Shadow of the giant: How global value chain participation influences the knowledge structure of SMEs

Abstract

Beyond the knowledge acquisition facilitated by global value chain (GVC) participation for small and medium-sized enterprises (SMEs), extant studies have largely overlooked its impact on the knowledge structure (knowledge depth vs. breadth) of SMEs, whose GVC linkages are normally trapped in captive relationships dedicated to customized and exclusive tasks. Introducing an interactive perspective of power-embeddedness logic, this study examines how GVC participation affects SMEs’ knowledge structure. Based on the large longitudinal data of China’s SMEs, estimations from the Panel Fixed effects model and Negative Binomial model indicate that while GVC participation has a positive effect on knowledge depth, it has an inverted U-shaped effect on knowledge breadth. Moreover, relationship history and indigenous R&D differently moderate the effects of GVC participation on knowledge depth and breadth by influencing either power or embeddedness logic. These findings provide new insights into the complex interaction between the two logics and SMEs’ constraint response in GVC linkages through deliberate knowledge management.