Research On Competitive Advantage Of China's Software Industry From The Perspective Of Global Value Chain

The formation of global value chain (GVC) results from the combination of economic globalization and information technology revolution, which has brought incredible changes to the world economy. GVC indicates that in the worldwide economic system consisted of technology, management, capital, market, labor, natural resources, products and other factors and under the circumstances of globally integrated manufacturing and trade, many related businesses jointly produce a product or undertake to produce only parts of the product, thus forming a link of international division of labor and interests. Taking advantage of the opportunity where developed countries outsource their non-core businesses, developing countries can embed themselves into the GVC through processing trade or building their own strategic positions by sharpening their competitiveness.Software industry, as the core of information industry, plays important roles in promoting economic globalization and transforming business models. Therefore software has become one of the most strategic and fundamental industries affecting a country's competitiveness in the 21st century. This will undoubtedly intensify the competition in fields of software-related new technologies, new products and new applications. Developed countries will continue to strengthen their leading position in the global value chain and expand their competitive advantages in the new round of competition and international division of labor. Some developing countries also leave no efforts in developing their software industry in order to catch up the new wave, to become information technology powers and to achieve leapfrog development.Software firms in developing countries, which organize production according to the principle of endowed resources, have less advantage over their transnational counterparts in developed countries which can integrate resources globally. Therefore, the developing countries need also to build their competitive advantages in addition to comparative advantages in factors endowment. Only by fostering industrial competitive advantage, could developing countries maximize and sustain their interests in the international division of labor.The previous studies on how developing countries build their competitive advantages mainly focused on India as a service outsourcing provider. Little literature has concentrated on China. Domestic scholars paid more attention to creating favorable environment for the information industry and software outsourcing from national perspective, lacking comprehensive and systematic research of software industry from firm's point of view. Furthermore, firms are the main participants in industry competition, therefore, it is not sufficient to research the issue of industrial competitive advantage only from perspective of national policies and efforts must be given to explore how to enable local firms to gain their core capabilities of fighting against their foreign competitors in both international and domestic markets, therefore transforming the comparative advantage of domestic industry into real competitive advantage.This dissertation tries to develop a theoretical framework and practical path for establishing competitive advantages of China's software industry under the circumstances of economic globalization and global informationalization. Therefore, the theoretical significance of this paper lies in that, in the context of global value chain, and on the basis of systematic research on global value chain theory, industrial advantage theory and the theory of firm's competitive advantage, a "double diamond model" of ten factors was constructed to explore the sources of competitive advantage in the software industry from the national and firm levels, thus enriching the research on industrial organization theory and firm organization theory. The practical significance of this paper lies in that by analyzing China's software industry in terms of the related factors in the "double diamond model", suggestions of a "dual system path" were proposed to establish competitive advantage of China's software industry.With analytical and comprehensive method, this dissertation explored how China should set up its software competitive advantages in the context of global value chain. The dissertation was divided into seven chapters. The first chapter introduced the issues under research, background and significance of the topics, research objectives and methods, content and framework. The second chapter developed a "double diamond model" of ten factors to form the theoretical framework for the dissertation. Chapters III and IV continued the theoretical analysis of the ten factors in the "double diamond model" from the perspective "external diamond model" of industrial environment and "internal diamond model" of firm's competences respectively. The fifth chapter explored the development and market structure of China's software industry, China's status in GVC, disclosing the reasons for China's such a bottom position. Chapter VI analyzed the development modes of the United States, Japan, India, and Ireland as developed countries in the GVC of software industry according to the "double diamond model" and then summarized the key points for these countries'success and what China could learn from them. Chapter VII suggested a "dual system path" for establishing competitive advantage for Chinese software industry.The dissertation has drawn three major conclusions:(1)Due to the formation of GVC of software industry, developing countries have the opportunity to embed into the GVC through undertaking the labor-intensive coding and testing activities, and gradually build their own competitive advantage through technological relay among transnational inter-firm networks. (2)Industrial competitive advantage results from both industrial environment and firm competences. Therefore, developing countries need to build their software industrial competitive advantage from the national level and the firm level. (3)Chinese government and software firms do not have to duplicate their foreign counterparts in developing software industry and may explore their own development mode with Chinese characteristics and sharpen their competitive advantage by matching its resources and competences with the changeable international and local industrial environment.The dissertation probably innovates in constructing a "double diamond model" of ten factors for developing countries to build their competitive advantage in the GVC of software industry, and developing a "dual system path" to build competitive advantage for China's software industry in the context of GVC.