Value Chain Governance Of Specialty Products Industry For Minority Nationality

This paper centers about "value chain governance" and aims at explore new governance mode of economic development of minority nationality, and also gives an answer to the question that "whether specialty products manufacturers of minority nationality can grow into the leader of characteristic development in minority area by the way of govern the value chain". Based on references to current research achievements on value chain governance both at home and abroad, this paper gives out definition, classification and detailed analysis on the concept of value chain, then combines it with major conclusions and arguments from the organizational theory, the contract theory of enterprise and the theory of competitive advantage to build up a frame model of value chain governance. The after applying the frame model in business operation activities of specialty products manufacturers of minority nationality, based on examination on specialty products of minority nationality and existing production situation, the paper collects data through field study and questionnaire surveys and provides a thorough analysis on what are the factors that impose adverse influence on or limit the establishment of various economic relations in specialty product industry of minority nationality from microcosmic aspect by the example of specialty product manufacturers in minority area of Guizhou Province. Those economic relations play the dominant role in the value creation of specialty product industry of minority nationality and decide what it contributes to society, consequently giving its existence significance, status and prospect in regional economy. In the process of research the paper forms the following three interrelated innovations:First and foremost, the innovation of value chain governance theoretical model. The research integrates global value chain theory with the contract theory of enterprise, organizational theory and enterprise’s strategy management theory to build up a new value chain governance theoretical frame model and theoretical analysis logical frame, which provides theoretical continuity and integrity for former governance opinions under global value chain. Further it also sheds light on value chain governance from the aspects of theoretical roots that governance issue arose, essential issue solved, governance purpose and its motivation.Secondly, extension of value chain governance. Based on in-depth analysis on value chain governance, the paper presents an extended national-culture-focused value chain governance mode——culture-oriented governance based on the argument that culture has significant influence on governance mechanism. The research increases factors involving with value chain governance mode choice, among which the "core competitiveness and complementary production" embodies a strategic behavior that turns cultural implicit knowledge into enterprise’dynamic capacity of producing new knowledge and includes national cultural knowledge into core products. The extended governance mode included in national culture helps to discuss power relations and economic rent allocation among participants on the value chain of core product (or core technology) concerning cultural implicit knowledge. Besides, it is also of critical importance for intervention policy designing, as it contributes to more benefits that developing countries can gained from value chain.The third one refers to new interpretation on specialty product industry for minority nationality. Instead of adopting the concept of "characteristic industry" appeared in the former studies, the paper proposes a "specialty product industry". It emphasizes the concept of product, which provides better application of value chain governance theory into studies on characteristic industries in undeveloped areas, consequently advancing characterized development of minority areas in China. Moreover, through empirical analysis the research proves that specialty product industry for minority nationality, as a characteristic industry in minority areas, has great potentiality in promoting national culture and giving a strong boost to regional economic development.The paper consists of five parts in the route of theory——demonstration——policy proposal. First it builds up a theoretical mode frame of value chain governance and carries out theoretical derivation study on related factors affecting the choice of value chain governance mode; then it demonstrates and analyses minority areas of Guizhou Province as undeveloped while cultural-featured representative; finally some policy suggestions have been proposed. Apart from the introduction and conclusion, the research containing the following five parts:The first part is a theoretical basis of the whole paper. It clarifies a logical starting point of "rules-production" value chain governance theory, pointing out that the theories of global value chain, organization, enterprise’s contract and competitive advantage can be interrelated through two variables——power relations and economic rent, and can co-construct a theoretical mode of value chain governance as purpose, root, essence and motivation respectively. The second part presents a logical derivation of value chain governance mode. It sets out basic mode of value chain governance and factors that pose influence on the mode, pointing out an extended national-culture-focused mode of value chain governance based on the argument that culture plays important role in governance mechanism. This part specifies that there is close correlation between national culture and the whole value chain governance system. It takes national culture as a critical factor that influences value creation of strategic links of value chain, showing that a value chain governance mode containing national culture will help to analyzes power relations and economic rent allocation among participants on the value chain of core product (or core technology) concerning cultural knowledge.The third one refers to current situation analysis of specialty product industry for minority nationality. Based on a detailed illustration on the connotation, extension and value embodiment of specialty product of minority nationality, this part discusses the current situation of specialty product industry for minority nationality and reveals industry development situation by case studies from micro perspective, accordingly points out that national culture and traditional craft are core components of specialty product of minority industry, based on which the competitiveness of specialty product industry for minority nationality can set up. The significance of value chain governance is to weigh the power relations of participants of value chain in the process of product’s culture value, craft value and economic value realization.The fourth part carries out an empirical research. Through field study and questionnaire surveys on specialty products manufacturer in minority areas of Guizhou Province, it demonstrates the assumption that specialty products manufacturer in minority areas has potentiality to gain more economic rent (excess profit) by taking advantage of national culture and traditional craft, which, in other words, means specialty products manufacturer in minority areas may grow into an economic entity with dominant power to organize, coordinate or control the value creation and profits allocation, so as to gain more economic rents. It is also shown by the research result that R&D and marketing links are strategic ones for specialty product industry for minority nationality, while national culture and traditional craft do play a dominant role in power relations of the strategic links and profit allocation among participants, accordingly describes the prospect of the industry. Specialty product manufacturers of minority nationality in China can convert national cultural knowledge into dynamic power through encoding national culture and traditional craft, so as to grasp the control over R&D and marketing links which are with high exit barriers. What’s more, they can also raise the access barrier to production link through increasing value creation contribution of traditional craft to production link. The result derived from the research is beneficial to further understand the essential relations of participants on the value chain of specialty product industry for minority nationality, thus provides reference for strategies on governance mode of specialty product industry for minority nationality in China, as well as the upgrading of the governance mode.The last part presents relevant experiences drawn by foreign researchers and suggestions on policy. It clearly states that the development of specialty product industry for minority nationality is a booster for economic development of minority areas in China, leading the minority areas in a characterized way of development. It stresses that specialty product industry for minority nationality shall combine manual craft with modern machinery, and the government shall create a policy environment more favorable for the culture, craft and economic value of national culture and traditional craft. The government is supposed to provide strong support on specialty product industry for minority nationality, strengthen governance on national culture protection and heritage, and enhances its service function as creating more opportunities for specialty product industry.