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There is a great reliance on fiscal incentives to sustain the automotive industry competitiveness due to several structural problems, among them the inefficiency of the supply chain. This paper aims to compare the supply chain structure of traditional automotive industry with the supply chains from South Korea and China. Based on strategic decision and transaction cost theory, this comparison seeks to exploit the factors that led to the inefficiency of automotive supply chains.

The authors used a qualitative approach and applied a multi-method research. They conducted semi-structured interviews with six executives from automakers representing the selected countries, carried individual meetings during one workshop and used secondary data from several sources.

Concepts identified in the research such as reliability, supply chain governance and automaker competencies led the authors to propose that the traditional automakers have higher transaction costs when compared to the new automakers due to the horizontal structure of their supply chain. While new competitors have vertical upstream supply chains, which indicates better profitability, traditional automotive industry is horizontal, depends on fewer Tier 1 suppliers and is disconnected from Tier 2, impacting negatively in the transaction costs and supply chain management.

This study suggests that automotive executives rethink the current upstream supply chain model by identifying the competencies required for their current and future competitiveness and implementing a vertical integration of these competencies.

This research exploited the inefficiency of supply chain as one of the explanations for the low competitiveness of the national automotive industry.

Micro and small enterprises (MSEs) play a crucial role in the development of any country by generating innovative ideas. However, they face inherent restrictions that hinder their innovation capabilities. It is essential to support innovation policies to overcome these barriers and foster innovation. This study aims to explore how innovation policies can reduce barriers to innovation in MSEs using the lens of innovation capabilities.

Through a multiple case study, the authors examined eight MSEs in São Paulo (Brazil) and five in Florence (Italy) to conduct this study. These countries share a similar level of importance when it comes to MSEs.

Current innovation policies could be more effective for MSEs if certain barriers they encounter are faced and resolved, such as limited financial resources and a scarcity of qualified workers. These barriers directly affect two key elements of their innovation capability: financial resources and human resources. Therefore, it is essential to develop innovation policies that target these elements directly to enable MSEs to overcome these obstacles and thrive.

This study aims to enhance the knowledge of how innovation policies can help alleviate obstacles to innovation and how they can influence the various components that comprise the innovation capability of MSEs. This research can be valuable for policymakers as it provides insight into which innovation policies impact each aspect of innovation capability, enabling them to choose the most suitable policy based on the specific needs and local circumstances of the MSEs.