A theoretical analysis of comparative advantage and value network in cross-border e-commerce
The development of cross-border e-commerce not only follows the theory of comparative advantage, but also reflects the business model of the value network. According to the comparative cost trade theory (the “Comparative Advantage Trade Theory”) proposed by David Ricardo in his book “Principles of Political Economy and Taxation”, the basis of international trade lies in the relative difference in production technology, not the absolute difference. Therefore, each country should focus on producing and exporting those products that are more efficient than other countries, while importing those products that are less efficient to produce. This strategy of “choosing the greater of two benefits and the lesser of two disadvantages” can not only save labor, but also improve labor productivity through specialized division of labor.
The theory of comparative advantage further points out that even a party that is at a disadvantage in the production of two commodities can, as long as the degree of disadvantage is different, find products in which it has a greater comparative advantage for production and export. Likewise, the party in a dominant position should focus on producing products with more obvious advantages. Through such division of labor and cooperation, both parties can benefit from international trade. This theory emphasizes that even if there is no absolute low-cost advantage, as long as there is mutual comparative advantage, international free trade can benefit all participants.
On the other hand, with the rise of integration thinking, companies are paying more and more attention to the use of external resources to enhance their core competitiveness. This trend prompts companies to outsource their non-core operations to other specialized entities, thereby forming a supply chain between different companies. However, although traditional value chain theory is helpful in understanding how an enterprise’s internal activities jointly create value, it tends to cause enterprises to focus too much on cost control and ignore the essence of value creation. This may lead to price wars and other issues within the industry.
In order to deal with the above challenges, modern business managers are advised to turn to the value network model. The value network not only focuses on the supply side, but more importantly, promotes cooperation among customers, companies and suppliers to jointly create value. A value network is an ecosystem composed of member companies and partners that allows all parties to cooperate based on shared resources and complementary advantages. In this way, the value network not only improves customer satisfaction, but also delivers higher profit margins to the business.
In summary, cross-border e-commerce can play an important role in today’s global economy, whether from the perspective of comparative advantage or value network. The former helps us understand how different countries and regions promote global trade by leveraging their relative advantages; the latter shows how companies can adapt to changing market demands by building more flexible and collaborative value networks.