Value chain management capability

Revolutionary developments in ICT [clarification needed] (UNCTAD 2003) have profoundly reconstituted the nature of international business.

To survive, a firm must be capable of managing the internationally dispersed value creating operations effectively amidst an overload of information.

The dimensions of value chain management capability presented below are based on a longitudinal case study.

The empirical data was collected through a series of interviews with top managers in a globally operating technology-based SME.

The employees and the culture in the organization need to be internationally oriented, to have a global mindset (see Nummela et al. 2004).

This may result in an organization that is tuned to global business: “It is not just about communicating, but actually co-operating with different people in different environments.” The interviewees recognized a need to expand the pool of technological know-how through partnerships as a basic prerequisite for internationalization of software SMEs.

(The technology-intensive nature of the business may have an influence here: Since the systems sold require customer contact before (specification etc.)

The ability to approach potential partners with high success rate may be a critical factor in enabling a firm to achieve a position that is beneficial to it.

Through establishing good personal relations and frequent contacts to the managers in the larger value chain members they try to make sure the large partner remembers their existence and would turn to them when in need of the expertise they can provide.

In addition to the capabilities highlighted in earlier literature, effective utilization of virtual teams was brought up in the interviews.

This can develop into an important organizational capability in SMEs, and thus enable global scale business with limited resources.

The concept of value chain management capability needs further development and more extensive research is required.

This study provides interesting insights to this real-life phenomenon but it also points out that theoretically it would deserve additional attention.

Additionally, extending the case study at hand to cover informants also from other organizations of the value chain could bring interesting new insights.

Since internationalizing value chains appear to be requisite for small firms in the software industry, and managing them very challenging, it is vital to know more about what makes it possible to succeed with them.