ABSTRACT Based on the integration of theories of global value chains (GVC), national innovation systems (NIS), and firms' knowledge search, this paper seeks to explore how a country's GVC forward and backward linkage portfolios affect its innovation performance. The empirical results confirm the hypotheses that a country's forward‐linking market concentration has a negative linear effect, while its backward‐linking market concentration has a positive linear effect on innovation performance. However, contrary to what theoretical hypotheses predict, a country's forward‐linking product concentration has a positive linear effect on innovation performance, while backward‐linking product concentration has a U‐shaped curvilinear effect on innovation performance. The major contribution of this paper is to highlight the importance of a country's external linkage as leverage to trigger more global knowledge transfer and learning effects, and ultimately to produce more homegrown innovations.
Hong‐Ji Huang (Tue,) studied this question.