Who dominates global value chains? multinationals vs domestic firms

This paper aims to advance International Business (IB) research by better identifying the role and influential area of foreign-owned multinational enterprises (MNEs) in global value chains (GVCs) compared to that of domestic-owned firms. For doing this, we build an input-output model to divide th e topology of trade in value added into three networks composed respectively by the traditional trade, simple and complex GVC trade according to whether and how production sharing happens a cross national borders. Using the new OECD inter-country input-output data for 2000-2016, we find th at, China’s domestic-owned firms have been not only a supply center of manufacturing value added, but also rise as a new regional center of both supply and demand for services through simple GVC n etworks; the United States’ domestic-owned firms dominate GVCs in services as a global center for both demand and supply, especially in complex GVC networks; MNEs located in Germany and the U nited Kingdom show the dominate presence respectively in providing manufacturing and services v alue added via complex GVCs networks. Through making GVCs visible by trade in value added based network analyses with consideration of firm ownership, this paper helps better understanding of w ho dominates what types of GVC, thus enriches the IB research concerning the GVC governance.