Servicification and global value chain survival: Firm‐level evidence from India

In this article, we study the role of servicification in sustaining global value chain participation. To empirically analyse the role of firm servicification on GVC survival, we draw information from a sample of 1,227 Indian manufacturing firms over 2001–2018. We use a complementary log–log model an...

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Bibliographic Details
Published in:Australian economic papers 2022-09, Vol.61 (3), p.455-473
Main Authors: Reddy, Ketan, Sasidharan, Subash
Format: Article
Language:English
Subjects:
Causality
exit
F14
global value chains
manufacturing
Propensity
servicification
Trading
Value chain
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Summary:In this article, we study the role of servicification in sustaining global value chain participation. To empirically analyse the role of firm servicification on GVC survival, we draw information from a sample of 1,227 Indian manufacturing firms over 2001–2018. We use a complementary log–log model and find that higher servicification is associated with a lower hazard rate. Moreover, we account for the reverse causality in the model using a two‐stage residual inclusion method and correct for self‐selection using the propensity score matching estimator. Our finding of servicification aiding GVC survival remains robust to the endogeneity concerns. Further, our analysis also underscores the importance of servicification for sustaining GVC participation for firms with short‐trading spells.
ISSN:0004-900X
1467-8454
DOI:10.1111/1467-8454.12255