The changing geography and ownership of value creation: evidence from mobile telecommunications

Abstract

Through an innovative trade-in-task case study, we explore how Nokia, which is historically one of the most important mobile phone manufacturers in the world, offshored the development and production of three distinct mobile phones at three different points in time.Adjacent to these processes, we find that the value creation in areas such as design and manufacturing knowledge has rapidly shifted away from advanced economies to emerging economies. Moreover, we find that the value added captured by Nokia decreased dramatically over the studied time period. Based on our results, we discuss more generally the challenge of multinational corporation (MNC) to preserve value and how the realization of the benefits of offshoring must be assessed with respect to the altered requirements for controlling value-adding activities.

Estimating firm digitalization: A method for disaggregating sector-level digital intensity to firm-level

“…For example, apart from relying on revenue as an indicator of sector engagement, sourcing relationships could also provide useful input to the method. Analysis of sourcing relationships allow for derivation of value-add distribution across supply chain [18] , [19] , [20] and thus could provide an up-stream perspective on digitalization.…”

Innovation in supply networks—A research framework and roadmap

“…For example, Seppälä (2013) studied the evolution of Nokia's cell phone supply network between 2000 and 2010 identifying how its structure evolved under the effect of five major disruptions related to global, emerging‐market suppliers (e.g., Flextronics' acquisition of Nokia's Finnish suppliers, the introduction of Asian suppliers, and the merger between the Motorola and Nokia Siemens networks). Similarly, Larsen et al (2018, p. 683) documented how Nokia's supply network changed from a set of individual suppliers (pre‐2004) to multi‐technology commodity clusters (where some suppliers were responsible for modules and technologies) and from a number of individual suppliers within Nokia's direct supply network (between 2004 to 2007) to four different, large, vertically‐integrated, multi‐technology suppliers like Foxconn, Jabil, BYD, and Lite‐on. The evolution of Nokia's supply network impacted innovation dynamics because these large, vertically integrated suppliers gained a substantial role in the platform design, software design, and other development‐related aspects of Nokia's products.…”

“…While software platform and user interface design were primarily focused in Denmark, product test design, mechanical component manufacturing, and subassemblies were distributed across India and China. Finally, manufacturing was distributed across China, India, Romania, Hungary, Mexico, and South Korea (Larsen, Seppälä, & Ali-Yrkkö, 2018).…”

Subsidiary autonomy and knowledge transfer

“…This paper focuses on emerging markets because they, in spite of related challenges (Søberg, 2011; Sharma and Kaushik, 2017), increasingly play an essential role in value creation in areas such as manufacturing knowledge and design (Larsen et al , 2017) and IT (Bhattacharjee and Chakrabarti, 2017). Companies are unlikely to outsource core activities (Asakawa and Som, 2008; Dossani and Kenney, 2007; Søberg, 2011; Sharma and Kaushik, 2017), and captive R&D offshoring is more beneficial for innovation performance than offshore R&D outsourcing (Nieto and Rodriguez, 2011), which makes captive R&D offshoring particularly interesting.…”