Firms’ efficiency and global value chains: An empirical investigation on Italian industry

This paper investigates the effect of participation in GVCs on firms' efficiency and explores some dimensions of heterogeneity in this impact across different firms, according to GVC governance, positioning in the chain and time length of participation. Our analysis takes advantage of survey data providing information on involvement in GVCs for a large set of Italian industrial SMEs between 2008 and 2012. We employ a DEA approach to retrieve a measure of firms' technical efficiency (i.e., DEA efficiency scores) and estimate the impact of involvement in GVCs on firms' efficiency through propensity score matching techniques. To account for possible residual endogeneity, we also focus on new entrants. Furthermore, we provide robustness checks by using truncated regression and Heckman estimators. The results of our empirical investigations contribute to the GVCs firm‐level literature confirming our research hypotheses: SMEs' participation in GVCs leads to win a return in terms of higher efficiency; this gain is systematically higher for the involvement in relational GVCs, and the benefit is especially noteworthy for suppliers.