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Academic Research on Value Chains

Porter’s Generic Value Chain Model and Beyond

Academic research on Value Chains was first popularized by Michael Porter, who introduced a generic value chain model that consists of five primary activities and four supporting activities. This model was set in the context of a traditional manufacturing firm and became the basic point of reference for value chain analysis in the academic and business worlds. Because the model was developed at the time when markets were based heavily on traditional manufacturing firms, the service industry and companies with operations based on intangible assets require more adjusted approaches.

As the business environment changed, Michael Porter developed new academic frameworks regarding the co-creation of shared value with the main premise: “What is good for society is good for business.” In other words, if a company creates a societal benefit, this will ultimately lead to the creation of an economic benefit on a sustainable basis. Porter suggested that in an environment with increasing competition firms may need to coordinate the sharing of activities between organizational sub-units. Customer demands and market forces may require that coordination move beyond the traditional integration between departments, product lines, or geographic structure. A firm may need to formulate strategies and manage interrelationships within the same function or activity between different units, e.g. between business units and geographical area units. See Porter addressing the concept of creating shared value in the video below.

Global Value Chains Research

On a similar note, Gary Gereffi, Professor of Sociology at Duke University, has developed the “Global Value Chains Initiative” (GVC) that seeks to develop an industry-centric view of economic globalization which highlights the linkages between economic actors and across geographic space. This involves a multi-year effort to test and develop the GVC framework with the aims of creating greater analytical precision, intellectual impact, and policy relevance. One of the most interesting research outputs is the publication of Global Value Chains in a Changing World (2013), which introduces a dialogue with policymakers in Asia. This book explores how economists, political scientists, management specialists, development thinkers, and business executives are joined together in an exploration of the multiple dimensions of supply chains, including what drives them, how they operate, how they adapt in a rapidly changing world, and what they mean for development and for policy. In the video below, Gary Gereffi addresses his main area of research.

Academic Research on Value Chains and Competitive Advantage

Further research includes work by Reed and DeFillippi (1990), who introduce the link between competitive advantage and competence developed within the firm, while Hofer and Schendel (1978) see competitive advantage as the unique position a firm develops relative to its competitors through its patterns of resource deployment. Other interesting insights have been provided by O’Sullivan and Geringer (1993), who describe the chain of activities as the natural value chain, which includes value chain stages regarding what a firm needs to accomplish and describes value chain “interrelationships” as the commonalities and interdependencies between the stages. Another piece of research by Armistead and Clark (1994), examines the use of a value chain in designing service operations strategy, suggesting that a resource activity should map to any service operation based on a service delivery system that includes three dimensions: resources used, configuration of the resources, and service process flow.