The Dynamics of the Corporate Food Chain: Strategy, Power, and Position in the Age of Outsourcing

Over the past decade manufacturers in industrialized countries initiated strategies to outsource and, subsequently, offshore lower-value manufacturing operations to developing countries, especially Taiwan, Korea, and China. Ostensibly, outsourcing/offshoring was not thought to represent a strategic threat since the functions being outsourced were viewed to be commodity in nature. The visible benefit was the ability to free up resources to focus on higher value functions. At the time, few executives visualized that their new strategic partners would acquire significant technology, design, process, and other knowledge that they would use to move up the food chain and become a potent new class of competitors. This paper introduces the concept of the corporate food chain, explores its theoretical underpinnings, and presents potential implications for managers