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Academic Research on Value Chains

Porter’s Generic Value Chain Model and Beyond

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

As the business environment has been changing, Michael Porter developed new academic frameworks addressing a co-creation of a shared value with the main premise: “What is good for society is good for business.” In other words, if a company will create a societal benefit, this will ultimately lead to the creation of the 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 integration between the traditional departments, product lines, or geographic structure. A firm may need to formulate strategies and manage interrelationships within the same function/activity between different units, e.g., between business units and geographical area units. See the video below with Porter addressing the creating shared Value Concept.

Global Value Chains Research

On a similar note, Gary Gereffi, a professor at Duke University, developed a “Global Value Chains Initiative” that seeks to develop an industry-centric view of economic globalization that highlights the linkages between economic actors and across geographic space. It is 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 include publication of “Global value chains in a changing world” that introduces a dialogue with policymakers in the Asian region, where economists, political scientists, management specialists, development thinkers and business executives joined together in an exploration of the multiple dimensions of supply chains, 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 the main area of research.

Academic Research on Value Chains and Competitive Advantage

Some of the further research include Reed and DeFillippi, who introduce competitive advantage as being linked to competence developed within the firm, while Hofer and Schendel see the competitive advantage as the unique position a firm develops relative to its competitors through its patterns of resource deployment. Other interesting insights are provided by O’Sullivan and Geringer, who describe the chain of activities as the natural value chain that
includes value chain stages of what a firm needs to accomplish and describe the value chain ‘interrelationships’ as the commonalities and interdependencies between the stages. One of the other interesting researchers is provided by Armistead and Clark, who examine the use of the value chain in designing service operations strategy, suggesting a resource activity map to any service operation, which is based on a service delivery system that includes three dimensions: resources used, configuration of the resources, and service process flow.