Value Chain Smile. Gross margin across the local value chain of a focal firm, compared with its direct and indirect suppliers and customers. The fitted lines for upstream and downstream connections trace the shape of the value chain: U, inverted-U, upward, or downward. U and inverted-U are the most informative, showing whether the focal firm earns less or more than its suppliers and customers. Examples: Flex Ltd. (U), Coca-Cola (inverted-U), and Nvidia, which moves from U to inverted-U over time.

It accompanies Agrawal, Allon, and Osadchiy, "Value Capture in Supply Networks" (under review).