Understanding Upgrading Using Value Chain Analysis

Abstract

Globalisation in trade has provided many opportunities to firms but expanding global trade has also brought several threats. Global competitive pressures require firms to strategically plan for change continuously. This paper considers two systemic issues firms should consider when facing competition: first, companies do not innovate and upgrade in isolation and second, not only must firms innovate (doing things better than before) but they must target areas in which to upgrade (doing new things and doing things better than anyone else). The paper concludes by introducing a value chain framework that suggests an upgrading trajectory.