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Industrial Upgrading for Historical, Organizational Learning

Uploaded by surfchick on Feb 20, 2005

Industrial Upgrading as an Historical and Organizational Learning Process

From a theoretical point of view, there are three defining elements in this historically and organizationally grounded, global commodity chains approach to industrial upgrading. First, sequences of export roles are contingent, not invariant, features of industrial upgrading. While the progression from assembly to OEM to OBM export roles is quite typical, success in one role does not guarantee success in subsequent ones. Backsliding is possible and the sequences may vary, especially for more advanced forms of upgrading. These export roles are not mutually exclusive, either. In fact, most nations are tied to the world economy in multiple ways (Gereffi, 1995). In the case of apparel, for example, the East Asian NIEs have engaged in assembly, OEM, and OBM from the 1960s through the 1990s, and they have extended their OEM and to a lesser degree OBM capabilities to a diverse array of other export industries. Prominent apparel exporters like China, Mexico, and Turkey are currently making a successful transition from assembly to OEM production, while most nations have not progressed beyond the assembly export role.

Second, industrial upgrading is embedded in a social structure of producers, which is made up of "organizational chains" of buying and supplying firms. From this perspective, industrial upgrading involves organization learning to improve the position of firms or nations in international trade and production networks (Gereffi and Tam, 1998). Participation in global commodity chains is a necessary step for industrial upgrading because it puts firms and economies on potentially dynamic learning curves. There are many obstacles, however, to moving up these chains. The barriers to entry for each export role are more demanding as one moves along the industrial upgrading trajectory. Subsequent stages generally require the mastery of skills associated with the previous stage, although new resources and capabilities are also involved in upgrading shifts. Entry into the apparel commodity chain in the assembly export role, for instance, requires that an economy have low labor costs, political stability, and favorable quotas or other forms of trade access to major export markets. The shift from assembly to the OEM role requires, in addition to the foregoing conditions, a local infrastructure of firms capable of supplying a variety of apparel inputs (e.g., textiles, thread, buttons, zippers, labels) at the quality and quantity levels required for...

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Uploaded by:   surfchick

Date:   02/20/2005

Category:   Business

Length:   4 pages (996 words)

Views:   4016

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