Research Summary
Research Summary
Evolution of firm structure in vertical specialized technology supply chains
By: Willy C. Shih
Description
The global market in many everyday products has been transformed by the internationalization of production. In many industries, semiconductors and electronic products in particular, a sequential mode of production has evolved in which goods are produced in a series of stages taking place in different countries by “vertical specialists” who pass work-in-progress across borders to the next firm in the value chain. This multi-country production sequence has been facilitated by inexpensive and rapid communications and the low cost to transport goods, as well as declines in tariff and non-tariff barriers. A distinguishing feature of this kind of vertical specialization is that imported inputs are used to produce export goods. These might be components or partial subassemblies, but frequently a product might transit through dozens of firms and cross multiple frontiers before it makes it to a storefront for sale to the ultimate consumer. We are interested in the evolution of firm structure as technological shifts drive changes in the vertical boundaries.