Environmental management in global value chains: how production fragmentation drives environmental upgrading in China’s ocean manufacturing

This paper is the first to use firm-level data of China to quantitatively analyze the impact of forward-linkage-based production fragmentation on the Chemical Oxygen Demand emission of ocean-based manufacturing enterprises from 2000 to 2013. Our research demonstrates that deeper engagement in production fragmentation serves as an effective tool for corporate environmental management, significantly improving ocean-based manufacturing firms’ environmental performance. This greening effect is heterogeneous, proving strongest for processing trade firms, domestic enterprises in non-pollution-intensive industries, and firms in marine-focused cities. We find this upgrading is achieved through both composition effects (capital shifting to cleaner sectors) and technique effects (driven by biased technological progress). Crucially, our analysis offers practical insights for managers and policymakers: stricter environmental regulations and greater global value chains complexity amplify these positive outcomes, providing clear pathways to foster more responsible and sustainable production models.