Metaphors: Value Chain Versus Value Tree

I just read Global value chains and technological capabilities: a framework to study learning and innovation in developing countries from the Values Chains for Development website of the Dutch Royal Tropical Institute. Both the paper and the website appear to be useful.

They got me to thinking about the metaphor of a "chain" in the "value chain". In the time of Darwin there were competing metaphors:

• The Great Chain of Being, versus
• The Tree of Life

I wonder whether the "tree" metaphor might be better than the 'chain" metaphor in some of the thinking about technology and development. The following illustration also uses a chain metaphor (supply chaing), but illustrates that some products are simpler to manufacture and distribute than others.

Source: International Labor Rights Forum

Think about complex manufactured products, such as the space shuttle, large jet aircraft, or even the automobile. They have many parts, and indeed parts are often assembled in sub-assemblies which are in turn assembled into the final parts. Thus firms may be buying intermediate goods on one market and selling their outputs as intermediate goods on another market. A tree structure might help represent that structure. Thus each company involved in the production of a product might be seen as a node, and the supply of parts between companies as directed links between nodes. (Indeed. for each part supplied by a variety of producers there might be a set of supplier nodes each connected to the consumer node.) Looking at the graph from the point of view of the final consumer of the product, it would look like a tree as seen from the roots.

If you think about the personal computer, the consumer not only purchases the computer from a distributor, but also is likely to purchase complementary software from other distributors, and to obtain content from a large network of suppliers. From the point of view of the consumer, the personal computer may best be seen as an element in a technological system that supplies information, education, entertainment and/or information on demand. That system is even bushier than the supply tree for the computer itself.

The supply tree can be seen not only in terms of the flow of goods and services, but in terms of the appropriation of benefits. Each firm receives a portion of the final price of the goods, and transfers a portion of that price back to its suppliers.

It also occurs to me that one might expand the model to consider the lattice involved in an industry. In the automobile industry, for example, there are many parts manufacturers supplying many different auto firms. If one superimposes the supply trees for the different auro firms, the result would be a lattice, with many nodes corresponding to parts manufacturers connected with many nodes corresponding to auto firms. The markets for intermediate goods would correspond to cuts across the lattice.

Whether the supply tree metaphor is better than that of the supply chain will come out in experience, and will probably depend on the analytic purpose. But surely the evolutionary tree has proved far more useful that the tree of life as a metaphor in our scientific age.