Companies’ resilience in global value chains under external shocks: evidence of the first wave of COVID-19 pandemic

Growing uncertainty and more frequent shocks in the global economy require firms and regulators to find new sources of resilience. The impact of participation in global value chains on firm performance remains largely unresolved in current literature, especially in the context of external shocks. The paper aims to expand on the understanding of the mechanism of the relationship between globalisation and firm resilience. The study draws on the concept of global value chains and utilises various markers of firms' belonging to these chains such as imports, exports, international quality certificates and foreign equity participation. The methodological novelty of the paper lies in the fact that not only the actual values of the change in revenue as a result of the shock, but also the expected recovery period for different models of global value chain organisation are used to assess the resilience of firms. Using data on 5,301 firms from 29 countries in Europe and Central Asia, using probit regression and ordered probit regression, we find that non-economic shock from the COVID-19 pandemic negatively affected importing firms, leading to lower sales and a longer expected recovery period. Large firms and firms with international quality certifications proved to be more resilient. Participation in global value chains and firms' export orientation had no significant impact on revenue fluctuations and the ability to restore revenue to pre-crisis levels. The results obtained provide additional arguments for companies' decision-making regarding participation in the chains, as well as in forming guidelines for the state foreign trade policy and foreign direct investment policy.