In what way do national systems of innovation matter for learning, upgrading
and innovation processes in services GVCs? A review of the empirical
evidence.
Partial Draft
Paulina Ramirez
Birmingham Business School
Edgbaston Park RD
Birmingham B15 2TT
UK
[email protected]
Paper presented at ECLAC conference 'Offshore services in Global Value Chains: New
drivers of structural change in Latin America and the Caribbean?', ECLAC, Santiago, Chile;
18-19 October 2012
Abstract
Studies of international production have acknowledge that the ability of firms to learn,
upgrade and innovate in global value chains is also influenced by the national institutional
systems in which firms are embedded. Little is known however about the nature of the
support firms in developing countries require in order to benefit from knowledge flows in
GVCs and how the type of support required changes as firms upgrade in GVCs. Based on a
thorough review of the literature of existing empirical studies as well as primary data the
paper examines the role of national innovation systems on learning and innovation processes
in service-based GVCs.
Introduction
Changes in the organisation, governance, and location of value creating activities associated
with the emergence of complex international inter and intra-firm networks has been a major
feature of the world economy over the last thirty years and a defining feature of present day
globalisation (Dicken 1992; Dunning 1997; Gereffi and Korzeniewicz, 1994). Underpinning
the rise of these global networks are two distinct but related trends: (i) the increasing
liberalisation of trade and foreign direct investment; and (ii) the increasing disaggregation of
value adding activity which can be undertaken either inside firms or acquired from
independently-owned internationally dispersed suppliers. To these two trends can be added
the increasingly widespread diffusion of ICTs giving rise to the exchange of information
across geographical locations. The significance of these innovations in the organisation and
internationalisation strategies of firms have been acknowledge by scholars from a variety of
distinct disciplines, in some cases leading to new conceptualizations of the multinational firm
which focus on the power to coordinate and control international operations even when no
ownership rights exist (Dicken, 2007). It is in this context that the concepts of global
production networks (GPN) and global value chains (GVC) has been developed to explore
the functional integration and governance of internationally dispersed value-adding activities
in a variety of inter and intra-organizational networks (Coe et al., 2008; Ernst and Kim 2002;
Gereffi et al., 2001, 2005; Henderson et al., 2002). One important implication of changes in
the organisation, governance and location of international value adding activities is that in
order to understand processes of international knowledge transfer and their impact on
national and regional economies and firms it is no longer enough to focus attention on foreign
direct investment alone but it is necessary to incorporate into the analysis the cooperative
relations between lead firms and their networks of international suppliers, service providers,
customers and support institutions such as training institutions and universities (Ramirez and
Rainbird 2010). This paper therefore adopts a GVC perspective in order to analyse the
processes of learning, upgrading and the development of innovative capabilities amongst
MNC subsidiaries and joint ventures as well as with independently-owned suppliers, service
providers and customers which are part of global value adding networks.
To what extent and in what manner GVC participation offers opportunities for upgrading and
the development of capabilities of locally-based firms has been an area of concern for GVC
research. Empirical studies of various industries have focused on knowledge flows within
these networks of relationships and the mechanisms used by GVC lead firms to transfer
knowledge to their suppliers as well as the extent to which they help or hinder the ability of
GVC partners to undertake more complex functions. The results from these studies support
the notion that GVCs have become important vehicles for international knowledge diffusion
(Gereffi 1999; Ernst and Kim 2002; Humphrey and Schmitz 2002; Ramirez et al 2012)
however the ability of suppliers to deepen and widen their capabilities including the ability to
undertake more complex functions is not automatic but depends on factors such as the ability
of suppliers to learn and absorb external knowledge, the nature of industry knowledge-base as
well as the way GVCs are coordinated and governed (Humphrey and Schmitz 2002; Gereffi
et al 2005; Morrison et al 2008; Schmitz 2006). Whilst much of the research on knowledge
flows within GVCs has focused on the motivations of lead firms to disseminate knowledge
and know-how to network partners and the mechanisms they use to do so (see Ernst and Kim
2002) the ability of suppliers to learn, absorb and internalise new technological, managerial,
and organisational practices has only recently been the focus of attention. Studies of GVCs
do acknowledge that the strength of upgrading in these networks depend significantly on the
existing capabilities of suppliers and that this, in turn, is strongly influenced by national and
regional institutions for knowledge creation and diffusion (Bair 2005; Gereffi et al 2005;
Humphrey and Schmitz 2002; Kaplinsky, 2000) however few studies have looked at the
impact of national and local systems of learning and innovation on the ability of firms to
upgrade in GVCs.
Based on a review of existing empirical studies as well as primary data this paper examines
the role of national innovation systems on the learning and innovation processes in servicebased GVCs. Empirical studies of service GVCs are analysed to identify references to how
national institutions influenced firm-level learning and upgrading. The literature on national
institutions is then analysed. From these studies the paper identifies the relevant national
institutions that influenced learning and upgrading in services GVCs and the role they played.
Whilst most of the studies on upgrading in GVCs have focused on independently-owned
suppliers in this paper the impact of national institutions on knowledge flows to MNC
subsidiaries and joint ventures as well as to independently-owned suppliers are explored
The link between national innovation systems and upgrading in global value
chains
There are a number of benefits associated with the adoption of a GVC framework to analyse
the learning and upgrading opportunities offered by the emergence of inter and intra-firm
networks for the organisation international value-creating activities. One of the advantage of
GVC analysis is that it focuses not only on FDI flows but also on the market and non-market
relationships between lead firms and their networks of international suppliers, service
providers, customers and support institutions. The importance of this broader framework is
that it not only focuses on the activities of MNCs, their subsidiaries and joint ventures but it
incorporates into the analysis indigenously-owned firms whose activities are nevertheless
strongly influenced and shaped by the both the opportunities as well as demands and
constraints placed on them by these global networks. A second contribution of GVC
approach is that it focuses not only on the value and location of FDI flows but also on the
nature of this investment by disaggregating the analysis of the value-creating process into
sequences of activities (e.g. research and development, purchasing, production, marketing,
distribution and logistics) allowing for a more detailed study of the activities located by lead
firms in particular countries and the knowledge and skills required by subsidiary or partner
firms to undertake them. Studies of services and manufacturing GVCs have therefore been
helpful in identifying the types of skills and knowledge required to undertake particular
activities and functions (including the knowledge and skills require for upgrading) (See for
example Gereffi and Fernandez-Stark 2010 and Fernandez-Stark et al 2012; Hardy et al 2011
in the case of services). Though it is not clear from GVC analysis how firms or countries
develop the required skills and knowledge.
Empirical studies of GVCs have shown that in a number of industries these international
networks have become significant vehicles for international knowledge diffusion, learning
and upgrading (Bair and Gereffi, 2003; Ernst and Kim, 2002; Gerefffi, 1999; Gereffi et al.,
2005; Humphrey and Schmitz, 2002; Sturgeon, 2002) as network lead firms provide
information and in many cases also technical and managerial assistance as well as training to
their network suppliers and partners. Evidence also indicates that in many instances the
increasingly more stringent demands by lead firms on quality, consistency and speed of
response from their supply base has had a positive impact on selected suppliers, driving them
towards more complex and higher-value-added activities of the value chain. Research has
also shown however that the ability to upgrade to more knowledge-intensive activities is not
automatic and that local suppliers will only progress to more complex activities if they have
already developed strong in-house learning routines. This suggests that participation in GVCs
will enhance capabilities where they already exist but will not create them from scratch and
that it is not enough for firms to be exposed to external knowledge to upgrade their
capabilities, they must also make significant efforts to internalise, adapt and use this
knowledge (Ernst and Kim 2002; Ramirez et al 2012). Moreover, case studies of specific
industries have also shown that lead firms who want to retain control of functions considered
strategic can also hinder upgrading by local firms to more complex functions (Schmitz 1999;
Schmitz and Knorringa 2000). Therefore, though generally positive about the possibilities for
knowledge transfer, more nuanced studies that apply the GVC framework acknowledge the
existence of considerable challenges for learning and upgrading in these networks and that a
complex relationship exists between the nature of the industry and knowledge involved, the
ability of suppliers to absorb and use external knowledge as well as the way GVCs are
governed (Humphrey and Schmitz, 2002; Schmitz 2006; Morrison et al 2008; Ponte and
Ewert 2009; Pietrobelli and Rabellotti 2010).
Despite its significant contribution, one of the weaknesses of the GVC literature has been the
lack of attention paid to the processes of learning and upgrading at firm level (Coe et al 2008,
Morrison et al 2008). For example, though one of the advantages of using a GVC framework
is that it includes not only the activities of MNC subsidiaries but also those of indigenous
firms it has not analysed whether learning and upgrading differs in these different types of
firms. This distinction is nevertheless important because while MNC subsidiaries and joint
ventures are embedded in the global knowledge networks of their parent firms and are
therefore likely to be less reliant on the national and regional institutions of the host country,
indigenous-owned firms are likely to be much more rooted and dependent on local business
and innovation systems. Without a greater understanding of how firms inserted in GVCs
internalise and use novel external managerial, organisational and technological knowledge
and practices it is difficult to understand the dynamics of these networks and to what extent
the potential for upgrading will actually be realised. Therefore, as argued in Ramirez and
Rainbird (2010), to understand capability development in international networks research on
GVCs needs to make connections with theories of the firm which focus on learning,
upgrading and the development of absorptive capacity at firm level.
A significant contribution to our understanding of how firms learn, absorb external
knowledge and develop innovative capabilities come from literatures that conceptualise the
process of learning and knowledge creation as social and interactive processes dependent on
the existence of both in-house routines for capability formation as well as the linkages firms
develop with local and national institutions that support knowledge creation and diffusion
(Lundvall 1992; Nelson 1993; Lall and Pietrobelli 2003, 2002; Viotti 2002; Lundvall et al
2009). These approaches recognise that though important learning takes place as part of the
daily routine of firms- including its regular interactions with suppliers and buyers- the ability
to perform more complex activities and undertake more knowledge-intensive functions
usually requires the existence of systematic internal practices (e.g. the type of activities
undertaken in technical or R&D departments) explicitly aimed at absorbing and where
possible generating new knowledge (Lundvall 1992). It is recognised however that these
processes of learning and search within firms are also shaped in a fundamental way by
national and local institutions that influence the way interactions take place (for example:
trust and loyalty, the long-termism versus short-termism vision of the finance system).
Learning and upgrading is also influenced by the way firms interact with national
organisations and institutions for knowledge creation and diffusion and the nature of these
(for example: education, training and skills development systems, academic and state science
and technology research institutes; technical consultancy services; intellectual property
legislation). So, for example, Lundvall and Johnson (1994) argue that the specific
combination of skills, education, knowledge and experience which characterises the
personnel of the R&D department of a firm will influence firm-level innovation and learning
process including the ways that problems are formulated, methods chosen and solutions
sought. However, the type of skills and knowledge firms are able to access and the manner in
which they are able to access them will be influenced by the national institutions system in
which firms are embedded.
Other approaches, such as the Varieties of Capitalism literature link the technological
advantages of firms and nations to the existence of different national institutions that shape
the manner in which coordination to access resources necessary for production and
innovation (for example access to skilled labour or finance) take place in different capitalist
economies (Hall and Soskice 2001). Amongst the significant insights of both these
literatures is the historical and path-dependent nature of the evolution of national institutions
for capability formation, the difficulties and dangers associated with attempts to mechanically
transfer institutional set-ups which have been successful in particular national environments
to others and the difficulties in identifying a 'best-practice' when it comes to institutional
systems (Lundvall and Johnson 1994). This literature also points out that the emergence of
national institutions that shape knowledge creation and diffusion are not technocratic
questions but are often contested and subject to intense political conflict (for example
national systems of education and training, the protection of intellectual property rights, or
the corporate governance and finance systems) (see Streek 1989 for example for a discussion
on skills). As a result, institutional framework that supports learning and innovation countries
and regions provide (or fail to provide) will be influenced by the historical development of
their national business and innovation systems.
Though the literatures on national business, learning and innovation systems have made
significant contributions to our understanding of knowledge creation and diffusion their focus
has remained local and national and has not engaged with the opportunities and challenges
for upgrading face by firms inserted in GVCs. Yet a key insight of GVC analysis is that firms
that are more integrated into the global economy are subject to both intensive pressures to
learn and upgrade their products and processes but also face greater opportunities to acquire
new knowledge and skills. Moreover the needs of firms inserted in GVCs and the
requirements they place on local and national business and innovation systems may differ
from those of indigenous firms with weaker exposure to the quality standards and practices of
international markets (Ramirez et al 2012). By making connections between literatures that
focus on knowledge acquisition in GVCs and that of national system for learning and
innovation the aim is to gain a better understanding of how learning and upgrading take place
at the firm level within global networks.
It has been noted by Morrison et al (2008) as well as Ponte and Ewert (2009) that within the
GVC literature the concept of upgrading is rather unclear. Drawing from various
contributions on the GVC literature Fernandez-Stark and Gereffi (2012) conceptualises the
process of upgrading as including six distinct changes: : Entry into the value chain, when a
new actor begins to participate in the value chain; product upgrading, which describes the
shift into the production of a higher value product; process upgrading describes
improvements in efficiency in the production systems, such as the incorporation of more
sophisticated technology; functional upgrading describes the movement to higher value
stages in the chain that require additional skills; chain upgrading, which describes the entry
into a new value chain by leveraging the knowledge and skills acquired in the current chain;
and finally, end market upgrading, which describes the entry into new higher value end
market segments, which may involve geographic or industry shifts, such as textile suppliers
moving from apparel manufacturers to customers in the medical, defence or construction
industries (Gereffi, 2005; Fernandez-Stark, et al., 2012; Humphrey & Schmitz, 2002). This
conceptualisation of upgrading however may not take into account more modest
improvements in products or processes that nevertheless represent significant learning efforts
on the part of firms and which play an important role in consolidating their participation in
GVCs. For example a study of Pakistani car component suppliers in Japanese-led GVCs
showed that even the ability to improve existing products and make relatively modest
improvements to existing production processes required significant investment and effort on
the part of suppliers (Ramirez et al 2012). Therefore, in a similar manner to Morrison et al
(2008) the paper uses the term upgrading to mean a widening and deepening of existing
capabilities as well the more far-reaching improvements of capabilities.
Method
Based on a review of existing empirical studies as well as primary data the paper examines
the role of national innovation and business systems on learning and upgrading in servicebased GVCs. Empirical studies of services GVCs allow the identification of networks in
different locations, the particular way they are organised (for example the extent to which
indigenous firms participate in GVCs in specific locations), and the demands they place for
skills and knowledge in that particular locality. Some of these studies have also explored to
what extent supplier/customer upgrading has taken place. These studies however seldom
discuss whether MNC subsidiaries and indigenous firms have different requirements in order
to upgrade their capabilities nor do they delve into how the different skills and knowledge
required by firms inserted in GVCs were provided in different countries or regions and the
institutional systems that led to their reproduction, development and expansion. To gain an
greater understanding of the institutional set up necessary to support learning and upgrading
of firms in GVCs the paper draws on both the GVC literature as well as studies of national
institutional systems and the way they influenced the development of different industrial
sectors. The combination of these perspectives and empirical studies is required to
understand the role of national institutions for upgrading in GVCs.
Given the size and complexity of the literature it is not possible in this paper to give a
comprehensive review of all studies undertaken, however the analysis of significant
contributions from the literature on GVCs as well as from the innovation and business
systems literatures gives a clear indication of the institutions of interest and the role they play
in learning and upgrading in GVCs. Most of the studies reviewed are qualitative and though
this limits our ability to generalise from these particular experiences they make a significant
contribution by helping to open the 'black box' of what happens inside firms in terms of their
learning and upgrading practices and their linkages with local institutions for knowledge
creation and diffusion .
Results
The most significant finding from this review of existing empirical literature is the dearth of
studies analysing the relationship between national institutions for knowledge creation and
diffusion and learning and upgrading in GVCs. Studies of national innovation systems with
firms actively engaged in GVCs did however provide some indication of the relevant
institutions and the role they played in learning and upgrading. Given the broad scope of the
NSI and RIS literature the discussion focuses on the key factors identified in empirical
studies of a selected group of countries with firms that have successfully engaged in businessservices GVCs. The discussion below focuses on five factors: Institutions related to human
capital; The national science and technology research system; industrial structure; national
demand; and intellectual property protection.
(1) Institutions related to human capital: skills, employment relations, career
and professional development
Empirical studies of learning and upgrading in GVCs highlighted the importance of labour
for capability development in GVCs. Questions related to the cost, the supply and retention of
labour, the systems for skills, education and training, the institutions for career and
professional development arose as significant factors influencing the ability of firms to learn
and undertake more complex functions in GVCs.
(1.1)
The systems for skills, education and training
Studies of MNC subsidiaries as well as indigenous firms which participate in business
services GVCs clearly highlight the importance of access to skilled labour at relatively low
costs as one, and in many cases the main, reason for increasing the outsourcing and
offshoring of business service activities. These studies also link the upgrading to more
complex functions in GVCs to the increasing sophistication of labour skills and experience
(UNCTAD 2004; Dossani and Kenney 2007; Massini and Miozzo 2010; Gereffi and
Fernandez-Stark 2010). Though much of the present literature on the outsourcing of business
services refers to the importance of skills in IT and software engineering it is important to
bear in mind that the offshoring of business service functions started before the advent of ICT
and that a number of locations which are now have strengths in ICT-related business services
developed their competencies as services providers prior to the ICT revolution. According to
Metters and Verma (2008) in the case of the US, the offshoring of service work started in the
1970s when batches of data were transported by ship and air from the US for processing to
the Caribbean, above all Barbados. The authors point out that by the mid-1990s a number of
US firms operated offshore paper processing centres employing a significant number of
workers. US firms had also established offshore paper processing activities in Ireland.
Though much of this work was unskilled, some activities- such as the processing of health
insurance claims in Ireland, involved professional workers (e.g. nurses). It is interesting to
note that today both Ireland and the Caribbean (Mulder et al 2007) are locations with a
significant number of IT-enabled business service firms inserted in GVCs indicating the
importance of the broad range of skills required for a number of service- related activities and
cautioning against an exclusive focus on the technical knowledge associated with modern ITenabled business services.
Radical changes in technology associated with the diffusion of ICT are of course central to
the emergence and rapid expansion of business services GVCs offering software and
computer programming services as well as numerous IT-enabled business services associated
with business process outsourcing (BPO). The convergence between ICT and business
functions meant that many of the firms which started out as IT service providers over time
diversified their service offering into IT-enabled business services increasingly widening
their demand for skills. As a result, whilst initial accounts of the rise of ICT services GVCs
tended to focus on the demand for highly-educated IT workers more recent accounts have
identified a broader set of professional and language skills necessary for upgrading in BPO
activities (See Gereffi and Fernandez-Stark 2010). India has a strong business services
industry made up of both MNC subsidiaries as well as strong indigenously-owned firms.
Though the beginnings of the Indian software services industry is associated with relatively
low-value work the upgrading of activities to more complex functions is widely acknowledge
(Arora et al 2001; D'Costa 2003; Athreye 2005; Dossani and Kenney 2007; Joseph 2009).
Research on the Indian software services industry has given the country's national system of
education and its emphasis on the teaching of science and engineering a central explanatory
role for the development of this industry. Though not focusing particularly on the
development of software engineers in the early stages of the industry, the role of India's
engineering colleges has been highlighted in studies which have also pointed to the
agglomeration of software MNCs around the pools of skilled labour clustered around these
education institutions, the most salient being Bangalore (Arora et al 2001). Similarly, Joseph
(2009) relates a number of government initiatives in education during the 1970s and 1980s
that resulted in the introduction of numerous graduate and postgraduate programmes in
computer sciences. Joseph recounts how proficiency in computer programming was made
mandatory for the undergraduates of India's IT colleges and for science postgraduates of all
major universities in the country and he refers to a number of both public and private training
initiatives to develop software skills amongst the workforce. These include initiatives by
India's Department of Education supporting training in software development in firms as
well as permission for the establishment of private training centres. The significance of these
initiatives for the IT software and services industry in India is reflected in Arora's et al (2001)
study where a number of firms indicated that a graduate engineering education was needed
because of the problem-solving skills, logical thinking and learning tools it imparts which
help employees to quickly adapt to changes in technology and tasks. It was argued that since
Indian firms aimed to provide a wide range services these skills and capabilities were
necessary.
However, though the large number of university trained engineers has been seen as one of
India's strength in software and business services various studies point to a number of
weaknesses in these initiatives. The uneven character of the IT training imparted by private
institutions has been noted by Joseph (2009). On the other hand, Arora and colleagues note
the inefficient use of human capital in India with highly qualified engineers working in tasks
that underutilize their knowledge and skills. This is explained by the fact that Indian software
firms (above all those servicing the US rather than the local Indian market) prefer to recruit
university trained engineers rather than diploma holders from private training institutes even
though the majority of the tasks for which they are recruited will tend to be relatively nontechnical. The work of Arora and colleagues suggests that a more efficient use of skilled
labour would require firms to organise short training courses to college graduates but firms
don't do so because they do not want to give the impression (above all their US clients) that
they do not have necessary qualified workforce. This suggests an inefficient use of
knowledge and skills with the underutilization of degrees at higher levels in the jobs
hierarchy and of intermediate qualifications which are not employed.
In the cases of Ireland and E. European countries the empirical studies reviewed indicate that
the business services industry is mainly dominated by MNC subsidiaries serving other MNCs
outside the host country. In these countries indigenously-owned business service firms appear
to mainly serve niche markets or local SMEs and be weakly connected, if at all, to GVCs.
Studies indicated that in Hungary, Slovakia and the Czech Republic as well as Ireland the
presence of business services MNC subsidiaries made specific demands on national
educational provision which were positively responded to be national governments. In the
case of Hungary, for example, a number of initiatives such as the introduction of secondarylevel training for future call centre employees and the organisation of university-level training
course in ‗service sciences‘ were introduced with the help of the Hungarian Outsourcing
Association ( Hardy et al 2011). In the main services MNCs in E. European countries appear
to want access to the specific language skills necessary to service the region so that
knowledge of at least one foreign language was a prerequisite to gain employment. Hardy's et
al (2011) study found that between 80 and 90 percent of employees in these firms had a
university degree and the majority of them spoke more than one foreign language. The
authors found that university graduates were favoured not because the work required
university-level skills but because graduates were more likely to have language skills. As in
the case of India this suggests an inefficient use of knowledge and skills with the
unproductive use of formal qualifications at higher levels in the jobs hierarchy and an
underutilized use of intermediate skills.
In the case of Ireland, access to a comparatively cheap, well educated, English-speaking
workforce and the responsiveness of the Irish education system and government to the skills
requirements of foreign investors have been amongst the main arguments used by Irish
investment promoting agencies to attract FDI in internationally traded services (Mac Sharry
and White, 2000). Since the late 1970s the development of a technically competent workforce
and the establish of close links between the education system and the needs of industry (above
all those of MNCs) have been high on the Irish government's agenda leading to a number of
initiatives such as the establishment of Regional Technical Colleges (RTCs) created to
supplement the universities as well as the establishment of a forum for dialogue between
Ireland's Industrial development agency and the education system which has clearly placing
industrial policy and the needs of MNCs at the centre of education and training policy (Barry
2005). During the l980s initiatives designed to train school leavers in the basics of
computerization, office procedures and business operations were rolled out at the same time
that a programme of grants to enterprises for employee training was introduced. These grants
were often included in the incentive package offered MNCs locating in Ireland (Trauth 2001).
It is important to note the importance of Ireland‘s accession to the European Union (or EEC) to
the growth of its vocational and technical education system as to a large extent this expansion
was financed with the assistance of European funds. So, for example, in 1986 almost 90% of
new entrants to full-time courses at the RTCs (i.e. about 20% of those entering third-level
education) were in receipt of ESF grants (Barry 2005). Case study evidence supports the notion
that over time firms located in Ireland have tended to increase the numbers of engineers and
technicians they employ. At the same time these studies have found that newer waves of FDI
have tended to employ a higher proportion of skilled employees (Wickham and Boucher 2004).
Concerns have been expressed, however, that though Ireland's institutional system of education
and skills development has adjusted well to the changing needs of the foreign-owned sectors it
has neglected the requirements of indigenous industry (Wickham and Boucher 2004).
Moreover, as in the case of India and E. European countries the work of Ó‘Riain (1997) also
points to significant levels of underused skills amongst engineers in the software industry.
1.1.2 Importance of a national research system for high-skilled workforce
In order to undertake the more knowledge intensive activities of the value chain firms need
access to very highly skilled labour with doctoral degrees as well as research expertise and
problem solving expertise. Studies of R&D outsourcing in the pharmaceutical industry, for
example, indicate that at that level of the value chain the type of employees that are required
need to be 'problem solvers, fixers, idea generators' (Interview Astra Zeneca 2012). Though
international movement of labour through expatriate workers, immigration or sending
nationals to foreign universities can alleviate shortages of knowledge workers, the lack of a
national research system can undermine the ability of both indigenous firms as well as MNC
subsidiaries to upgrade to the more complex and innovative activities in GVCs (Athreye et al
2009). In the case of the Indian software and business services industry, for example, the
study of Arora et al (2001) points to the country's weak postgraduate research and training
infrastructure as a potentially serious constraint on the ability of Indian-based firms to access
research and problem solving expertise. In the case of Ireland, the emergence of a number of
international locations for internationally traded service during the mid to late 1990s led the
Irish government to increasingly target the higher-value activities of the GVC for FDI. The
need to create a pool of very highly skilled labour with research expertise in order to attract
and embed these high value activities was one of the arguments presented by Irish policy
makers to support a major shift in resource allocation towards the establishment of a national
research system even in the context of the acute financial crisis gripping Ireland since 2008
(Ramirez et al 2012).
(1.1.3) Employment retention
Most country case studies with successful business service GVCs reveal periods of high
attrition and turnover rates in labour market with firms finding it difficult to retain high
skilled employees. Whilst this has led to higher costs of labour in all the countries studied
some countries have also attempted to respond to tight labour markets with a number of
institutional initiatives. In the case of India, for example, where indigenous-owned firms
(compared with MNCs) have found it particularly challenging to retain employees
(Parthasarathy and Aoyama,2006) one response to the high labour turnover has been to
provide career paths to employees, promoting software programmers to managers based on
seniority rather than on proven managerial ability (Arora et al 2001). This practice however
has been questioned by US client firms who have argued that this has weakened project
management in Indian firms. A key point here is that solutions to problems are often
contested within countries and GVCs hence the variety in business and innovation systems
and why notions of 'best practice' are not useful when discussing national institutions.
Interestingly, Parthasarathy and Aoyama (2006) suggests that Indian-owned firms have
developed different trajectories for upgrading than MNCs operating in India and that this has
influenced employee retention rates. They point out that changes in the nature of work in
Indian R&D service firms has created new advantage for working in these firms as they
enable IT professionals to continuously develop their skills in contrast to employees from
MNCs who feel that they are always doing the same thing. Further work needs to be carried
out to establish if this is also linked to more dynamic career progression paths in Indianowned firms.
2
National Science, Technology and Innovation Research System
As firms undertake more complex functions in GVCs the existence of dynamic national
science and technology research system becomes increasingly important. There are a number
of reasons for this including: the need to develop a very skilled workforce with research
expertise, the ability to access consultancy services and advice from public sector research
establishments and/or university research teams, the potential for more in-depth knowledge
transfer in academic-industry links, the potential for the creation of research-led academic
spin-out firms with potential for insertion in the higher value functions of GVCs.
In the case of the Indian, government R&D efforts in software development distributed
throughout a variety of public research institutions (including military research) and
universities was central to the build-up of national capabilities and was vital for the
development of a critical mass of skilled workers with software expertise (Parthasarathy and
Aoyam 2006, Joseph 2009). As well as working for MNCs and large Indian-owned firms,
many of these highly skilled workers went on to become the entrepreneurs that underpinned
the development of a local cluster of 'home grown' firms in areas such as Bangalore. Joseph
(2009) argues that India's national science and technology system has also played a role in
attracting US MNC's R&D investment into the country thereby allowing US MNC
subsidiaries to undertaken higher-value activities in GVCs. Nevertheless, studies also
highlight the existence of weak industry-academic links resulting in a continuing mismatch
between the skills-set of employees and those of firms so that large companies have to make
substantial investments in in-house training (Joseph 2009). The training infrastructure of
some of these firms (e.g. TCS, Wipro and Infosys) is on a large scale, sometimes larger than
those of leading universities. The commitment of Indian indigenous firms to their in-house
training programmes is clear evidence to the strength of India's indigenous industry with
aspiration to develop their own GVCs and is a contrast to the weakness of the Irish
indigenous industry.
For countries where FDI is important the presence a dynamic research base may be
important for both attracting and embedding the higher-value activities of MNCs. Hardy et al
(2011) note evidence of more substantial relationships in terms of research and development
cooperation between the companies and universities, with examples of companies financing
selected university activities developing in Hungary, Slovakia and the Czech Republic. In the
case of Ireland, in the context of the increasing intensification of international competition for
FDI, the development of an internationally competitive academic research system capable of
generating knowledge relevant for industrial innovation, dynamic university-industry links,
and academic spin-out firms has become a central plank of the country's policy efforts both to
attract and embed new waves of higher-value FDI activities as well as creating a new
generation of indigenous industry capable of inserting itself in the higher functions of global
GVCs. Research on industry-academic links in Ireland (Ramirez et al 2012) show that the
STI policies introduced since 2000 have resulted in an increase in academic-industry linkages
by both MNCs and indigenous firms but that it is the foreign-owned firms that have mostly
benefitted from the new system. The research shows that firms with higher R&D, skills and
export intensity have created more linkages with universities. In Ireland these firms tend to be
subsidiaries of MNCs, especially in the ICT and pharmaceutical sectors, which are also
deeply embedded in the global science and technology networks of their parent firms and
have therefore developed substantial absorptive capacity and internal capabilities outside of
the Irish STI and business system. In the case of Irish-owned software firms the research
show weak linkages with the new research system namely because of the long-term nature of
this research and the requirement that industrial partners contribute some of the funding. The
research shows that the STI system emerging in Ireland deepens the dual character of the
country's industrial structure which has been identified as a significant weakness for
sustainable growth. It is important to note that the policies introduced in Ireland were
strongly influenced by notions of 'best-practice' associated with high-technology or well
performing regions in the US and EU (Liagouras 2010; Tödtling and Trippl 2005) but which
were not necessarily appropriate to the character of Ireland's industrial structure or stage of
development.
3
Industrial Structure
The national industrial structures of countries is also important in explaining the emergence
of new, often very specialised, firms which can integrate themselves in high-value nodes of
GVCs. In new technological and industrial fields, for example, what is the source of new firm
formation is an important question. New firms can arise from a number of sources. FDI is
clearly one source of new firm formation and this has been very important for countries
following FDI-led industrialisation strategy such as Ireland or Singapore. The sources for
new indigenous firms can be many including: the national science, research and academic
system, spin-outs from existing national firms as well as spin-outs from MNCs. In a number
of countries such as Ireland and India, specialised spin-out firms from MNCs have played an
important role in the emergence of indigenously-owned industry. So, for example, the exit of
IBM from India led to the start up of small entrepreneurial firms by ex-IBM employees
(Athreye 2005) whilst many of the professionals that were later to become the founders and
managers of home grown higher-value service firms developed their technical as well as
managerial expertise at the offshore development centres of multinational firms
(Parthasarathy and Aoyama,2006; Joseph 2009). The above is also true for the creation of
Ireland's indigenous firms many of which have been spin-outs from US MNCs and whose
technical and managerial employees gained critical knowledge whilst being in their
employment (O‘Malley and O‘Gorman. 2001). In the case of the Indian pharmaceutical
industry the acquisition of MNC subsidiaries in the 1990s and early 2000s- including in some
cases the Indian-based research centre of these firms- by Indian-owned firms played an
important role in the development of capabilities and skills by indigenous firms as well as the
basis for collaborations and the entrance of Indian firm into the GVCs of EU pharmaceutical
lead firms (Athreye et al 2009).
Existing national firms have also been an important base for the creation of new firms that
have entered GVCs in new dynamic sectors. In the case of the business services industry in
India many of the new indigenous entrants consisted of existing firms (many of them
indigenous computer hardware firms or firms with large in-house data processing activities)
diversifying into software (e.g Wypro). Spin-outs from large national firms have also been
the basis for the creation of new entrants that have successfully inserted themselves in GVCs
(see Arora et al 2001 for examples). A key challenge however is the existence of a financial
system able and willing to support high-risk start-ups. In the case of both India and Ireland
(through Enterprise Ireland) state financial assistance has been an essential source of finance
for these firms (D'Costa 2003). However, much of the financial dynamism for Indian start-up
firms seems to have originated in the US where Silicon Valley-based Indian technoentrepreneurs have become angel investors for Indian companies (D'Costa 2003).
3.2
National networks of suppliers
The existence of a dynamic base of supplier firms has been identified as an important factor
embedding investment, including FDI, and determining the strength of knowledge flows
between firms inserted within GVCs in national and regional localities (White 2004). The
existence of a numerous, dynamic and strongly linked base of local suppliers inserted in
GVCs is therefore linked to the development of clusters and the benefits for learning and
upgrading associated with this.
4 Importance of national demand
The strength and sophistication of national markets also arises as important for firms' ability
to insert themselves and upgrade in GVCs, above all in the early stages of development of
firms. The main explanation for this is that it is in the context of national markets that most
firms begin to learn and develop the skills that allows them to compete later on in
international markets. Private sector client firms- both indigenous or MNC subsidiaries- as
well as public procurement have played a significant role in stimulating learning and
upgrading of business service firms by making stringent demands on quality but also giving
services providers the opportunity to deliver more complex services (Botelho et al 2005). In
India, for example, Athreye (2005) highlights the importance of the exit of IBM from the
Indian market as it created domestic demand for Indian programmers who could support
domestically produced computers. This, along with demand for programming skills for public
sector programmes (e.g. attempt to build space capabilities) was important for the formation
of the knowledge and skills-base that underpinned the growth of the Indian software and
business services industry. The national market remained important even after Indian firms
had entered international markets as software development for the domestic market provided
more challenging projects and therefore led to the development of a broader range of skills
that just producing for export markets. While the bulk of exports from Indian service firms
consisted of low-design, coding and testing, projects for domestic customers were larger and
more challenging as for example the screen-based trading system for the Bombay Stock
Exchange and the Reservation System for Railways (Arora's et al, 2001). In the case Brazil,
for example, Botelho et al (2005) highlights the role of the Brazilian banking and
telecommunications industries who combined strong in-house capabilities with outsourcing
to MNCs and indigenous software service firms. The products and services developed in
these contracts could serve as the basis for subsequent products and services.
However, once an industry is established it is less dependent on its home market and
exposure to international markets may be necessary for its further development. Parthasarathy
and Aoyama (2006) for example refer to developments associated with the emergence of the
R&D services sector in Bangalore which grew as part of global networks associated with
Asian, specially Taiwanese, semiconductor GVCs. The authors point to the fact that these
R&D service firms have grown without the support of local industry and argue that linkages
to Asian networks have allowed Indian software firms to 'path-skip' to R&D services. It is
important to note however that the origins of these Indian firms can be traced back to the pool
of designers employed by two Bangalore-based public sector firms (Parthasarathy and
Aoyama, 2006).
The limitations of the Irish national market has been raise as a factor explaining the
difficulties for the emergence of indigenous software and business services Irish firms.
Interviews with the Irish National Software Association indicated the role of national firms in
areas such as banking in the initial development of the indigenous Irish software industry.
The increasing dominance of MNCs and their network of overseas suppliers with the rise of
global procurement had weakened the national market for indigenous firms. On the other EU
hand anti-competition laws restricted the ability of Irish public sector organisations (e.g.
libraries, local municipalities) to support the development of national firms.
A more recent example of successful outsourcing relates to Indian pharmaceutical companies
who are increasingly participating in the GVCs of European and US pharmaceutical leadfirms as R&D service providers. In the case of this industry, Schüren (2012) refers to the
importance of domestic demand linked to public sector initiatives (as well as the regime of
intellectual property protection that allowed product imitation) for the initial development of
the capabilities of Indian-owned pharmaceutical firms. The drop in publicly funded domestic
demand during the 1990s is one of the factors that has spurred Indian pharmaceutical firms to
increasingly insert themselves in global value chains either as producers of generic products
or as providers of manufacturing and, more recently, R&D services to European and US led
pharmaceutical GVCs. The success of Indian firms in international markets has not however
been without controversy as Indian firms have been criticised for focusing their research
capabilities on lifestyle and chronic conditions as well as more advanced science-based
technologies such as biogenetics and stem-cells considered more relevant for foreign markets
rather than domestic disease patterns (Schüren, 2012). This pattern of development is
contrasted to the Brazilin pharmaceutical industry which, in contrast to the Indian, is focused
on the needs of the domestic population but where private sector firms are weak and little
engagement with GVCs exist (Ibid).
4.
Role of industry associations
Case studies indicate that in a number of countries and regions, industry associations have
played an important role supporting firms upgrade in GVCs by helping to provide both in
formal and informal ways (e.g. through peer group networks) a variety of technological
knowledge as well as market research. The role of NASSCOM in the Indian service sector in
providing valuable market research information (Parthasarathy and Aoyama (2006) as well as
its role in projecting India's international image internationally (Josepth 2009) has been noted
in various studies. In the Czech Republic, Slovakia and Hungary, companies participated in
the development and institutions of local business through their membership of chambers of
commerce and business clubs and nationally through IT and outsourcing alliances. For the
companies, these associations provided an informal forum for exchanging ideas and
transferring tacit and codified knowledge. Moreover, through these associations, managers of
FDIs exerted institution-bending behaviour through attempts to exert pressure for changing
what they regarded as certain detrimental elements of the local environment. (Hardy et al
2011)
5
Intellectual Property Protection
Historically, national intellectual property regimes played a significant role in shaping the
ability of national firms to insert themselves in GVCs and the manner in which they did so.
More recently the WTO and the Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPs) have undermined these national differences nevertheless their legacy
still exists and TRIPS remains controversial. One of the most significant examples of the
importance of national intellectual property regimes was the patent legislation in India before
entry to the WTO and the manner in which it shaped the development of the Indian
pharmaceutical industry. Historically, the intellectual property legislation in India protected
process but not product innovation. This allowed Indian pharmaceutical firms to copy and
reverse engineer the pharmaceutical and chemical compounds of the leading chemical and
pharmaceutical MNCs allowing Indian-owned firms to develop quite extensive expertise in
chemistry. India was forced to abandon this 'developmental patent regime' (Schuber 2012) as
part of its entry in to World Trade Organization (WTO) and its decision to abide by the
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) which requires
the provision of patent protection for both pharmaceutical products as well as processes.
After the TRIPs agreement leading Indian generic firms started to invest heavily in R&D and
this has allowed them to upgrade their capabilities and undertake more complex and highervalue activities in GVCs as R&D service providers. The evidence suggests that Indian firms
have successfully inserted themselves in GVCs and are upgrading their capabilities to
perform higher-value activities (Athreye et al 2009). Interviews with leading pharmaceutical
lead firms and biotechnology companies in the UK suggest that they are increasingly
incorporating the outsourcing of chemistry-based activities to Indian pharmaceutical
suppliers (Interviews Ramirez 2012). Nevertheless, Indian firms are only able to participate
in GVCs today because by the time the changes in patent laws were introduced they had
already developed strong capabilities in chemistry. Interestingly, Joseph (2009) refers to the
role of India's software industry association (NASSCOM) in supporting anti-piracy initiatives
in software showing the complexity of the role of intellectual property institutions even
within the same country. This reflects the different needs of industries at different stages of
development and GVC participation. Though today there is much less scope for reverse
engineering and imitation-based learning and innovation strategies, intellectual property
protection remains an issue of contention within and between countries.
Conclusion
The empirical studies analysed do make an important distinction between GVC activity in
India and that of Ireland and Eastern Europe. Whilst India has both MNC and indigenousowned business services GVCs, the business services GVC activities in Ireland and the
Eastern European countries studied are dominated by MNCs. The studies clearly suggest that
national institutional differences were important influences in determining which firms were
able to participate in business services GVCs and the manner in which the resources required
for learning and upgrading in GVCs were created and developed. The importance of human
capital is highlighted in all studies on the development of business services GVCs therefore
national systems of education and training are central to our understanding of both the
emergence as well as upgrading in these GVCs. However, different strategies of
industrialisation have led to important differences between the education and skills
development system of India which was mainly geared to the development of an indigenousowned GVCs and that of Ireland and E. European countries who have given a greater role to
FDI.
Empirical studies reviewed indicate that central to the success of India in business services
industry has been its national systems of education and training with a strong emphasis on
the teaching of science and engineering. Government initiatives in education and training the
area of computer sciences started early and included government sponsored initiatives in both
undergraduate and postgraduate education in universities and colleges, the establishment of
private software training centres, as well as training in software development in firms.
Given the origins of IT-enabled business services industry in software and IT services, India's
early emphasis on science and engineering education and training placed it in a strong
position to develop this industry. The existence of cadre of scientists and engineers has been
the key element in Indian's ability both to attract FDI in IT-related business services as well
as developing and indigenous-owned industry. A key distinguishing feature in India however,
appears to be the significant in-house training programmes of some of India's indigenous
firms.
In contrast to India, Ireland does not have a history of large investment in science and
engineering education, however, the importance of FDI in Ireland's industrialisation strategy
has made it's education and training systems very responsive to the skills needs of foreign
investors. At various stages in its history since the 1960s the Irish government has targeted
foreign investment in higher-value industries and activities into the country and as part of this
strategy it has introduced initiatives in vocational and technical education and training to
increase both the technical and business competence of its workforce. The importance of
Ireland's membership of the EU has been a significant factor in this respect as much of the
funding for the expansion of the countries education and training system has come from
European rather than internal funds. Similarly, the more recent evidence from E. European
countries shows the importance of government responsiveness to the skills needs of foreign
investors.
A number of challenges and controversies are associated with the education and training
systems in both sets of countries. Both in India and E. Europe, for example, there are
important questions about the efficiency with which highly educated labour is used
suggesting the underutilization of skilled workers who are performing tasks for which they do
not need their skills well as the inefficient use of intermediate qualifications which are not
employed. In the case of Ireland, on the other hand, a policy systems which is highly
responsive to the needs of MNC has been criticised for neglecting the skills needs of
indigenous firms. Despite the identification of underutilised knowledge and skills, empirical
studies in India as well as Ireland indicate that the existence of a weak postgraduate research
infrastructure is seen as a constraint by both countries to their ability to develop and attract
the highest-value activities of the GVC such as innovation. These activities require more indepth problem-solving and ideas-generating capabilities which tend to be associated with
research. The identification of these gaps suggests that the ability to match efficiently the
needs of the various activities of the GVC with the knowledge and skills developed in
national education and training systems is not an easy one. A key point however is that
different countries, all of them successful as locations for business services GVC activity,
have developed different education and training systems and that these have resulted in
different ways of GVC involvement.
The existence of a national science, technology and innovation research system appears as an
important factor for the development of an indigenous industrial base as well as for the
higher-value activities of business services GVCs. In the Indian case, government R&D
efforts in software development were not only important for the creating the group of very
skilled workers that played an important role in attracting FDI in higher-value activities but
was also very significant for the emergence of indigenous entrepreneurs that underpinned the
rise of India's local clusters of indigenous firms. Ireland, on the other hand, did not have a
significant national science, technology and innovation research system until 2000, and this is
understood to be one factor, amongst others, explaining the country's very weak indigenous
industrial structure. The development of a internationally competitive national system of
science and technology was a major policy initiative in Ireland and was seen as a significant
element of the country's strategy to attract the higher-value activities of US led GVCs. The
system being created however has been criticised for being of little relevance to the existing
weak indigenous industrial base and up to now there is little evidence of its importance as a
source for indigenous entrepreneurial start-ups. Moreover, while there is evidence that MNCs
are locating higher-value activities in Ireland the importance of Ireland's efforst to create a
national science and technology system in the upgrading of these investments seems unclear.
The experience of Ireland with its complex dual industrial structure illustrates the complex
role of national science and technology institutions in industrial and GVC development and
why notions of 'best-practice' can result in institutional systems that are marginal to efforts to
upgrade in GVCs.
The role of countries' industrial structure as well as national markets also appear to play a
significant role in the type of firms able to engaged in GVCs as well as their activities.
Empirical studies from India as well as Ireland indicate the importance of MNCs as a source
of indigenous star-up firms and in the case of India spin-out firms from large national firms
have been significant. There are few studies however that discuss the institutional support
given to these firms in areas such as finance or market intelligence, though industry
associations do appear to play an important role in the latter. More research on the longevity
of these start-ups and the type of support they require is key because the challenges faced by
small entrepreneurial firms are significant and few countries have managed to engender
significant numbers of these firms. One factor that does appear to be of significant
importance for indigenous firms is the nature of the domestic market. Empirical studies of the
Indian software industry show that even after indigenous firms had successfully
internationalised, their domestic market still played a key role in their upgrading efforts as a
source for more challenging projects that required a broader range of skills than those
demanded by international markets. From a policy point of view this has important
implications for the role public procurement policies- can play in the development of the
capabilities of firms which can support upgrading in GVCs. The experience of India is in
sharp contrast with that of Ireland where MNCs have tended to buy services from other MNC
ad public procurement has not been seen as a policy tool to support the upgrading capabilities
of indigenous firms.
Research has show that insertion in GVCs as well a learning and upgrading once part of
these global networks is a challenging task. A complex combination of systematic in-house
investment as well as knowledge flows within GVCs is necessary for learning and
upgrading. Though there is a dearth of research on how national institutions influence
learning and upgrading in GVCs, the few studies that exist show that national institutions are
essential for human capital development, firm-formation as well as the development of in-
house research capabilities. The few studies that do exist indicate that different institutional
systems can result in different patterns of learning, upgrading and insertion in GVCs
therefore comparing and contrasting the experiences of firms- both the successes as well as
failures- based in different national innovation systems is needed to gain a full understanding
of the manner in which GVC participation and upgrading is influenced by different
institutional systems.
References
Arora, A., Arunachalam, V.S., Asundi, J., and Fernandes, R., 2001, The Indian software
services industry, Research Policy, 30 (8), 1267-1287
Athreye, S., 2005, The Indian Software Industry, in Arora, A., and Gambardella, A., (Eds),
From Underdogs to Tigers: The Rise and Growth of the Software Industry in Brazil, China,
India, Ireland, and Israel, Oxford University Press
Athreye, S., and Kapur, S., 2009, Introduction: The internationalization of Chinese and
Indian firms—trends, motivations and strategy, Industrial and Corporate Change, Volume 18
(2), 209-221.
Bair, J. and Gereffi, G. (2003) ‗Upgrading, uneven Development, and Jobs in the North
American Apparel Industry‘, Global Networks, 3 (2):143-169
Dossani, R., and Kenney, M., 2007, The Next Wave of Globalization:
Relocating Service Provision to India, World Development Vol. 35, No. 5, pp. 772–791,
2007
Barry, F., 2005, Third-level Education, Foreign Direct Investment and Economic Boom in
Ireland, Centre for Economic Research, Department of Economics, University College
Dublin, Working Paper Series, WP05/09
Botelho, A.J.J., Stefanuto, G., and Veloso, F., 2005, The Brazilian Software Industry, in in
Arora, A., and Gambardella, A., (Eds), From Underdogs to Tigers: The Rise and Growth of
the Software Industry in Brazil, China, India, Ireland, and Israel, Oxford University Press
Coe, N., Dicken, P., and Hess, M., 2008. ‗Global production networks: realizing the
potential‘, Journal of Economic Geography, 8:271-295.
Dicken, P., 1992. Global Shift: The Internationalization of Economic Activity. Paul Chapman
Publishers, London
Dicken, P. 2007. Global Shift: Mapping the Changing Contours of the World Economy. 5th
Edition. London: Sage Publications.
Dunning, J.H.,1997, Alliance Capitalism and Global Business, London: Routledge
Ernst, D., Kim, L., 2002. Global production networks, knowledge diffusion, and local
capability formation. Research Policy 31, 1414-1429.
Fernandez-Stark, K., Bamber, P., and Gereffi, G., 2012, Upgrading in Global Value Chains:
Addressing the Skills Challenge in Developing Countries, OECD Background Paper
Gereffi, G., Korzeniewicz, M. (Eds), 1994. Commodity Chains and global Capitalism.
Praeger Publishers, Westport
Gereffi, G., 1999. International trade and Industrial Upgrading in the Apparel Commodity
Chain. Journal of International economics 48 (1), 37-70
Gereffi, G., Humphrey, J., Kaplinsky, R., and Sturgeon, T., 2001. ‗Globalisation, Value
Chains and Development‘, IDS Bulletin 32 (3): 1-8
Gereffi, G., Humphrey, J. and Sturgeon, T. 2005 ‗The Governance of Global Value Chains‘,
Review of International Political Economy, 12:1:78-104.
Gereffi, G., and Fernandez-Stark, K., 2010, The Offshore Services Global Value Chain,
Mimeo, Center on Globalization, Governance & Competitiveness, Duke university
Hall, P. and Soskice, D., (Eds) 2001, Varieties of Capitalism: The Institutional Foundations
of Comparative Advantage, Oxford University Press
Hardy, J., Grzegorz, M., and Capik, P., 2011, Upgrading Local Economies in Central and
Eastern Europe? The Role of Business Service Foreign Direct Investment in the Knowledge
Economy, European Planning Studies, Volume 19 (9), 1581-1591
Henderson, J., Dicken, P., Hess, M., Coe, N. and Wai-Chung Yeung, H., 2002, ‗Global
production networks and the analysis of economic development‘, Review of International
Political Economy 9(3):436–464
Humphrey, J., Schmitz, H., 2002. ‗How Does Insertion in Global Value Chains Affect
Upgrading in Industrial Clusters?‘ Regional Studies 36 (9), 1017-1027
Joseph, K.J., 2009, Sectoral innovation systems in developing countries: the case of ICT in
India, in Lundvall, B-A., Josepth, K.J., Chaminade, C., and Vang, (Eds) J., 2009, Handdbook
of Innovation Systems and Developing Countries, Cheltenham, UK, Edward Elgar
Kaplinsky, R. 2000, ‗Globalisation and Unequalisation: What Can Be Learned from Value
Chain Analysis?, Journal of Development Studies, 37 (2):117-146
Liagouras, G., 2010, What can we learn from the failures of technology and innovation
policies in the European periphery?, European Urban and Regional Studies, 17(3), 331–349
Lall, S., and Pietrobelli, C., 2003, Manufacturing in Sub-Saharan Africa and the need of a
national technology system, in Muchie, M Lundvall, B.A., and Gameltoft, P., (Eds) The
Making of African Innovation Systems,Aalborg University Press
Lundvall, B-A., 1992, National Systems of Innovation, Towards a Theory of Innovation and
Interactive Learning, London, Pinter
Lundvall, B-A., Johnson, B., 1994, The Learning Economy, Journal of Industry Studies, 1(2),
23-42
Lundvall, B-A., Josepth, K.J., Chaminade, C., and Vang, (Eds) J., 2009, Handdbook of
Innovation Systems and Developing Countries, Cheltenham, UK, Edward Elgar
Mac Sharry, R., White, P., 2000. The Making of the Celtic Tiger: The Inside Story of
Ireland‘s Boom Economy. Mercier Press, Dublin.
Massini, S., and Miozzo, M., 2010, Outsourcing and Offshoring of knowledge-intensive
business services: Implications for Innovation, In Gallouj, F and Djellal, F., (Eds) , The
Handbook of Innovation and Services, Edward Elgar
Metters, R., and Verma, R., 2008, History of offshoring knowledge services, Journal of
Operations Management, Volume 26, Issue 2, 141–147
Morrison, A., Pietrobelli, C and Rabellotri, R., 2008, Global Value Chains and
Technological Capabilities: A Framework to Study Learning and Innovation in Developing
Countries, Oxford Development Studies, Volume 36, Issue 1
Mulder, N., Saez, S., de Camino, C and Finot., A, 2007, Trade in services in Latin America
and the Caribbean: an analysis of recent trends, Division of International Trade and
Integration, Cepal, United Nations, Santiago, Chile, December 2007
Nelson, RR., 1993, National innovation systems: a comparative analysis, Oxford University
Press
O‘Malley, E., O‘Gorman, C., 2001. Competitive Advantage in the Irish Indigenous Software
Industry and the Role of Inward Foreign Direct Investment. European Planning Studies 9 (3),
204-320
O‘Riain, S., 1997. An Offshore Silicon Valley? The emerging Irish Software Industry.
Competition and Change 2, 175-212.
Parthasarathy, B., and Aoyama, Y., 2006, From software services to R&D services: local
entrepreneurship in the software industry in Bangalore, India, Environment and Planning A
2006, volume 38, 1269- 1285
Pietrobelli, C., and Rabellotti, R., 2010, Global Value Chains Meet Innovation Systems: Are
There Learning Opportunities for Developing Countries? World Development, 39 (7), 12612011
Ponte, S., and Ewert, J., 2009, Which Way is ―Up‖ in Upgrading? Trajectories of Change in
the Value Chain for South African Wine, World Development, Volume 37, Issue 10, October
2009, Pages 1637–1650
Ramirez and Rainbird 2010Ramirez, P., Love, J.H., and Vahter, P., 2012, Industry-academic
links: unintended consequences of Ireland's FDI-led industrialisation strategy, Under review
by Regional Studies
Ramirez, P., Khan, Z., and Tomlinson, M., 2012, Knowledge flows at the bottom of the
pyramid: The experience of Pakistani component suppliers in three Japanese-led automotive
Global Value Chains, Paper presented at SASE conference 2012, MIT, Boston, USA
(Interview Astra Zeneca 2012, Ramirez, P.)
Schmitz, H. (1999) ‗Global Competition and Local Cooperation: Success and Failure in the
Sinos Valley, Brazil‘, Worl Development 27(9): 1627–50.
Schmitz, H. and Knorringa, P. (2000) ‗Learning from Global Buyers‘, Journal of
Development Studies 37(2): 177–205.
Schüren, V., 2012, Two TRIPs to Innovation, Pharmaceutical Innovation Systems in India
and Brazil, SFB-Governance Working Paper Series, No. 37.
Sturgeon T (2002) Modular production networks: a new American model of industrial
organization. Industrial and Corporate Change 11(3): 451–96.
Tödtling, F., and Trippl, M., 2005, One Size fits all? Towards a differential regional
innovation policy approach, Research Policy, 34, pp 1203-1219
Trauth, E., 2001, The Culture of an Information Economy: Influences abd Impacts in the
Republic of Ireland, Kluwer Academic Publishers, Dordrecht, Boston, London
UNCTAD, 2004, World Investment Report: The Shift Towards Services, United Nations,
New York, Geneva.
Wickham, J. and Boucher, G., 2004, Training cubs for the Celtic Tiger: the volume
production of technical graduates and the Irish education system, Journal of Education and
Work, Vol 17:4: 377-395