Conference Paper
Powering the Energy Transition in Enterprises: Empirical Insights into the Global Value Chain–Energy Innovation Nexus
No.
ERF32AC_101
Publisher
ERF
Date
May, 2026
Topic
Q4. Energy
Q5. Environmental Economics
F. International Economics
Global value chain (GVC) embedding can induce businesses’ energy efficiency and decarbonization transition. Yet, this is the end effect; the granular process-level energy upgrades and enhancements that lay the groundwork for the broader transition remain unexplored. This is the first firm-level examination of the linkage between GVC participation and energy efficiency innovation. Using WBES-BEEPS database in 41 global countries, we find that GVC participation significantly increases enterprises’ propensity to take up energy innovation. The mechanism analysis uncovers the mediating role of market scale and induced research and learning spillovers in explaining the studied nexus. We conduct a nuanced heterogeneity analysis to account for variations across firm-level characteristics, sectoral attributes, global regions and country income groups. The positive effect is more evident among SMEs, less financially restrained firms, liable enterprises to environmental regulations, and firms operating in manufacturing, medium-high and high-tech and relatively energy-efficient industries. The income-based cross-country analysis pinpoints the effect of GVCs on intensifying global energy inequality. GVC firms from low-income countries can disproportionately innovate in their energy efficiency, yet only if they function within energy-efficient sectors. Regional heterogeneous results are stronger among MENA firms, and more specifically SMEs, financially unconstrained, medium and low-technologically intensive, and energy-regulated enterprises. A set of robustness checks validates the reliability of baseline results to endogeneity and selection biases. This research encompasses a suite of policy recommendations for leveraging the association between GVC embeddedness and firm-level green energy performance to accelerate macro-level environmental protection.