How does outsourcing overseas affect the dynamics of a value chain?

Trust-based relationships play a crucial role in value chain analysis. They foster a win-win situation, promoting an integral architecture as opposed to a zero-sum, modular architecture. Companies that build integral value chains incentivize their suppliers to share innovation, under the belief that all players are in this together and will collectively benefit from innovation. There's a long-term trust-based relationship such that if one party brings an innovation, the wealth will be shared. This approach enhances efficiency, promotes improvement, and can lead to increased profit margins.

Companies incentivize their suppliers to share innovation in a value chain by building long-term, trust-based relationships. They foster an attitude of collective benefit from innovation, creating a win-win situation rather than a zero-sum game. This integral architecture encourages suppliers to share innovations, knowing that the wealth generated from these innovations will be shared. This approach is in contrast to a modular architecture, where one party's gain is another's loss.