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Cited by 118Digital Platforms and EconomicsFirm Innovation and GrowthInnovation and Knowledge Management

Kingpins, Bottlenecks, and Value Dynamics Along a Sector

Jacobides, Michael G., Tae, C. Jennifer·2015·Organization Science
DOI 10.1287/orsc.2014.0958
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Abstract

This paper explores the dynamics of value distribution within a sector, using data on the U.S. computer industry as an illustration. It provides exploratory quantitative evidence for the way in which conditions within the segments of a sector’s value chain affect the profitability of those segments compared with the sector as a whole. To consider how value shifts from one part of the sector (such as computer assemblers) to another (such as software and microprocessor makers), we look at how conditions within a segment (such as software developers) affect changes in the value share of that segment compared with the entire sector in terms of market capitalization. We find that the presence of what we call “kingpins”—firms with superior capabilities, modeled in our study as having superior market capitalization and as being disproportionately important in terms of research and development (R&D)—is correlated with a higher share of total sector value, suggesting that kingpins can help a segment to become a “bottleneck.” Sales concentration and the level of R&D expenditure are not always reliable predictors. Kingpins exert a positive externality on their direct competitors, yet their segments display increasing internal inequality over time, making the presence of kingpins a double-edged sword for their peers. Our findings extend recent work on industry architectures, highlighting the interconnectedness of different segments within a sector. They also provide a structure to help study the dynamics of “value migration,” which has not yet attracted much academic scrutiny.

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  • Studies focusing on lead firms are more likely to use financial performance measures as indicators of GVC success.

    “Studies focusing on lead firms are more likely to use financial performance measures as indicators of GVC success: for example, value capture as measured by comparative market capitalizations of various industrial sectors (Jacobides & Tae, 2015), sales and profit growth (Griffith & Myers, 2005), and return on assets (Buckley & Tian, 2017;Lampel & Giachetti, 2013).”

    From Global value chains: A review of the multi-disciplinary literature (2020) · cites this paper as Jacobides & Tae, 2015

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Authors
Jacobides, M. G., & Tae, C. J.
Affiliations
  • London Business School (GB)
  • University of Bath (GB)
ORCID
Venue
Organization Science
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Published
2015-06
Volume
26
Issue
3
Pages
889-907
ISSN
  • 1047-7039 (ISSN-L)
  • 1526-5455
DOI
10.1287/orsc.2014.0958
OpenAlex
W2165399907
Cited by
118
References
67
Citations by year
2026: 7 · 2025: 17 · 2024: 13 · 2023: 6 · 2022: 13 · 2021: 11 · 2020: 11 · 2019: 17 · 2018: 10 · 2017: 5 · 2016: 5 · 2015: 1 · 2014: 1
FWCI
19.61
Type
journal article
Language
en
Open access
closed
Locations
Organization Science (publishedVersion)
Topics
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Digital Platforms and Economics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Firm Innovation and Growth
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Innovation and Knowledge Management
Keywords
Kingpin, bottlenecks, value migration, Nevanlinna theory, computer industry, market capitalization, R&D investment, sales concentration, industry architecture, organizational capabilities, software industry, microprocessor industry

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