Upgrading In Global Value Chains Research Articles

Smart Cities and Global Value Chain Upgrading: Evidence from China

China has been on a new journey pursuing high-quality development, an important element of which is global value chain (GVC) upgrading. The smart city pilot policy, which aims at reshaping the urban development model in China, is carried out and regarded conducive to achieving high-quality development. Nevertheless, regarding whether and how smart cities could promote GVC upgrading, research is scant. We adopted the approach of time-varying difference-in-differences (DID) and used a dataset that encompassed 174 prefecture-level cities between 2005 and 2017 to investigate the impact of China’s smart city pilot policy on the GVC upgrading of cities. The findings indicate that, firstly, GVC upgrading is significantly enhanced by building smart cities in China. Secondly, this favorable influence on GVC upgrading is mainly through channels of informatization, innovation, and industrial structure adjustment. Thirdly, the influence is more pronounced in eastern cities and cities with better conditions in terms of human capital, fiscal capacity, and information infrastructure. This research provides evidence and policy implications for China to move forward with the smart city establishment in a bid to upgrade GVCs and achieve high-quality growth.

Why do MNE foreign subsidiaries differ in supply chain management capability, and how does it matter?

Purpose Despite the growing and widespread importance of exploring the primary factors facilitating global value chain (GVC) and supply chain management, this topic has received surprisingly little attention to date. Drawing upon the technology–organization–environment framework and the resource-based view, this study aims to fill these important gaps in the literature by theorizing and developing a comprehensive model to explain how a foreign subsidiary of multinational enterprises can improve the upgrading of the GVC and supply chain performance in a host market. Design/methodology/approach Using survey data collected from 266 foreign subsidiaries of multinational enterprises operating in the Chinese manufacturing sector, this study empirically examines the theoretical framework using a structural equation modeling approach. Findings The results demonstrated that the relative advantages of digital technology, supplier diversification and environmental uncertainty all contribute positively to the development of foreign subsidiaries’ supply chain management capabilities. Meanwhile, supply chain management capability plays a positive role in foreign subsidiaries facilitating GVC upgrading and enhancing supply chain performance. Research limitations/implications The findings of this study provide many important implications and useful insights to foreign subsidiaries operating in an emerging host market by concentrating on how to develop and maintain their competitive advantages in the process of GVC reshaping and supply chain restructuring. Originality/value This study provides a useful guide to help firms better understand how they may develop and enhance their competitive advantages in upgrading their GVCs and implementing supply chain restructuring. In addition, this research generates important policy implications considering the recent trend toward creating more effective and sustainable global supply value chains.

How does manufacturing servitization effect global value chain upgrading? Tests based on the dual perspectives of “participation” and “division position”

Manufacturing servitization has become an important trend in the development of global manufacturing. Under the policy goal of global value chain upgrading, it is of great significance to discuss how manufacturing servitization affects the participation and position in global value chains (GVCs). Based on the OECD Input-Output Tables (OECD-ICIO) from 2008 to 2018, we calculate the level of manufacturing servitization in major economies. At the same time, based on the TIVA database, two indicators reflecting the upgrading of the global value chain are calculated from the dimensions of “participation” and “division position”. This paper empirically examines the mechanism and effect of manufacturing servitization on the upgrading of GVCs. Our findings reveal the following: (1) Manufacturing servitization has a significant enhancement effect on global value chain upgrading. (2) Manufacturing servitization can affect the upgrading of GVC through “cost reduction effect, technology spillover effect and specialization effect”. (3) Manufacturing servitization in developing countries has a greater promoting effect on the upgrading of GVC(4) For manufacturing industries with different levels of technological development, the promotion effect of manufacturing servitization on high-tech industries is more obvious. This paper has two main implications: On one hand, the government should not only increase support for the service sectors, but also promote the innovative development of the service sectors. On the other hand, it is necessary to improve the level of opening up to the outside world, make full use of the positive “spillover effect” of high-quality service elements, and promote the integration of production-oriented services and manufacturing.

The relationship between dynamic capabilities and global value chain upgrading: the mediating role of innovation capability

PurposeThis study examines how dynamic capabilities (DCs) impact global value chain (GVC) upgrading and assesses the mediating role of innovation.Design/methodology/approachThe study uses a quantitative research method. The data are collected using an online questionnaire administered to respondents working in Chinese automobile manufacturers in China and Laos. The data are analyzed using structural equation modeling (SEM) and related software.FindingsThe results show that DCs and innovation capabilities (ICs) positively affect GVC upgrading and that ICs plays a mediating role between DC and GVC upgrading. Dynamic capabilities evolution (CE) mediates the relationship between DCs, ICs and GVC upgrading. Finally, differences exist in the effects of the three dimensions of DCs on ICs and GVC upgrading.Practical implicationsFocusing on the absorption and transformation of knowledge, enterprises could experience a clear enhancement of IC and CE and be more likely to obtain higher marginal returns. The study provides insights for emerging market firms to gain higher added value in internationalization.Originality/valueThis study demonstrates that different dimensions of DCs have different effects on GVC upgrading. In terms of theory, the impact of IC is considered in terms of the mediating effect of CE on IC. Differences are highlighted concerning the impact of learning capability, integrating and coordinating capability and sensing capability on the mediated relationships.

A journey toward global value chain upgrading: Exploring the transition from backward to forward integration

Global value chains (GVCs) are embraced worldwide as a gateway to technological and economic upgrading. Countries integrate into backward, value-importing linkages with the aim of accumulating technological capabilities and transitioning towards creating their own forward, value-exporting chains and capturing a greater share of the value generated within GVCs. Existing knowledge, which is largely fragmented and descriptive, points to a number of uncertainties and complexities that make this process anything but linear. It is open question whether the deepening backward linkages facilitates forward integration in GVCs. Using data from 65 countries over two decades, we show that the impact of backward integration on forward integration in GVCs varies over time and that it is moderated by the level of development of the country, the diversity of the GVC partner network and the innovation conditions in the home market. The research adds a new perspective to the literature on GVC-driven upgrading.

Effect of blockchain technology–supply chain risk fit on new product development performance: The moderating role of supply chain upgrading

As the most disruptive information technology at present, blockchain technology has considerable application potential in supply chain risk management. On the basis of technology–task fit theory, this study aims to theorize and examine blockchain technology and supply chain risk management by proposing a set of research hypotheses. To achieve this, blockchain technology is classified into two main characteristics, namely, traceability and security, and categorized supply chain risks into supply, demand, and process risks. This study also empirically validates the conceptual framework and proposes hypotheses using structural equation modeling, with 355 Chinese manufacturing firms as the research sample. Empirical findings demonstrate that all the three types of risk and the two main characteristics of blockchain (i.e., blockchain traceability and security) positively contribute to the supply chain risk–blockchain technology fit. Results also suggest that the supply chain risk–blockchain technology fit positively affects new product development (NPD) performance. In addition, the relationship between supply chain risk–blockchain technology fit and NPD performance is positively moderated by global value chain upgrading.

Global value chain upgrading effect of foreign capital withdrawal: Evidence from Chinese firms

Is foreign capital withdrawal historical opportunity or realistic challenge for Chinese firms to upgrade their global value chain (GVC)? Based on the framework of demand and supply, this study examines the impact and main characteristics of foreign capital withdrawal on upgrading Chinese firms’ GVCs and finds that foreign capital withdrawal promotes the upgrading of firms’ GVC as a whole and the effect is a consequence technological innovation on the supply side and the market scale on the demand side, especially exploratory innovation, utilisation innovation and the domestic market demand. Further research shows that the effect of foreign capital withdrawal on GVC upgrading of small- and medium-sized firms, general trading firms, foreign capital holding firms and non-Hong Kong, Macao，and Taiwan foreign forms is stronger. Foreign capital withdrawal from firms with a low-technology organic composition has a significant GVC upgrading effect; besides, the GVC upgrading effect of foreign capital withdrawal in competitive industries is obviously stronger than that in monopolistic industry. These conclusions help in better understanding China’s foreign capital withdrawal and its economic impact, developing efficient and reasonable countermeasures and promoting Chinese firms in the global market.

Global value chain upgrading on the psychological anxiety of financial investors

BackgroundUnder the global value chain division pattern, the trade structure is changing day by day, and the intermediate goods trade is becoming the mainstream trend. As the final exportation platform under the international production network and production system, developing countries mainly take advantage of factors such as resource endowment and demographic dividend to form comparative advantages in processing and assembly, focusing on low-end production links with low added value and low technology content, and are in the downstream position of the global value chain. Investors need to establish a reasonable investment plan, understand the market rules and risks, master the investor mentality, and control risks. This study analyzes the impact of investors’ psychological anxiety in the context of global value chain upgrading.Subjects and MethodsIn this study, 540 financial investors in a province were evaluated by self-rating Depression Scale (SDS) and Self-rating Anxiety Scale (SAS). Amos software was used to conduct confirmatory factor analysis on the survey results.ResultsThere was significant difference between the total score of depression and gender (t = -2.098, P <0.05). Attachment anxiety not only predicts depression directly, but also indirectly through self-esteem.ConclusionsThe upgrading of global value chain has a negative effect on the psychological anxiety of financial investors. Depression, attachment anxiety and self-esteem were significantly correlated with psychological anxiety disorder. Self-esteem plays a mediating role between attachment anxiety and depression.

Impact of opening-up on industrial upgrading in global value chain: a difference-in-differences estimation for Shanghai pilot free trade zone

PurposeUsing the Shanghai pilot free trade zone (SPFTZ) as the testing ground for further reform and opening up,the links between global value chain (GVC) and pilot free trade zone (PFTZ) programs are mutually reinforcing. GVC creates opportunities for companies to use PFTZ to reduce their costs and increase their competitiveness, while PFTZ can facilitate the movement of goods within GVC and promote the development of GVC by attracting foreign investment. Overall, in SPFTZ, the industrial structure is promoted due to trade and investment facilitation, innovation promotion, and comprehensive service platform inside SPFTZ.Design/methodology/approachThis study examined industrial upgrading in GVC (IUGVC) using five indicators under three quantitative dimensions: product, process, and skill upgrading. Difference-in-Differences (DID) model is employed for the impact assessment of SPFTZ. Parallel trend analysis and Granger causality analysis are performed to check the reliability of DID outcome. Finally, robustness test using exogenous control variables are carried out.FindingsA positive impact of SPFTZ is found on IUGVC, which is due to promoting effect of SPFTZ on foreign direct investment and technological innovation. Based on the study's findings, policy recommendations are given, such as providing business support to enterprises operating inside a PFTZ.Originality/valueFrom a GVC perspective, the impact of theSPFTZ establishment on IUGVC cannot be ignored, and is so far missing in the literature.

Hubs of embodied business services in a GVC world

This paper explores the phenomenon of functional upgrading in Global Value Chains (GVCs) by applying empirical techniques of Social Network Analysis and graph theory to data from the TiVA database for the period from 1995 to 2018. Specifically, we focus on two (from less to more complex) stages of GVC participation: the global supply of manufacturing inputs and the global supply of business services to be embodied in other countries’ exports. We identify which countries are the leading specialized global providers in each stage, analysing their evolutions over time and the relationship between both progressions. It highlights the trajectory of China that has increased its role as a hub in both stages to reach top positions. Using a dynamic panel data model, we find that the role of a country as a specialized global supplier of manufacturing inputs is associate with becoming a prominent global supplier of embodied business services, suggesting a path to functional upgrading in GVCs.

An Ecosystem View of Supplier Upgrading in Global Value Chains: Evidence from Taiwanese Suppliers

An Ecosystem View of Supplier Upgrading in Global Value Chains: Evidence from Taiwanese Suppliers

Can Global Value Chain Upgrading Promote Regional Economic Growth? Empirical Evidence and Mechanism Analysis Based on City-Level Panel Data in China

Since launching its reforms and opening up, China has actively integrated itself into global value chains (GVCs) and experienced continuous growth. However, there exists a significant imbalance between GVC upgrading and economic growth across regions in China. Can GVC upgrading promote economic growth at the regional level? Despite the theoretical foundations and empirical evidence provided at the national level, research on GVC upgrading at the subnational level remains limited. This study constructs a temporal indicator to measure GVC upgrading at the finest subnational level, including cities at the prefecture level and above, and employs panel fixed effects (FE) and mediation models to examine the impact and mechanism of GVC upgrading on regional economic growth, aiming for a meaningful exploration in this area. The results show that GVC upgrading has a significant positive effect on regional economic growth with robust performance. Specifically, a 1-standard-deviation improvement in GVC upgrading leads to a 0.054-standard-deviation increase in the logarithm of per capita gross domestic product (GDP). Heterogeneity analysis shows that the promotion effect is more pronounced in coastal areas and administrative centers. Mechanism analysis indicates that GVC upgrading promotes regional economic growth by facilitating capital accumulation, promoting technological progress, and enhancing human resources, among which, facilitating capital accumulation plays the most significant role, accounting for over 70% of the economic growth effects associated with GVC upgrading. Thus, China should create an enabling environment for promoting GVC upgrading, enhance capital accumulation, foster regional innovation systems, improve the quality of human capital, and promote domestic market integration.

The impact of China's trade and FDI on Africa's GVC participation and economic upgrading

PurposeThis study examines the impact of China's trade and foreign direct investment (FDI) on Africa's global value chain (GVC) participation and economic upgrading.Design/methodology/approachThe study covered 48 African countries, cutting across the western, eastern, central, southern and northern subregions to cover the heterogeneity of the continent. The study adopted feasible generalized least squares panel VAR-Granger causality Wald test and system generalized methods of moments techniques for estimation.FindingsOverall, China's FDI to Africa and US-Africa trade have a linear relationship with Africa's GVC involvement and economic upgrading. The findings suggest that although China-Africa trade has a positive impact on GVC engagement and upgrading, the marginal effect decreases in the face of US-Africa and EU-Africa trade.Originality/valueThis study provides new evidence on the impact of China's FDI and trade on African economies' GVC participation and economic upgrading. To the best of the authors’ knowledge, this is the first study to empirically explore the effects of China's FDI and trade on Africa's GVC integration and economic upgrading as well as from the perspectives of backward and forward GVC participation. Furthermore, the study empirically examines whether the effects of Africa's economic cooperation with China relative to its GVC engagement differ from those of Europe (EU) and the US via a comparative regression.

Circular Economy and Social Upgrading in Global Value Chains: An Analytical Perspective on Social Upgrading in the Global South

Circular Economy and Social Upgrading in Global Value Chains: An Analytical Perspective on Social Upgrading in the Global South

A review of research on global value chain upgrading of manufacturing enabled by digital economy

A review of research on global value chain upgrading of manufacturing enabled by digital economy

The impact of green technology innovation on global value chain upgrading in China’s equipment manufacturing industry

In recent years, China’s equipment manufacturing industry has been actively embedded in the global value chain (GVC), but pollution emission has become an important factor hindering the industry from climbing to the high-end link of GVC. How to break through this restriction through green technology innovation is exactly urgent for the Chinese government and manufacturers. Therefore, using the panel data of China’s equipment manufacturing industry and its subsectors from 2007 to 2019, this paper constructs an econometric model to investigate the impact of green technology innovation on the GVC upgrading, and further examines the mediating effect through stepwise regression method. The results show that for the full samples of China’s equipment manufacturing industry, there is a U-shaped relationship between green technology innovation and the promotion of GVC status; and for basic metals and metal products manufacturing subsector and transport equipment manufacturing subsector, the conclusion is same with the whole industry; but for machinery equipment manufacturing subsector and electrical, electronic and optical equipment manufacturing subsector, the trend is opposite, that is, an inverted U-shaped relationship which first rises and then declines. Additionally, green technology innovation in China’s equipment manufacturing industry can promote GVC upgrading by reducing its dependence on GVC, optimizing export trade, reducing pollution costs, and promoting green product and process innovation. Based on the above, this paper finally proposes targeted policy implications to provide theoretical basis and experience reference for China’s equipment manufacturing industry to promote the GVC upgrading through green technology innovation.

International research on labor in agri-food value chains: A bibliometric review from web of science

Value chains are an important driver for the current labor dynamics in the agri-food sector, and agri-food value chain sustainability strongly depends on decent work conditions. An increasing literature body have been investigated the interactions between chain agents and how it impacted labor issues. Our aim was to map the scientific landscape of the scientific knowledge on labor in agri-food value chains. We performed a bibliometric review of 343 articles indexed in the Web of Science based on descriptive and network analysis of articles metadata, which covered authors, journals, citation times, keywords and countries. We showed that labor in agri-food value chains has an international audience, despite that knowledge production was largely built by a restraint leading scientific network. Overall, the scientific knowledge is organized into four main research domains on labor in agri-food value chains: (1) labor governance in global value chains through standards, (2) employment in value chains and impacts on socioeconomic conditions of rural areas, (3) gender issues and value chains, (4) labor and upgrading in global value chains. The controversies in the international literature regarding labor issues in the agri-food value chains, and blind spots of current research are discussed.

Environmental Upgrading and Downgrading in Global Value Chains: A Framework for Analysis

A key concern of the global value chain (GVC) and global production network (GPN) literature relates to whether and how actors, especially in the Global South, upgrade by generating and capturing more value. To date, such research has predominantly focused on the economic and social aspects of upgrading. In this article, we leverage selected insights from economic geography to advance our understanding of the environmental dimensions of upgrading and downgrading in GVCs and GPNs. We develop an analytical framework that distinguishes the processes of environmental upgrading, in terms of value creation and appropriation, from the resultant outcomes (biophysical manifestations, impacts on market access, and reputation). Furthermore, the framework is considered from the upgrading perspectives of multiple actors instead of focusing only on lead firms and other powerful actors. We illustrate how to apply this framework through a case study of the Kenya–UK horticulture value chains. We show that despite the uptake of environmental upgrading practices, as required by UK supermarkets and transmitted by Kenyan export firms with the facilitation of government agencies, Kenyan farmers have mostly experienced environmental downgrading, with some negative effects also affecting farmers and other resource users beyond the value chain.

Public Governance and Technological Capabilities in the Kenyan Leather Industry

ABSTRACT This article focuses on small- and medium-sized enterprises (SMEs) in Kenya’s leather sector. It explores how public governance impacts SMEs’ technological capabilities and access to global value chains (GVCs). By public governance, we mean all government regulations and interventions set in place to shape the organization of value chains. Drawing on interview data, the article compares Kenya’s leather handbag and footwear manufacturers. On the one hand, handbag SMEs have succeeded in upgrading and entering GVCs through a combination of foreign knowledge and partnership with local universities. Despite meeting with public governance barriers, this process has enabled the transfer of technological capabilities from foreign-owned firms to a number of emerging SMEs owned by Kenyan nationals. On the other hand, leather footwear production was developed during the 1970s by large firms under state support. As protectionist measures were lifted in the 1990s, firms shut down and producers moved into the informal economy, replicating outdated capabilities in a context of price-driven competition, thereby limiting upgrading and participation in GVCs. The article concludes by comparing these findings with the experience of Kenya’s apparel manufacturers and highlighting the critical need for GVC research to account for the role of public governance in shaping firms’ technological capabilities and access to global markets.

Microfoundations of global value chain research: Big decisions by small firms

In this study, we introduce a unique longitudinal dataset from the Italian Ministry of Economy and Finance Annual Survey (IMEFAS) to assess how micro and small enterprises (MSEs) partake in the global economy by tapping into global value chains (GVCs). The results of the empirical analysis show that the great majority of micro and small enterprises are unable to establish direct links with GVCs. However, two sub-categories of subcontractors and branded producers were able to accomplish upgrading and partake in GVCs after the 2008 economic crisis. For both groups of firms, strategies implemented in domestic value chains contributed to their future participation in GVCs. By identifying small firms’ value chain decisions associated with their ability to access GVCs directly, this study sheds light on the microfoundations of GVCs. It paves the way for the future intersection of small business economics and GVCs, two areas of research that have seldom talked to each other.