Navigating the Uncertainty: Unveiling the Impact of Trade Policy Uncertainty on GVC Ascent in Chinese Listed Companies

ABSTRACT This study is based on real options theory and uses a sample of Chinese listed companies from 2000 to 2016 to investigate the dynamic process and mechanisms by which trade policy uncertainty affects the upgrading of enterprises within the global value chain (GVC). The article finds that trade policy uncertainty has a positive forcing effect on enterprise GVC upgrading. In an environment of trade policy uncertainty, factors affecting enterprise upgrading in the GVC include both internal and external risks. Internal risks encompass the understanding of multinational strategies by executives and operational risks. External risks include the vulnerability of supply chains and dependence on cross‐border profitability. The interaction effect reveals that correct internal decision‐making and risk avoidance in transnational operations are far more important than dealing with external risks. Additionally, the positive impetus brought about by trade policy uncertainty is more pronounced in private enterprises, non‐high‐tech firms, and those with weaker financial constraints.