Knowledge & capabilities in a global value chain: A case study of Nicaraguan cocoa smallholders

Maria Damgaard Laugesen & Patricia Da Silva Søvsø Nielsen

Student thesis: Master thesis

Abstract

Research on global value chains (GVCs) has often focussed on the perspective of the lead firm. However, in this study we turn our attention to the suppliers by looking at how they are impacted by lead firms when participating in GVCs. With this research we wish to add new insights to this field of study by examining the case of Nicaraguan cocoa smallholders’ participation in a GVC. We approach this research through a specific analysis of the different knowledge sharing processes, which take place within the GVC as we perceive these processes to be critical for the development of the cocoa smallholders’ capabilities and for sustaining a competitive advantage. By applying a theoretical framework, which combines the aspects of GVC theory as well as a resource-based view of the firm (RBV) and knowledge-based perspective we set out to investigate: “How do Nicaraguan cocoa smallholders acquire knowledge and develop capabilities to upgrade the cocoa production?” In order to answer our research question we have conducted a case study of cocoa smallholders from the Nueva Waslala Cooperative (NWC). These cocoa smallholders participate in a GVC with the German chocolate manufacturer, Ritter Sport, by selling their cocoa to the cooperative, which then processes it into the semi-finished product which Ritter Sport purchases. Ritter Sport sources cocoa through a Public Private Partnership with a local NGO, Association for Diversification and Communal Development (ADDAC). ADDAC assists in the training of the cocoa smallholders within the areas of farming practices and cooperativism. At present time the cooperative depends on ADDAC to provide support to them in their daily operations. Conducting this case study involves a fieldwork research to Nicaragua, which enables us to provide empirical evidence to carry out an indepth analysis of the interaction between the different actors when sharing knowledge concerning farming practices in the GVC. Among our findings, we discovered that the cocoa smallholders, including the workers in the cooperative, acquire knowledge through interaction among themselves, and Ritter Sport and ADDAC. This acquisition of knowledge enables the cocoa smallholders to produce the product required by Ritter Sport. Hence, the cocoa smallholders develop capabilities in relations to farming practices. However, in this analysis we also discovered that there were organizational issues, which we believed to be crucial for the development of the cocoa smallholders’ capabilities and therefore required an analysis of its own. Here, we discovered several deficiencies in the knowledge sharing processes, which hinders the development of the cocoa smallholders’ managerial skills and constitutes an obstacle for their independence from ADDAC.

EducationsMSc in Business, Language and Culture, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2011
Number of pages136