Large MNEs and their GVCs : a theoretical and empirical approach on the role of intangible capital in the aeronautic and automotive industries

Type de publication:

Conference Paper

Source:

Gerpisa colloquium, Paris (2018)

Résumé:

Title : Large Multinational enterprises and their Global value chains : a theoretical and empirical approach on the role of intangible capital in the aeronautic and automotive industries.
 
Global value chains (GVCs) have become the main framework for the organization of world production and trade. GVCs generally refers to the full range of activities performed to bring a specific product from its conception to its end use and beyond (Gereffi and Fernandez-Stark, 2016, Kaplinsky, Morris, 2002). This basic definition holds even when a typology of GVC is proposed (e.g. snake-like and spider-like configurations of GVCs, Baldwin and Venables, 2013).
This paper, based on our own research on GVCs in the aeronautic and automotive industries, proposes that a GVC can be defined as having three dimensions: techno-productive (close to the definition given before), strategic and value creation and distribution (Serfati, Sauviat, 2018). Since the dimensions are interrelated, putting emphasis on the two latter allows to focus attention on the extent to which GVCs are shaped by large Multinational Enterprises’ strategies. This theoretical perspective has two consequences. One, an analysis of GVCs cannot be carried out only at the sectoral level (e.g. automotive sector) , it has to investigate the coexistence of different GVC built by rival firms (e.g. different OEMs) within the same sector. Two, MNEs are not passive recipients of technological disruption, they are proactive since these shapes GVCs configuration.
The paper takes stock of the refocusing of large MNE’s activities within their GVC. They devote increasing attention to upstream activities (mainly design and R&D), but an outstanding feature in their strategy is the core role held by downstream market-related activities: branding and marketing, IP, post-sales customer services, etc. A growing share of their FDI is oriented towards these downstream activities (Belderbos and alii, 2016). This reflects a product differentiation-based strategy in phase with the oligopolistic competition prevailing in most industries.
From an accounting and financial perspective, those activities are included in the broader category of intangible capital, which accounts for a large share of large MNEs’ stock value. Intangible capital, despite daunting difficulties as regards their valuation, is a powerful magnet for financial investors (the global value of intangible capital has more than doubled between 2008 and 2016) (Brand Finance, 2017). A careful study finds that a good part of the income earned from intangibles is related to IP, one way or another (WIPO, 2017).
Such a strategy adopted by large aeronautic and automotive MNEs means that a growing share of R&D has to be located close to final markets. Not only Development activities account for the larger share of total R&D expenditures, but when they are disaggregated for EU companies (EU 2017), ‘Development for market launch’ (18% of total R&D) and ‘Development for adapting product to the local market’ (13%of total R&D) are the main objectives.
Against this background, issues addressed in the paper include the following:
- What are the main changes in large aeronautic and automotive MNEs as far as their R&D strategy is concerned and how these changes affect the organization of their GVC and the couple offshoring (or not)/out- or in-sourcing ? Why a significant share of these MNEs’ R&D activities remain located in their home country and what this fact tells us on the limits of the globalisation of R&D?
- How the rise of intangible-related activities affect the concept of rents considered as critical by some GVC scholars (Kaplinsky, Morris, 2002)?
- What is the influence of new corporate governance shareholder value-oriented on large MNEs R&D activities?
The paper will draw on aeronautic and automotive top French industrial groups and their GVCs, comparing the two sectors in order to point out their similarities and differences
 
Catherine Sauviat (IRES)
Claude Serfati (IRES) and Cemotev (Unversity of Versailles-Saint-Quentin-en-Yvelines)
 
References :
Belderbos R., Sleuwaegen L., Somers D. & De Backer K. (2016), "Where to Locate Innovative Activities in Global Value Chains: Does Co-location Matter?", OECD Science, Technology and Industry Policy Papers, No. 30, OECD Publishing, Paris.
Brand finance (2017), Global Intangible Finance Tracker (GIFT™) 2017.
Gereffi G. and Fernandez-Stark K., (2016), "Global Value Chain Analysis: A Primer (2nd Edition)",https://globalvaluechains.org/publication/global-value-chain-analysis-primer-2nd-edition
Kaplinsky R., Morris M., (2002). A Handbook for Value Chain Research. Institute of Development Studies.
EU, (2017), "The 2017 EU Survey on Industrial R&D Investment Trends".Publications Office of the European Union
Serfati C., Sauviat C. (coordonné par) (2018), "L’impact des chaînes mondiales d’approvisionnement sur l’emploi et les systèmes productifs : une comparaison France - Brésil dans les industries aéronautiques et automobiles", Rapport remis au département de la Recherche du B.I.T, Janvier.
WIPO (2018), World Intellectual Property Report 2017 – Intangible Capital in Global Value Chains, Geneva.
 
 

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