Pathways for capacity building in heterogeneous value chains: Evidence from the case of IT-enabled services in South Africa
Charlotte Keijser & Michiko Iizuka
#2017-012
The global value chain (GVC) approach has stressed that inter-firm
linkages within GVCs can create new opportunities for capabilities
formation in developing countries. However, little is known about how
firms from developing countries engage and benefit from participation in
GVCs of services. Using data collected from 44 interviews of IT-enabled
service providers in South Africa, this paper explores how service
providers in developing countries build service delivery competence
critical to their performance, focusing specifically on the development
of human resource management capabilities and domain expertise. Results
show that participation in GVCs triggers learning processes for firms
that are crucial in building service delivery competence, especially in
the absence of a strong national system of innovation. Nevertheless,
interactions between actors and institutions within the country, as well
as internal firm resources are critical to acquire and adapt
foreign-sourced knowledge to the local context. Finally, we find local
and regional value chains of IT-enabled services offer additional
learning avenues for capability formation and potential pathways into
GVCs for domestic firms.
JEL Classification: D830
Keywords: Global value chains, regional value chains, system of
innovation, organisational learning, IT-enabled services, South Africa