Local Heroes, Global Impact: The Unsung Power of Micro and Small Enterprises in Global Value Chain Reconfiguration

ongoing

Recent geopolitical and economic shocks have led to a profound transformation in global production processes. In response, many companies are restructuring their operations by relocating business activities closer to or within their home countries. This shift is altering the dynamics of Global Value Chains (GVCs), intricate networks that are central to producing a variety of goods. While scholarly attention focuses on large multinational firms, the role of Micro and Small Enterprises (MSEs) in GVC reconfiguration remains an unexplored frontier. SOS-GVC aims to introduce a pioneering theoretical and empirical framework to assess the role of MSEs in reshaping GVCs structure, with a focus on the territorial implications of their strategies. The project will provide evidence of the various ways MSEs can influence global production processes. Firstly, MSEs directly involved in GVCs can repatriate offshored activities, generating impacts in the domestic regions where they are located. Secondly, MSEs indirectly participating in GVCs can safeguard local subcontracting networks by implementing risk prevention strategies to reduce the likelihood of disruptive events. The combined effect of these actions can empower the territories where MSEs operate, enhancing their ability to react to shocks. To construct the empirical framework, I will employ distinctive georeferenced firm-level data obtained from the Italian Ministry of Economy and Finance Annual Survey covering the 2010-2022 period. This database, untapped by the academic community, provides a unique advantage. The project has significant societal implications. As deglobalization trends persist, the crucial role of MSEs in GVCs is expected to grow, along with the regional impact of their activities. The societal impact lies in fostering a nuanced understanding of the intricate interplay between MSEs, GVC, and regional resilience, informing policymakers and stakeholders in navigating the evolving global economic landscape.