How does OFDI affect enterprises’ global value chain participation through supply chain networks?

This study constructs a firm-level supply chain network using transaction data between suppliers and customers of listed companies in China from 2009 to 2016, and examines the impact of outward foreign direct investment (OFDI) on enterprises’ participation in Global Value Chains (GVCs) from the unique perspective of supply chain networks. The baseline regression results show that OFDI in supply chain networks can promote enterprises’ participation in GVCs, extending the impact of OFDI to a broader supply chain network. The channel analysis results indicate that the peer effect of OFDI decisions and the alleviation effect of financing constraints are essential channels through which OFDI in supply chain networks affects enterprises’ participation in GVCs. Finally, from the perspective of supply chain structure and incorporating industry heterogeneity, this study examines the heterogeneous effects across three dimensions: supply chain concentration, supply chain information transmission, and supply chain efficiency. These findings not only enrich the research on OFDI and GVCs from the perspective of supply chain networks, but also provide valuable insights for developing countries to leverage OFDI enterprises to expand their benefits in GVCs by adjusting their domestic supply chain networks.