How emerging market firms learn to lead in complex product systems: Evidence from China's civil aircraft industry

Abstract Research Summary The rise of emerging market lead firms (LFs) in global value chains (GVCs) challenges the prevailing view that only multinational corporations (MNCs) from advanced economies lead systems integration, design, and innovation activities. In this paper, we explain how emerging market firms (EMFs) learn to lead in GVCs for complex product systems. We show how civil aircraft LFs in China overcame initial gaps in process and organizational knowledge to lead design and systems integration functions while ensuring compliance with national and global regulations. Our process model of EMF learning to lead is driven by two mechanisms: reconfiguring a GVC and leveraging MNC partnerships. Implementing a multi‐sourcing strategy, EMFs establish co‐lead partnerships that enable them to learn the design‐for‐compliance capabilities necessary to lead GVCs. Managerial Summary Emerging market firms (EMFs) seek to add value in global value chains (GVCs) by upgrading their capabilities. In this study, we focus on how EMFs develop the core capabilities necessary to become lead firms (LFs) in GVCs for complex product systems (CoPS). In CoPS GVCs, LFs must be able to coordinate innovation, product development, and regulatory compliance across a network of suppliers responsible for various systems and components. Industrial and institutional barriers limit EMFs' capacity to develop the capabilities necessary to become LFs in CoPS GVCs. Our case study of two firms in the Chinese civilian aircraft GVC reveals how EMFs can leverage a multi‐sourcing strategy that enables them to learn to lead by establishing co‐lead partnerships with multinational corporations.