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An increasing share of products is developed in global value networks. To the competitiveness of individual national economies it is of pivotal importance where the value inherent in the products is generated. The study approaches the topic from two complementary perspectives that respectively focus on different phases in the industry and technology lifecycles. On the one hand, the study examines large international companies, asking how value is generated in networks across a number of different industries, and how such value is distributed among business functions and geographical regions. On the other hand, the study analyzes the early development phases of emerging technology sectors by shedding light on the role of research networks and multidisciplinarity in the commercialization of science. To bridge the two themes, the study also assesses how start-ups in these emerging sectors are able to integrate into global value networks.
The newest trend in globalization bears witness to an increasingly fine-graded proliferation in the levels of international competition. Companies are still pitted against each other on the industry level, but now international competition has pervaded company boundaries and extended onto the levels of individual business functions (such as production, research, and product development) and work tasks (Grossman & Rossi-Hansberg, 2006, 2008 ja Baldwin 2006).
The gross domestic product (GDP) is the cumulative total of value added produced in a particular country. For the viability and growth of an economy it is therefore of importance in which functions value is generated. Similarly critical is the global location of business functions that generate particularly high value added.
The defining objective of this study is to produce fresh insights on the organizational and geographical loci of value generation in international companies, and to determine how the value produced in their various business functions accrue to Finland. In addition, the study examines new industrial sectors, the value chains and value creation mechanisms of which are still only emerging.
The study comprises of two parts: Part A – Value Creation and the Position of Finnish Companies in Global Networks, and Part B – From Science to International Growth Ventures.
Part A’s central research questions include: which business functions generate value added, how is value generated in the networks of different industrial sectors, how is the generation of value added divided across individual business functions and companies, and in which countries is the value added of different products generated? Part A examines the generation of value added in more than 40 products. Employing statistical data and methodology, the study analyzes the impact of internationalization and global collaboration schemes (outsourcing in particular) on the structure of tasks, productivity, wage levels and profitability in Finland.
The focus of Part B is on the early development phases of new industrial sectors and technologies. The part answers to the following research questions: what is the impact of research networks and multidisciplinarity on the commercialization of science, what are the central challenges and drivers in the commercialization of Finnish research, how do companies in new emerging sectors position themselves in global value chains, and what practices do they employ to integrate into these chains? Part B also develops a tool for assessing the cost-effectiveness of the adoption of new technologies as contrasted to the use of incumbent ones. Providing a cost-based estimate for a technology’s long-term impacts on relative savings and profitability, the tool gives the developer a tangible foundation for price development and negotiations with potential users. Small and medium-sized companies in particular are expected to benefit from the tool in negotiating a value adding position in value networks.
PERSONNEL
Research personnel at ETLA: Jyrki Ali-Yrkkö, Martti Kulvik, Mika Maliranta, Tuomo Nikulainen, Matias Kalm, Petri Rouvinen, Antti Kauhanen, Timo Seppälä, Matthias Deschryvere, Antti-Jussi Tahvanainen, and Pekka Ylä-Anttila.
The project is implemented in close collaboration with Aalto University, University of California (Davis), Stanford University Foresight and Innovation Program and Northwestern University, Kellogg School of Management.
Jyrki Ali-Yrkkö is in charge of the project and the dedicated lead of Part A. Martti Kulvik is the lead of Part B.
