Value capture by companies of different ownership, tier, size, and distance to market: A cross‐sectoral analysis

This paper investigates a widespread assumption in the upgrading literature that lead firms and higher‐tier suppliers perform better and capture a larger value than lower‐tier suppliers. In contrast to other studies, this analysis is based on a detailed examination of a cross‐sectoral sample of 251 companies (including companies outside production networks) nested in a small economy (Czechia). Our results indicate that the economic performance of companies varies profoundly according to a number of characteristics. Generally, domestic firms tend to capture larger value, that is, they spend more on capital investments, research and development (R&D), and personnel costs. Surprisingly, lead firms tend to spend significantly less on personnel costs, taxes and R&D than first‐tier suppliers. The highest value capture is by firms operating outside production networks. The results warn against overgeneralisations and indicate the need for a careful context‐sensitive analysis before the design of supportive policies. Short Research shows that domestic firms tend to capture larger value, that is, they spend more on capital investments, research and development (R&D), and personnel costs than foreign companies. Importantly, the highest value capture is by firms operating outside production networks. The results warn against overgeneralizations and indicate the need for a careful context‐sensitive analysis before the design of supportive policies.