Cross-border innovation for global value chain orchestration

This study investigates how multinational enterprises (MNEs) leverage cross-border innovation to enhance their capacity for orchestrating global value chains (GVCs). Grounded in systems integration theory, and using the context of the aircraft engine industry of the aerospace sector, we propose that architectural knowledge is imperative for MNEs to orchestrate their GVCs. This leads us to hypothesize that orchestrating MNEs possess a broader technological scope and a wider range of cross-border innovations compared to other firms. Moreover, we demonstrate the rising complexity and interdependency of the sector's technological system and conjecture that this increases the scope advantage that orchestrating MNEs need over other firms. To test these hypotheses, we analyze a unique longitudinal dataset on formal inter-firm linkages from 2002 to 2014. Our findings provide empirical support for our theoretical predictions.