Value capture by companies of different ownership, tier, size, and distance to market: A cross-sectoral analysis
Abstract
This paper investigates a widespread assumption in the upgrading literature that lead firms and higher-tier suppliers perform better and capture a larger value than lower-tier suppliers. In contrast to other studies, this analysis is based on a detailed examination of a cross-sectoral sample of 251 companies (including companies outside production networks) nested in a small economy (Czechia).
Our results indicate that the economic performance of companies varies profoundly according to a number of characteristics. Generally, domestic firms tend to capture larger value, that is, they spend more on capital investments, research and development (R&D), and personnel costs.
Surprisingly, lead firms tend to spend significantly less on personnel costs, taxes and R&D than first-tier suppliers. The highest value capture is by firms operating outside production networks.
The results warn against overgeneralisations and indicate the need for a careful context-sensitive analysis before the design of supportive policies.