Resilience and innovation: SME responses in global value chains under uncertainty

Abstract

• Crises temporarily erode information asymmetries in GVCs, opening agency windows. • Managerial learning intent transforms short-term responses into upgrading trajectories. • We identify four crisis-driven upgrading paths: functional, chain, hybrid, and non-upgrading. • Service-based functional upgrading embeds complementary capabilities into offerings. • Diversification and servicification strengthen supplier autonomy under power asymmetry. Global Value Chains demand resilient supplier strategies, yet the strategic agency of SME suppliers remains underexplored – especially in times of crisis. This study uses a qualitative, multiple case study design to examine how 69 SMEs respond to external shocks and pursue upgrading under uncertainty. The firms were sampled using maximum variation sampling to maximize observable contrasts in how upgrading unfolds, capturing a wide range of conditions affecting strategic behavior. The study identifies four crisis response strategies: functional upgrading, chain upgrading, hybrid approaches, and passive reactions. Our analysis shows that crises can act not only as disruptions but as catalysts for upgrading, transforming short-term adaptation into long-term strategic repositioning. While lead firms retain significant control over value capture, some SME suppliers pursue alternative learning trajectories that reduce dependency and enhance strategic autonomy. The findings highlight that upgrading under duress is contingent on managerial agency and learning intent.