Paper short abstract:

Drawing on primary research, this paper analyses how evolving organizational and sourcing patterns in mining GVCs have affected the competitive position of the South African mining inputs cluster and discusses key strategic responses by local firms to these shifting governance dynamics along the VC.

Paper long abstract:

The mining equipment sector is the most relevant and technologically sophisticated segment of the South African specialized machinery industry. However, while still representing an advanced pocket of excellence, during the last decades the mining inputs cluster has experienced a decline in global competitiveness, reflected in increasing market dominance by few multinationals with limited local manufacturing footprint and in significant imports along all stages of the VC. Against this background, and building on over 40 interviews with industry representatives, this work provides evidence of the domestic bottlenecks and global dynamics that have been responsible for the ongoing marginalisation of South Africa as a strategic location for production and innovation of mining-related technologies. Specifically, by combining the literature on firms capabilities with insights from the GVCs and the international business lines of research, this paper develops along three directions. Firstly, in an attempt to open the black-box of governance in GVCs, it examines the evolving procurement strategies of key players along the mining GVC, and its shifting organizational patterns, driven by tremendous processes of consolidation and concentration among large multinationals on one side and, on the other side, by the entry of new major actors, particularly from China. Secondly, it looks at how these dynamics can constrain growth and upgrading of local equipment manufacturers, although highly technologically qualified. Thirdly, through 5 qualitative firm case studies, it identifies the main set of strategies adopted by local players to respond to these shifting VC dynamics, discussing in-depth their business models and capabilities.