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How GVC Embeddedness Affects Firms’ Innovation Level: Evidence from Chinese Listed Companies

Author

Listed:
  • Wu Shiyi

    (School of International Business, Tianjin Foreign Studies University, No. 60 Xuefu Road, Binhai Campus, Binhai New Area, Tianjin, 300270, China)

  • Niu Rui

    (School of International Business, Tianjin Foreign Studies University, No. 60 Xuefu Road, Binhai Campus, Binhai New Area, Tianjin, 300270, China)

Abstract

This study uses a sample of Chinese listed companies from 2007 to 2016 to examine the impact and mechanisms of firms’ integration into global value chains (GVCs) on their innovation levels. The results show that as firms deepen their GVC participation, their innovation levels follow a U-shaped trend. This effect is only observed in the upstream of the supply chain, while downstream participation negatively affects firms’ innovation levels. Heterogeneity analysis indicates that this U-shaped effect is most prominent in state-owned enterprises and technology-intensive industries, but does not exist in foreign-invested enterprises. Moreover, digitalization and marketization are mechanisms through which GVC participation influences firms’ innovation levels, with marketization having a more pronounced impact.

Suggested Citation

  • Wu Shiyi & Niu Rui, 2025. "How GVC Embeddedness Affects Firms’ Innovation Level: Evidence from Chinese Listed Companies," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 19(1), pages 1-20.
    • Handle: RePEc:bpj:econoa:v:19:y:2025:i:1:p:20:n:1002
    DOI: 10.1515/econ-2025-0151
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    More about this item

    Keywords

    GVC; innovation level; marketization; digitization;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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