Firms’ Participation in Global Value Chains Research and Development Activities and Firm Performance: The Joint Moderating Effects of Knowledge Intensity and Technological Turbulence

Firms’ participation in GVCs R&D activities is contextually complex, and understanding the factors influencing its participation process is important to gaining firms’ competitiveness and performance improvement. This paper examines the impact of firms’ participation in GVCs R&D activities on firm performance and the mediating effect of technological progress. Additionally, we also test their effect under various levels of knowledge intensity and technological turbulence. Based on GVCs and dynamic capability theories, the study developed hypotheses that are tested through unbalanced panel data, which consists of 1343 observations from 428 individual firms in China’s manufacturing industries from 2014 to 2018. Fixed-effects models are used to examine hypotheses. The results indicate that technological progress partially mediates a positive relationship between firms’ participation in GVCs R&D activities and firm performance and that firms’ participation in GVCs R&D activities has a greater impact on firm performance when knowledge intensity is high. In contrast, this positive moderating effect is diminished when technological turbulence is high. This study provides a new perspective on firms’ participation in GVCs and useful guidelines for firms’ strategy selection and implementation that will facilitate the pursuit of performance excellence.