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This article analyses technology upgrading in global value-chains, by using unique data from the Swedish-based home-furnishing retailer IKEA and 23 of its suppliers in China and Southeast Asia. We show how these suppliers use IKEA’s technological support to improve their operational and duplicative capabilities, and, more importantly, their adaptive and innovative capabilities. Theoretically, this suggests that typologies of governance structures need to include a ‘developmental’ category, where buyer-driven value-chains are coordinated by powerful retailers with a global sourcing organization designed to facilitate close, local and long-term interaction, resulting in an efficient sourcing of low-cost, finished products, as well as technological upgrading among suppliers. [ABSTRACT FROM PUBLISHER]

Our data from local suppliers to AB Volvo's truck and bus-plants in Brazil, China, India and Mexico show that foreign TNCs contribute to technology-learning and improved adaptive technological capabilities, which help suppliers to expand businesses with domestic and international OEM-customers in many industries and markets. This support the evolutionary perspective that technology transfers from industrialised to developing economies are based on local inter-firm linkages arising from regular manufacturing activities of foreign TNCs. A policy lesson is that business-linkages with foreign TNCs with a low-volume demand for high-quality products can result in technology-upgrading among small local suppliers who make necessary learning-investments. [ABSTRACT FROM AUTHOR]