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Upstream or downstream in the value chain?

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  • Singer, Marcos
  • Donoso, Patricio

Abstract

Companies in the natural resources industry (e.g., mining, timber, farming and fishery) face the dilemma of whether to focus upstream or downstream in the value chain. The literature provides arguments and empirical evidence for either position. This paper presents an analytical framework based on the neoclassical theory of the firm, for which the best competitive advantage is the one that maximizes production efficiency. It serves to formulate an optimization model for the sawmill industry, and draws the data from the largest sawmilling company in the southern hemisphere. Although one conclusion is that the company should concentrate on the upstream activities, such conclusion is not applicable to other firms, since the analysis of the upstream-downstream dilemma must focus on the individual capabilities of each firm.

Suggested Citation

  • Singer, Marcos & Donoso, Patricio, 2008. "Upstream or downstream in the value chain?," Journal of Business Research, Elsevier, vol. 61(6), pages 669-677, June.
  • Handle: RePEc:eee:jbrese:v:61:y:2008:i:6:p:669-677
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    1. repec:fan:frfrfr:v:html10.3280/fr2017-001002 is not listed on IDEAS
    2. Glenn Parry & Oscar Bustinza & Ferran Vendrell-Herrero & Nicholas O’Regan, 2016. "Internationalization of Product-Service Systems: Global, Regional or National Strategy?," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 10(1), pages 16-29.
    3. Roy, Subroto & Sivakumar, K., 2010. "Innovation generation in upstream and downstream business relationships," Journal of Business Research, Elsevier, vol. 63(12), pages 1356-1363, December.

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