National Innovation Systems and Global Value Chain Participation: The Role of Entrepreneurship

Abstract

The national innovation systems (NISs) literature has focused on institutional and industrial structures while overlooking creative individual agencies. This gap may leave unanswered the question of why some countries with weak institutional structures still improve global value chain (GVC) participation. This study, thus, investigates how national entrepreneurial dynamism impacts a country’s GVC participation as conditioned by other elements of NISs. The empirical results show that entrepreneurship is positively associated with GVC participation. Additionally, this positive relationship is stronger among countries with lower levels of intellectual property rights (IPR) protection and smaller amounts of R&D employment. The findings suggest that entrepreneurship contributes to a country’s GVC participation and helps a country overcome its institutional weaknesses and, thus, achieve better globalization performance. Therefore, the study adds to NISs literature with creative individual agency, reveals the national internal avenue for GVC participation, and enriches the research on the NIS-GVC relationship.