GVC participation, firm characteristics and performance : firm-level evidence from CEE

Ponikvar, Nina (author), Stemberger, Jakob (author), Zajc Kejžar, Katja (author)

This paper investigates the effect of GVC participation on various aspects of firm performance-investment rate, firm size, profit margin, and labour productivity. Following the micro approach, participating firms are identified using transaction trade data, while the organisational form of participation is determined using firm-level data on inward and outward foreign direct investments (FDI). We test the role of GVC participation on firm performance based on propensity score matching applied to firm population data for a small, open Central and Eastern European country during 2006-2016 in two steps. Firstly, we compare GVC participating firms with non-participating firms and find that participating firms have, on average, larger fixed assets, higher gross investment rates, and generate higher value added per employee compared to non-participating firms, while no statistically significant differences are found in profit margins between the two groups. Moreover, on average, backward participation has slightly higher average treatment effects on all aspects of firm performance than forward participation. Secondly, we focus only on GVC participating firms and find that the organisational form of GVCs, i.e., vertical integration and outsourcing, does not have consistent effects on various aspects of firm performance. Firms with outward FDI outperform other GVC participating firms in labour productivity, regardless of direction of vertical integratinon. Vertically integrated manufacturing firms with inward FDI invest less than their outsourcing peers, while their productivity and profit margins are not significantly lower.

• Language: English
• Keywords: Central and Eastern Europe, international economics, supply chain, GVC, backward participation, forward participation, vertical integration, outsourcing, firm performance, propensity score matching
• Work type: Article
• Typology: 1.01 - Original Scientific Article
• Organization: EF - School of Economics and Business
• Publication status: Published
• Publication version: Author Accepted Manuscript
• Publication date: 13.12.2023
• Year: 2023
• Number of pages: Str. 25-53
• Numbering: Vol. 28, spec. iss.
• PID: 20.500.12556/RUL-163833
• UDC: 339.9
• ISSN on article: 0949-6181
• COBISS.SI-ID: 176829187
• Publication date in RUL: 11.10.2024

Record is a part of a journal

• Title: Journal of East European management studies
• Shortened title: J. East Eur. manag. stud.
• Publisher: Nomos
• ISSN: 0949-6181
• COBISS.SI-ID: 697875

Secondary language

• Language: Slovenian
• Keywords: Srednja iin vzhodna Evropa, mednarodna ekonomija, preskrbovalne verige

Projects

• Funder: ARIS - Slovenian Research and Innovation Agency
• Project number: P5-0117
• Name: Trajnostna konkurenčnost slovenskega gospodarstva v evropskem in globalnem okviru