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How Institutional Change Reconfigures Successful Value Chains: The Case of Western Pharma Corporations in China
Author(s) -
Dierks Alexander,
Kuklinski Christian Paul Jian Wei,
Moser Roger
Publication year - 2013
Publication title -
thunderbird international business review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.553
H-Index - 37
eISSN - 1520-6874
pISSN - 1096-4762
DOI - 10.1002/tie.21533
Subject(s) - multinational corporation , business , outsourcing , value chain , china , diversification (marketing strategy) , industrial organization , value (mathematics) , portfolio , scope (computer science) , competition (biology) , marketing , supply chain , finance , ecology , law , biology , machine learning , political science , computer science , programming language
Management researchers have traditionally emphasized two main factors in the definition of corporate strategies: internal capabilities and industry competition. However, in less stable, transition economies it is particularly the changing institutional environment that influences strategy definition and performance of multinational corporations (MNCs) as shown by numerous international business (IB) scholars. Yet, how institutions matter remains a largely unresolved question. This article examines how institutions have affected the value chain configuration of Western pharmaceutical firms in China. Our research framework identifies four major strategic shifts along the value chain of Western firms in the pharmaceutical industry: upgrading along the value chain, outsourcing to contract service providers, expansion of geographical scope and diversification of product portfolio. The findings allow concrete managerial implications to be derived for decision makers of Western pharmaceutical firms operating in China. © 2013 Wiley Periodicals, Inc.