Go Global or Stay Local? Understanding How Fiscal Incentives Reshape Supply Networks

Abstract

This study investigates the way firms reconfigure their supply base and reshape their production network to capture value from Free Trade Zone incentives to capture value from incentives. Six production networks located in Manaus, Brazil are analyzed using the Global Production Network framework and factors related to plant type and supplier relationships. A multiple case study was conducted. Data was collected using in-depth semi-structured interviews administered in loco, and the selected the firms were leaders in three different industries: transportation, mechanical assembly and chemicals. The results indicate that, if effectively applied, incentives can impact production network configuration from an embeddedness perspective, causing a firm to change its strategic role. Based on the analysis, we propose five propositions that challenge the relationships among autonomy, value creation, plant types and levels of embeddedness. The propositions are particularly useful for suppliers and distributors, as well as public agencies, including infrastructure providers and policymakers.

Technology Perspectives and Innovative Scenarios Applied in the Amazon Region

“…The GPN helps in evaluating firms' impact on a region and the local economy (Henderson, Dicken, Hess, Coe, & Yeung, 2002). The authors indicate that the framework can be used to evaluate how firms react strategically in relation to their networks when opportunities, such as tax incentives, arise (Martins, Siegler, Souza, Flynn, & Martins, 2019). The article confirms the importance of the formation of collaboration networks focused on innovation.…”

“…Understanding How Fiscal Incentives Reshape Supply Networks, investigates the way firms reconfigure their supply base and reshape their production network to capture value from Free Trade Zone (FTZ) incentives. It is authored by Martins, Siegler, Souza, Flynn, and Martins (2019).…”

Logistykacja gospodarki światowej

“…With intelligent support of domestic governments, such countries attired incoming capital and issuing knowledge to leverage quicker transition to industrialization stage (as i.e., namely "Asian Tigers" in 80'). Geographical distance between production and distribution zones, created pressure and opportunity to logistics sector development, along with desire to access such profitable valuecreating structure as supply chain fueled interest in lowering trade barriers worldwide (Anderer, Dür, & Lechner, 2020;R. S. Martins, Siegler, Souza-Junior, Flynn, & G. S. Martins, 2019).…”