This study provides foundations for the vertical integration strategy for global value chain efficiencies, although international economics emphasizes production unbundling. The two Japanese SMEs under study have transformed their value chain structures toward international vertical integration to take advantage of in-house multi-location, multi-plant arrangements and market-side innovations, including sales channel diversification and e-commerce. Their strategic transformation is consumer-driven rather than corporate buyer-driven, but they take their unique supply-side advantage of production capacity in Japan. The in-depth case studies suggest the limitation of single literature of internationalization studies and the necessity of an interdisciplinary approach in illustrating international business realities and deriving practical managerial and policy implications
