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

Ketan Reddy and Subash Sasidharan

Australian Economic Papers, 2022, vol. 61, issue 3, 455-473

Abstract: 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.

Date: 2022
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