Global Value Chain Participation and Green Innovation: Evidence from Chinese Listed Firms

Abstract

Green innovation is one of the most important approaches to prevent environmental pollution and foster sustainable development. Embedded in the global production networks, manufacturing firms have been found not only to be the main drivers of innovation but also the main polluters in developing countries. However, relatively few studies have systematically considered the effect of global value chain (GVC) participation on green innovation in the context of developing countries. By using a panel dataset of Chinese listed manufacturing firms, this study conducts panel data fixed-effect analyses and uses the instrumental variable two-stage least square model to investigate the effect of GVC participation on firms’ green innovation performance. The results show that increased GVC participation leads to improved green innovation performance of Chinese firms. Meanwhile, further heterogeneity analyses show that the impact of GVC participation on green innovation is more pronounced for firms with greater financial constraints, state-owned firms and firms in labor- or pollution-intensive industries, located in the eastern regions of China. Therefore, this study sheds light on the implication that actively participating in GVC is the key to promoting sustainable growth when facing the need for transformation in developing countries.

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

“…And reach further conclusions using enterprise panel data, that the deeper the integration into the global supply chain, the looser the financing environment would be, and the stronger the green innovation abilities of the enterprises. The research of Meng et al (2022) also highlights that increased GVC participation leads to improved green innovation performance of Chinese firms. However, Sun et al (2020b) emphasized that although the development of green technology in manufacturing industry must rely on technological innovation, the process of implementing green innovation is full of high uncertainty and risk.…”

Global Value Chain Participation, Employment Structure, and Urban–Rural Income Gap in the Context of Sustainable Development

“…As can be observed, there is significant geographical variation in the influence of GVC participation on URIG, and the function of GVC participation in expanding the URIG in the eastern region of China is evidently stronger than that of the central and western regions. This is mostly because of the eastern region's great geographic location and high degree of economic development, which draw a lot of foreign direct investment and cause the industry to scale up and create a lot of jobs [82]. With the increased participation in GVC, the eastern region has taken the lead in changing the trade pattern and pursuing higher value-added products, which has widened the wage gap between laborers with different skills, and in turn widened the URIG.…”

Reexamining the Impact of Global Value Chain Participation on Regional Economic Growth: New Evidence Based on a Nonlinear Model and Spatial Spillover Effects with Panel Data from Chinese Cities

“…To capture the dynamic characteristics of regional GVC participation in China from a time series perspective, Shao and Su (2017) [73] employed the methods developed by Hummels et al [32] and Upward et al [35], and they used Chinese customs data from 2000 to 2007 to measure the degree of GVC participation in 30 provinces. This method is not limited by the availability of IO tables, and Shao and Su's research can serve as a valuable reference for the construction of time series indicators concerning GVC participation at more granular regional levels [72]; it can even be applied at the microenterprise level [74].…”