Grow Global, Act Digital: The Impact of Digitalization on Global Value Chain Positioning

ABSTRACT Despite rapid advancements in digital technologies, the relationship between digitalization and trade, particularly within global value chains (GVCs), remains unclear. This study investigates the causal impact of digitalization on firm GVC positioning, a key determinant of both supply chain resilience and value‐added upgrading. Using data on Chinese exporters and an instrumental variable (IV) strategy to address endogeneity, we find that digitalization enables firms to expand their span of production stages by sourcing inputs from more upstream segments and shifting exports closer to final demand. Mechanism analysis shows that this effect can be attributed to the influence of digitalization on strengthening firm innovation capability, increasing high‐skilled labor utilization, improving resource allocation efficiency, and reducing information costs.