Managing the fragmented value chain of global business: exploitative and explorative offshoring towards emerging market economies

The fragmentation of the production process is currently a major theme of research in international business. Trade benefits come from the ‘slicing up’ of the aggregated value chain, as well as the entry of new countries bearing low labour costs. If, initially, only standardised, low-value manufacturing activities were delocalised in new emerging economies, many global firms are now offshoring knowledge-intensive activities. This process can be characterised as a move from the smile modelﮟ to a new model called here the λ (lambda) model. The paper will explore these new trends using some illustrative cases: L’Oréal (FR), Pfizer (US), ST Microelectronics (CH) and Geox (I). Key words: MNCs, relocalisation, R&D offshoring, internationalisation, value chain fragmentation