Evaluation of the effect of GVC participation on green technology innovation capacity: a microlevel analysis in China based on PSM-DID

Purpose Comprehensively inspecting green technology innovation capability (GTIC) in the context of global value chain (GVC) is vital to ensure that trade development is accompanied by an improved environment. This study aims to evaluate GVC participation’s effect on GTIC at the micro level from a quasi-natural experimental perspective; examine the mechanisms, dynamics and heterogeneity inherent in this effect and propose several pertinent policy recommendations for China and other developing countries. Design/methodology/approach Employing the propensity score matching-difference in differences (PSM-DID) method, this study evaluates GVC participation’s effect on the GTIC in China using a comprehensive panel dataset encompassing 220,794 observations across 31,555 enterprises from 2003 to 2009. Findings Our research generates several intriguing findings. First, GVC participation can significantly enhance the GTIC at the micro level. Second, GVC participation accelerates the improvement of GTIC of Chinese enterprises by intermediate goods trade, learning and developed market effects. Third, the positive impact of participating in GVC on GTIC is predominantly evident in state-owned, collective, general or mixed trade and resource- or capital-intensive enterprises; for labor-intensive enterprises, there is a handicap. Furthermore, the improvement effect exhibits a notable lag, gradually manifesting its prominence in the year following GVC participation. Originality/value This study fills a key research gap by empirically elucidating GVC participation’s effect and mechanisms on the GTIC at the micro level. This study intensifies our understanding of GVC participation’s heterogeneous effects on the GTIC vis-à-vis enterprise characteristics. This paper contributes to the understanding of the dynamic effects of GVC participation on GTIC. This study used the PSM-DID method to effectively avoid selection bias, enabling the exploration of a new research perspective.