Study On Resources Development For The Upgrading Of Original Equipment Manufactures

Original Equipment Manufacturers (OEMs) embed into global value chain by low cost advantage based on productive resources such as cheap labor and raw materials. OEMs get a rapid growth in the subcontracting process, which makes a significant contribution on industrialization and economic growth in China. However, low cost advantage is gradually dissipated owing to the change of macro policy, population, resources and environment. OEMs in the low-end of value chain face serious survival crisis because of limited profit space. How to get rid of survival crisis through the upgrading is an urgent problem for OEMs.Resource is the starting point of value creation. Resource development consists of resource identification, resource acquisition, resource integration and resource utilization.It is the process of reconstructing resource base to rebuild new value creation logic. These OEMs with certain capital and knowledge accumulation are taken as the study object in the thesis. OEMs’ upgrading is defined as the process of realizing process upgrading or function upgrading on the basis of contract manufacturing to promote their value creation and grab capability, which is achieved by resources development activities.Process upgraing refers to transforming simple processing and assembly activities into highly technical ones. Function upgrading is that processing and assembly activities ascend up other higher added-value activities in the value chain such as upstream research and development (R&D) and downstream marketing and brand. Optimal control theory, evolutionary game model and genetic algorithm are applied to study the following issues:identifing resources needed by OEMs’ upgrading and upgrading path, OEMs’ investment decision-making for internal cultivation of strategic resources, internal and external resources integration mechanism for OEMs’ upgrading, coordination investment between production resources and strategic resources, resource development capacity optimization. Resources development strategies are proposed to support OEMs’ upgrading.The main contents are as follows:Firstly, cooperative game model for discussing game behavior of value capture between international clients and OEMs is established to reveal the characteristics of resource needed by OEMs’ upgrading. Then, value output elasticities of OEMs’ production resources, R&D resources, brand and marketing resources are estimated by the extended Cobb-Douglas production function.On the basis of that, resources needed by OEMs’ upgrading and upgrading path under the different resources condition are identified by contrasting value creating potentiality of three kinds of resources.The study shows as follows:proportion of value capture between OEMs and international clients is determined by scarcity of strategic resource of international clients, productive resources with outstanding complementarity of OEMs, and the bargaining power between them. Whether executing process upgrading or function upgrading is determined by contrasting value creation potential of three kinds of resources.Secondly, on the basis of the thought of resources stocks accumulated model, OEMs’ investment decision-making model for internal cultivation of strategic resources is constructed by optimal control theory. It is applied to discuss how OEMs use limited R&D investment (resource flow) to internally cultivate strategic resources (resource stock) such as R&D resources or brand resources. The results show as follows:fund discount rate, study and absorption rate, utility of R&D investment and accumulative investment of strategic resources should be considered when OEMs choose investment strategy.According to OEMs’ own strength, continuous investment of high utility, from high utility to maximum investment, continuous maximum investment can be chosen to complete resources cultivation and maximize investment NPV.Thirdly, the behaviors of creating and acquiring various values between OEMs and international clients are analyzed. On the basis of that, evolution game is applied to analyze the evolution path, evolutionary equilibrium and influence factors of their cooperation strategy choice for internal and external resource integration. The study shows as follows: firstly, internal value creation and inbound spillover value acquisition are the source of new value, and also the important symbols and ways of enterprise upgrading; secondly, the probability of resources integration between OEM enterprise and international clients is negative correlation with cost of partner selection, and positive correlation with common value and OEM’s internal value; thirdly, there are optimal allocation proportion of common value and OEM’s inbound spillover value to maximize the probability of resources integration.Fourthly, optimal control theory is applied to analyze optimal investment timing and quantity of productive resources and strategic resources in specific phase. Galanz and BYD are taken as the case to explore coordination investment policy of productive resources and strategic resources in different upgrading stages. The research shows as follows:firstly, OEMs’ investment in OEM stage focuses on productive resources to continuously improve internal production and process management and technology content of contract manufacturing.It is helpful to provide customers with cheap and fine products. Secondly, OEMs in coexistence stage of OEM and ODM should pay attention to the investment of strategic resources on the basis of optimizing the investment of productive resources.It is helpful to modernize the production and build up certain innovation ability.Finally,OEMs’ investment in coexistence stage of OEM,ODM and OBM focuses on strategic resources on the basis of optimizing the investment of productive resources.lt is helpful to realize the independent innovation and shape the corporate brand.Finally, resource development capability such as dynamic resource recognition capability, dynamic resource cultivation capability and dynamic resource integration capability are taken as three measurement dimensions of dynamic capability.The intrinsic mechanism among dynamic capabilities, value activities evolution and OEMs’upgrading is analyzed. On the basis of that, genetic algorithm is applied to construct the simulation model for describing evolution process of OEMs’ value activities. It is used to investigate how resource development capabilities influence OEMs’value activities evolution and upgrading performance. On the basis of these, optimization strategies for resources development are proposed to support OEMs’ upgrading.The results show as follows:value activities are evolved to realize process upgrading or function upgrading through imitation and innovation of operational routines under the action of dynamic capabilities. When dynamic resource recognition capability is weak, OEMs tend to execute process upgrading, and probability of successful upgrading is small. Dynamic resource recognition capability, dynamic resource cultivation capability and dynamic resource integration capability are stronger, OEMs are more inclined to execute function upgrading, and probability of successful upgrading is bigger.To sum up, the thesis takes enterprise resource development as the research foothold, which provides new research perspective and technical support means to realize OEMs’ upgrading. Comparing with current perspectives such as global value chain, national value chain and global production network, it is better to reflect the microscopic characteristics of OEMs’ upgrading. The research conclusions and corresponding advices are with more pertinence and operability. They can provide reference for decision-making in improving OEMs’ upgrading performance.