Does digital transformation promote global value chain upgrading? Evidence from Chinese manufacturing firms

Enterprises in developing countries previously entered the lower end of the global value chain (GVC) by leveraging low-cost production factors. Digital transformation offers these enterprises opportunities to move upstream in the GVC. While the literature highlights the benefits of digital technology in enhancing innovation, productivity, and resource utilization, comparatively limited exploration of the relationship between digital transformation and GVC upgrading has occurred. We utilize data on Chinese listed manufacturing firms from 2007 to 2016 to investigate the impact of digital transformation on their positioning in the GVC. The results show that digital transformation significantly enhances manufacturing firms' positions in the GVC, with skill-biased technical change playing a positive role. Our findings indicate the significance of digitalization and talent-management strategies for firms aiming to capture greater value in the GVC.