Cooperation Between Firms in Global Value Chains and Firm Performance

Knowledge flows between countries and firms are important in economic growth and technology upgrading, to which Global Value Chains (GVCs) are key contributors. In this paper, we investigate directly rarely observable links between globally integrated firms and their suppliers, and their cooperative activities at a large scale. Linking multiple datasets at the firm- and firm-pair level from Hungary, we document that (i) suppliers with GVC-connected, productive or relational buyers are more likely to cooperate with their buyers, (ii) cooperating firms and firms with productive buyers are more likely to make innovations both in general and specifically with environmental benefits.