Why Small Enterprises Can (Still) Operate at the Top of the Pyramid? Evidences and Interstices' Theory in the Automotive Industry

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Abstract:

The paper questions the widely accepted vision of an automotive supply chain with a very pyramidal structure that works to mega suppliers' benefit. Mobilizing an original survey of 750 French SMEs, we show that SMEs can still operate at the very top of the pyramid and that the different tiers remain porous. The first section explains why the modularization of the automotive industry has led to a pyramidalization of supply chains, enabling the emergence of mega suppliers. The second section shows how some SMEs are still able to rise to the top tier of the supply chain, a process explained in the third section. Using the notion of interstices initially formulated by Penrose, an explanation is provided as to why mega suppliers leave certain market spaces unoccupied, with SMEs subsequently filling in the gaps. The ensuing analytical grid then leads to a conclusion that will highlight two main managerial and political implications.