Advanced Materials and Mobility of Innovation in Global Value Chains

In the past few years the theory of global value chains (GVCs) has been devoting increasing attention to the relationship between the geography of production and firms’ and regions’ innovation capabilities (Crescenzi et al., 2013; Parrilli et al., 2013). Moving away from the ‘innovate here, produce there’ logic (Bonvillian, 2005), scholars researching in innovation management started to pinpoint the mechanisms underpinning innovation in global industries and proved that when incremental and process innovation (I&P) is pursued, the co-location of R&D and production is a fundamental condition (Pisano & Shih, 2012; Breznitz & Buciuni, 2015). In addition to reconsidering the role of manufacturing in GVCs, this argument sheds light on the importance of first and second-tier suppliers in innovation development. Traditionally deemed as the mere executors of narrow production tasks in globally dispersed value chains, specialized suppliers proved to be a strategic asset in global lead firms’ innovation strategies.

 This new wave of studies seems to suggest the emergence of a new innovation paradigm in GVCs, where the traditional ‘design for manufacturing’ rationale has evolved into ‘manufacturing for design’. Central in this shift is the role of skilled suppliers, whose distinct production capabilities allow lead firms to translate design inputs into artifacts and mass-produce novel products. As much as skilled suppliers represent a crucial factor in lead firms’ innovation strategies, the geography and governance of innovation seem to be affected by suppliers’ competitive dynamics, such as production and innovation capabilities and upgrading strategies in GVCs. As a result, changes and evolutions at the supply level may affect the governance of innovation along the entire value chain.

Among the factors that have been lately affecting the competitiveness of suppliers in the global economy, of particular importance were advances in materials. Ranging from the introduction of plastic materials and new composites and metals in the automotive sector to the adoption of carbon-fiber components in the sports equipment and bicycle industry, new advanced materials have been profoundly impacting on the organization of GVCs (Buciuni & Finotto, 2016). Departing from the recognition of this phenomenon, this paper features an exploratory study on the effects of advances in materials on the geography and organization of innovation in global industries. The hypothesis we propose and discuss is that new advanced materials enable a new type of production activity where the microstructures of the new materials determine the performance of the products. This, in turn, triggered the shift from ‘design for manufacturing’ to ‘manufacturing for design’, a trend that is significantly impacting on the way innovation is developed in GVCs. As a result, traditional industrial locales are challenged to develop these capacities if they are to remain the loci of innovation development; at the same time, new production regions in emerging economies are offered significant opportunities to increase their competitiveness in the global economy and achieve upgrading in GVCs.