertation provides a novel perspective to investigate global value networks. A generic framework was developed to analyse the GVN model using a 4C model, which contains four analysing dimensions- contexts, configurations, capabilities and changes. Also, a three-step process is adopted to disassemble the complicated transformation into a more straightforward logic that can be summarised as the preparation phase, the adaptation phase and the outcome phase. To understand a new phenomenon embedded in the context, this research follows an interpretivism approach to build theory through case studies. Six multinational companies from Europe and Asia - Faurecia, Geely, Haier, Huawei, Yanmar and Daimler - in manufacturing industries have been selected and aligned with the theoretical sampling rationales. A case study has been conducted in each MNC, and their internationalisation processes as well as key GVN transformations have been captured for analysis. Primary data is collected mainly from semi-structured interviews with medium to high-level managers and decision-makers who are familiar with the growth history of the firms they worked for. The primary data was complemented and triangulated with the secondary data collected from documentation, archives, academic papers and other reliable resources, as well as the biographies of MNCs and their main founders, etc. Inductive coding and process study method were adopted to understand the changing factors, the adapting processes, and the outcomes of each GVN. There are five findings that explain GVN changes from multiple dimensions. Firstly, the research finds out existing contextual factors and internal triggers that interpret why MNCs need to adapt their operational patterns. Secondly, a GVN transformational typology was developed to explain the configuration of GVNs, and three specific types of changes were identified accordingly, namely VCDTs (value chain dominance transformations), ODTs (organisation dominance transformations) and IDTs (integrated dominance transformations). This dissertation also sheds light on how to configure a new GVN by puzzling out the interactions of the two systems during changing processes. The fourth finding mainly contributes to the outcomes of GVN transformations by investigating capability changes of each type of GVN. With these dimensions, an integrated and processed GVN transformation model was finally developed. And it argues that GVNs should be carefully restructured and reconfigured under certain considerations step-by-step strategically. This dissertation seeks to contribute to both operations management literature and international business literature with a dynamic view to capture practices and changes of MNCs’ global value networks. The findings bridge the gaps between two organic systems within one globally dispersed entity and explain how they function interactionally. The process model of GVN transformations contributes to the process study of MNCs in the IB field. It also provides implications and strategic guidance to practitioners such as managers, directors and decision-makers in large multinationals to better operate MNCs both short-term and long-term.