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Do Global Value Chains Make Firms More Vulnerable To Trade Shocks?: Evidence from Manufacturing Firms in Sweden
Blekinge Institute of Technology, Faculty of Engineering, Department of Industrial Economics.
Blekinge Institute of Technology, Faculty of Engineering, Department of Industrial Economics.
2019 (English)In: journal of Risk and Financial Management, ISSN 1911-8066, Vol. 12, no 3, article id 151Article in journal (Refereed) Published
Abstract [en]

This paper examines the effect of the Global Financial Crisis on manufacturing firms in Sweden by analyzing the effect of trade exposure on firm performance. This study examines the decline in international trade during the global financial crisis by focusing on the relationship between global production linkages and firm performance. The trade exposure at the firm and industry levels were measured to assess the direct and indirect effects of the crisis on firm performance. Robust evidence was found of a negative relationship between trade exposure and the firms' sales and value-added growth during the crisis. In addition, it was found that higher export dependence was associated with lower sales growth during the crisis. Our results also show that the effect of the decline in the external demand on firm performance depends on the international input-output linkages. In particular, industries that are upstream in the value chain experienced a less severe decline in performance during the crisis.

Place, publisher, year, edition, pages
MDPI, 2019. Vol. 12, no 3, article id 151
Keywords [en]
financial crisis; firm performance; exports; global value chains
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:bth-13280DOI: 10.3390/jrfm12030151ISI: 000487963000031OAI: oai:DiVA.org:bth-13280DiVA, id: diva2:1040798
Note

open access

Available from: 2016-10-28 Created: 2016-10-28 Last updated: 2019-10-21Bibliographically approved
In thesis
1. Firms in Global Value Chains: An Analysis of the Determinants and Effects of the Changing Location of International Production
Open this publication in new window or tab >>Firms in Global Value Chains: An Analysis of the Determinants and Effects of the Changing Location of International Production
2016 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This thesis deals with the globalization of production, a salient feature of the modern economy. The development of international outsourcing as a widespread business practice and the simultaneous decrease in trade and transport costs have contributed to the growth of a phenomenon known as global value chains. The main aim of the thesis is to understand how global value chains alter the location of economic activity. The thesis also studies the extent of firms' participation in global value chains and its consequences for firm performance.

 

The thesis consists of four papers studying the behavior of firms in global value chains. Paper 1 analyzes how production fragmentation influences the importing and exporting behavior of Swedish firms in the manufacturing sector. Paper 2 focuses on manufacturing firms in the ICT sector and analyzes the effect of global sourcing on firm performance. In Paper 3, the thesis examines deeper implications of global production by investigating whether exposure to trade raises firms' sensitivity to external shocks. The final paper in the thesis studies the location patterns of multinational firms and analyzes the effect of institutional distance on the number of multinational entries in developing countries.

 

A number of patterns emerge from these studies. The first is that Swedish manufacturing firms increasingly participate in global value chains by sourcing production inputs from overseas to create products for local and foreign customers. As a result, global value chains help to alter the specialization patterns of manufacturing firms. The second finding is that firms reap benefits from global sourcing in the form of greater efficiency. However, global sourcing may also raise the responsiveness of firms to negative external shocks. The final key result points to a developing trend in the location of activity in which emerging market multinational firms are becoming significant sources of foreign direct investment flows and their investment patterns challenge existing theories of multinational location choice.  

 

Place, publisher, year, edition, pages
Karlskrona: Blekinge Tekniska Högskola, 2016. p. 58
Series
Blekinge Institute of Technology Doctoral Dissertation Series, ISSN 1653-2090 ; 8
Keywords
Global value chains, outsourcing, offshoring, technical efficiency, multinational firms, imports, exports, financial crisis, institutions
National Category
Economics and Business
Identifiers
urn:nbn:se:bth-13285 (URN)978-91-7295-332-1 (ISBN)
Public defence
2016-12-01, J1650, Campus Gräsvik, Karlskrona, 10:00
Opponent
Supervisors
Available from: 2016-10-28 Created: 2016-10-28 Last updated: 2016-12-16Bibliographically approved

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Stone, Trudy-AnnQuoreshi, Shahiduzzaman

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