Who creates value added in a global value chain? A case study

Abstract

Objectives

The purpose of this study is to investigate how value added is created and distributed within global value chains. The issue is addressed through product-level analysis, by examining four different products of a Finnish case company that operates in textile-based accessory industry. The study aims to map the structure of these case products’ value chains and to define how the value added is distributed among chain members and geographies.

Research method

The research is conducted by following case study methodology. The study includes one case (case company), which is investigated through four units of observation (case products). Research data includes qualitative data collected through interviews and quantitative data collected from databases.

Results

Global value chains of the case products comprise of five segments: raw materials network, component network, production network, export network, and distribution network. The case company is located in the export network, and it holds a lead firm role within the chains.

The results give a clear indication that most of the value added is created in the downstream parts of the case products’ value chains, namely distribution network (wholesalers and retailers) and export network (case company). On average, these actors create more than 80 percent of the value added. As retailers and wholesalers account for approximately half of the created value added, the country of sales is the biggest individual factor to affect the geographical distribution of value.