Accounting for Firm Heterogeneity in Global Value Chains

Journal of International Business Studies (2020), doi: 10.1057/s41267-019-00282-0, open access

22 Pages Posted: 6 Jan 2021

See all articles by Fabienne Fortanier

Fabienne Fortanier

De Nederlandsche Bank

Guannan Miao

affiliation not provided to SSRN

Ans Kolk

University of Amsterdam Business School

Niccolò Pisani

IMD

Date Written: 2020

Abstract

The growing interest in global value chains (GVCs) has been paired with a greater appreciation of the need for better measurement methods, as reflected by recent initiatives from academia and leading international organizations. This research note focuses on one method to measure GVCs that has been recommended in recent scholarly work, namely input–output models, but goes beyond the industry level of analysis by introducing intra-industry firm heterogeneity. Our illustrative application to multinational enterprises (MNEs) versus domestic firms’ participation in GVCs enhances our understanding of their specific role in GVCs and how such engagement varies across countries and industries. While showing that MNEs’ contribution to value-added exports is considerably smaller than what is suggested by traditional trade statistics, our findings also, interestingly, document that the higher import content of exports of MNEs can go hand in hand with the creation of local backward linkages as a function of their much higher specialization in only parts of the production process vis-à-vis domestic firms. By answering relevant questions on MNEs’ engagement in GVCs that have hitherto been impossible to address comprehensibly and in a cross-country comparative setting, this application illustrates how the methodology has great potential for international business research.

Keywords: globalization, multinational enterprises (MNEs), input–output tables, trade in value-added, global value chains (GVCs)

JEL Classification: D22, D57, F00, F01, F1, F2, F4, F5, F6, L6, L7, L8. L9, M00, M1, M16

Suggested Citation

Fortanier, Fabienne and Miao, Guannan and Kolk, Ans and Pisani, Niccolò, Accounting for Firm Heterogeneity in Global Value Chains (2020). Journal of International Business Studies (2020), doi: 10.1057/s41267-019-00282-0, open access, Available at SSRN: https://ssrn.com/abstract=3746958

Fabienne Fortanier

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

Guannan Miao

affiliation not provided to SSRN

Ans Kolk (Contact Author)

University of Amsterdam Business School ( email )

Plantage Muidergracht 12
Amsterdam, 1018 TV
Netherlands
+31 20 525 4289 (Phone)
+31 20 525 5281 (Fax)

HOME PAGE: http://www.anskolk.eu

Niccolò Pisani

IMD ( email )

Ch. de Bellerive 23
P.O. Box 915
CH-1001 Lausanne
Switzerland

HOME PAGE: http://www.imd.org/faculty/professors/pisani-niccolo/

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