Rethinking the role of manufacturing in global value chains: an international comparative study in the furniture industry

TLDR

Offshore outsourcing has reshaped industrial organization in developed economies, especially in mature low‑tech sectors, but beyond a certain point it can strip firms and their domestic ecosystems of essential knowledge for innovation. The study asks whether production can still foster economic development for established manufacturers amid changing industrial patterns. Case studies in the furniture industry show that controlling operations boosts product innovation and strengthens competitiveness.

Abstract

In recent years, the rise of offshore outsourcing has significantly changed the industrial organization of developed economies. Particularly in mature, low-tech industries, the global relocation of operations has represented a necessary strategy for many firms. However, beyond a certain threshold, offshoring may deprive firms and their domestic ecosystems of critical knowledge for innovation development. Departing from the acknowledgment of changing patterns of industrial organization and the related effects on Western industries, we wonder whether production can still foster the economic development of established manufacturers. The development of an international multiple-case study in the furniture industry suggests that control over operations enhances product innovation and supports firms’ competitiveness.