Costs and benefits of following cost strategies in Value Chains

This paper looks into how cost-based competitive priorities affect a firm's upgrading in its value chain. The literature still consider cost-based competitive priorities relevant for firms under diverse strategic positioning, despite recommending contingencies for avoiding shortsighted approaches. It is opportune to understand how that holds under the perspective of Global Value Chains literature, since upgrading is one of its central concepts and represents the dynamic by which a firm is able to reach better positions in the value generation process. Researchers and practitioners have considered this dynamic a way for avoiding predatory competition, reinforcing the dangers of employing short-term strategies when pursuing it. The research question is: How cost-based strategies interfere in supplier's upgrading in a value chain? A multi-case study in the Serious Games segment of the Digital Games Industry allows advancing this investigation. These games have purposes other than entertainment, usually focusing on supporting skills learning or acquisition and find applications in very diverse fields. Results suggest that cost based strategies have greater chances of leading a supplier towards upgrading when self-imposed, compared to when derived from the leading firm's guidance.