Learning and Upgrading of Craft Exporters at the Interface of Global Value Chains and Innovation Systems

Firms operating at the interface of global value chains (GVCs) and innovation systems (ISs) are expected to have better access to knowledge than their competitors, enabling them to learn at a faster pace. This article assesses if and how learning at the interface enables handicraft exporters in emerging economies to upgrade and deepen their capacities. Our conclusion from the analysis of three case studies is that craft exporters incrementally deepen their capacities, but only rarely upgrade. Quasi-hierarchical GVCs in combination with immature ISs are likely to lead to the selective deepening of capacities related to production processes, whereas relational GVC in combination with mature ISs may instead lead to the selective deepening of capacities related to products. The research findings also suggest that GVCs and ISs co-evolve in path-dependent processes. As a result, long periods of incrementally deepening the firms’ capacities are intertwined with occasional spurts of discrete upgrading.