This study investigates the impact of pricing and export diversification on the resilience of Russian manufacturing firms within global value chains (GVCs) during two consecutive shocks: the COVID-19 pandemic and the sanctions of 2022. The research examines how pricing affects firms’ ability to sustain exports in times of crisis and analyzes the role of product and geographic diversification in mitigating disruptions. The findings reveal that market-controlled pricing and export diversification significantly enhance GVC resilience, enabling firms to adapt to disrupted supply chains and shifting market conditions. In contrast, rigid pricing controls, including government interventions, undermine export continuity. Single-product firms demonstrate less resilience to external shocks, highlighting the importance of export diversification in enhancing adaptability within GVCs. This study points out the critical role of flexibility and adaptability in pricing and export diversification for navigating external shocks. It provides useful insights for managers and policymakers, emphasizing the balance between resilience and efficiency in maintaining competitiveness. The results contribute to a broader understanding of GVC resilience, with implications for firms in other emerging economies facing similar challenges.

global value chains, resilience, export pricing, export diversification, Russian manufacturing, COVID-19, sanctions.

In recent years, growing uncertainty in the global economy and the increasing frequency of shocks disrupting global value chains (GVCs) have highlighted the limited theoretical and empirical understanding of exogenous shocks and their impact on GVCs (Chatterjee et al., 2024; Klarin et al., 2024). Notably, there is a significant demand for research into the factors that make GVCs more or less resilient (Suder et al., 2024).

The literature remains divided on the resilience of firms in GVCs when faced with external shocks. On the one hand, firms embedded in GVCs are often considered more resilient, as multinational corporations (MNCs) operating across numerous markets and regularly facing a range of environmental, economic, societal, geopolitical, and technological risks have long worked to develop the capacity to resist, absorb, and effectively respond to sudden shocks (Ambulkar et al., 2015). This includes adapting the configuration of GVC activities, particularly with respect to their spatial distribution and strategic management (Ali et al., 2022; Altay et al., 2018; Kano et al., 2020).

On the other hand, firms within GVCs may exhibit greater vulnerability due to their dependence on strategic partnerships and susceptibility to supply chain disruptions (Borino et al., 2024; Criscuolo and Timmis, 2017; Quoreshi and Stone, 2019; Arriola et al., 2020). Additionally, the adverse effects of external shocks can ripple through MNC networks, potentially impacting subsidiaries in countries not directly affected by the shock (Bena et al., 2022).

A notable limitation of existing studies on GVC resilience is their predominant focus on the actions and impacts on MNCs, often overlooking the organizational characteristics of non-lead firms within GVCs (Gereffi and Lee, 2016). This gap is evident in both empirical and theoretical research, which frequently neglects suppliers’ strategies for improving their positions within GVCs (Humphrey, 2020; Sako and Zylberberg, 2019). Specifically, prior studies fail to adequately address the distribution of value added and power within GVCs beyond MNCs, as well as the resilience of non-lead firms (Choksy et al., 2022; Pla-Barber et al., 2021; Suder et al., 2024). These aspects, however, are critical to understanding overall GVC resilience (Sako and Zylberberg, 2019). Currently, the majority of literature examines the impact of the COVID-19 pandemic, given its global scope and wide-ranging economic impact. A number of studies have evaluated how firms worldwide responded to the pandemic’s disruptions (Ghobadian et al., 2022; Hasan et al., 2023). Despite this, much less research has been conducted on other external shocks such as sanctions and trade wars, which tend to have a more specific impact on some regions or sectors (Le and Bach, 2022).

Our contributions address two key research gaps: pricing and export diversification as factors of resilient GVCs. First, it’s the factor of export pricing due to its significance as critical company’s capability (Tan and Sousa, 2011) and a fundamental determinant of success in export activities (Hofer et al., 2019). In contrast to existing studies that emphasize the degree of integration into GVC, government support (Gereffi et al., 2022a), technological cooperation, or innovation activity (Dilyard et al., 2021; Orlando et al., 2022), we consider pricing for analyzing GVC resilience. Export pricing is usually examined outside of shock periods, emphasizing its role in enhancing foreign market performance (Hofer et al., 2019). The research on pricing during shock periods remains limited, usual­ly focusing on pricing to increase exporter flexibility (Gupta, 2023). The present study contributes to the understanding of how distinct pricing mechanisms affect the resilience of global value chains — production cost control, market control, buyer control, and governmental control.

Second, we point out diversification as a factor influencing firm resilience under external shocks, considering both product and geographic diversification. While most studies focus on product (Choksy et al., 2022) and geographic diversification (Cos et al., 2019), the uniqueness of our approach lies in the combined analysis of both types of diversification based on survey data. This allows for a more comprehensive assessment of firm resilience. Rather than introducing a new parameter for testing, we demonstrate the significance of established diversification factors in the context of two distinct external shocks — the COVID-19 pandemic and sanctions — using a unified sample. While export diversification contributes to both firm profitability (Wagner, 2014) and export performance (Boehe and Jiménez, 2016), its impact under external shocks remains unclear. Considering the increasing frequency of external shocks globally, the purpose of this study is to examine the role of geographic and product diversification in periods of external shocks. While the impact of diversification during the pandemic has been partially studied, its role under sanctions remains insufficiently explored. Thus, our study fills a critical gap in empirical research by exploring how export pricing and a firm’s GVC participation influence export persistence.

This study is unique in its examination of GVC resilience through the lens of Russian manufacturing firms during two distinct shocks: the COVID-19 pandemic and the 2022 sanctions shock. Both the pandemic and the international sanctions, triggered by escalating geopolitical conflicts, have received significant attention in recent years (see reviews and discussions on the pandemic’s impact in Bacchetta et al., 2021; Borino et al., 2024; Kersan-Škabić, 2022, and on sanctions in Cheratian et al., 2023; Huynh et al., 2023; Meyer et al., 2023).

Focusing on Russian manufacturing firms is particularly compelling for several reasons. First, despite the dire initial forecasts regarding the impact of international sanctions — affecting nearly half of Russia’s export and import flows — researchers have concluded that the Russian economy has demonstrated resilience under external pressure, including maintaining its participation in GVCs (Bruno et al., 2023; Gaur et al., 2023; Galbraith, 2024; Tsouloufas and Rochat, 2023). However, the effects of sanctions have been highly heterogeneous among firms, influenced by a wide range of internal factors such as firm size, state or foreign ownership, degree of internationalization, use of digital technologies (Gaur et al., 2023; Golikova and Kuznetsov, 2017b; Simachev et al., 2023), and adaptation strategies (Fedyunina and Simachev, 2023; Kuzyk and Simachev, 2023). Second, the Russian economy experienced two consecutive shocks within a short time frame (2020–2022), providing a unique opportunity to analyze the impact of both on GVC resilience using the same sample of firms. This allows for direct comparisons of the results across the two shocks.

This article builds on the GVC framework, examining the impact of GVC ­organization on the resilience of non-lead firms. Specifically, we focus on the roles of pricing, product, and geographic export diversification as factors shaping GVC organization and resilience to pandemic and sanctions shocks. To achieve this, we formulate and test hypotheses on how different pricing within GVCs — market-controlled, governmental-controlled, production cost-controlled, and buyer-controlled — affect the resilience of non-lead firms. Our approach aligns closely with that of Staritz et al. (2023), who emphasized the role of price-setting into the analysis of governance within global value chains, and builds on supplier agency perspectives in GVC analysis, highlighting inter-firm structures and relationships (Choksy et al., 2022; Humphrey, 2020). Additionally, we test hypotheses on how product and geographic export diversification in­fluence firms’ GVC resilience.

Reflecting on our findings, this study enriches the existing empirical evidence on GVC resilience by highlighting organizational factors such as pricing and export diversification (Boehe et al., 2016; Oliveira et al., 2024). These insights enhance the understanding of the Russian economy’s resilience to external shocks. Given that Russia shares similarities with other emerging economies (Gaur et al., 2023; Meyer et al., 2023), the findings on GVC resilience factors are relevant and potentially beneficial for them as well.

The article is structured as follows: Section 2 introduces the hypotheses and conceptual evaluation model; Section 3 describes the data and estimation metho­dology; Section 4 presents the empirical results, while Section 5 discusses key findings and their implications for managers and policymakers.

The empirical analysis is based on the results of the project “Russian companies in Global Value Chains” from the HSE University’s Fundamental Research Program, during which a survey of manufacturing company ­managers was conducted in the end of 2022. The sample contains approximately 1,900 ­observations and is representative across economic sectors and enterprise size groups. In this study, the GVC resilience of firms is measured using the extensive margin approach, closely following the works by Bricongne et al. (2022); Campi and Dueñas (2022); Martin (2012); Stojčić and Vojinić (2023). Specifically, we measure the export extensive margin as the probability of a firm maintaining its export status (a dummy variable). We propose that the primary criterion for defining a ‘mono-product’ firm is the generation of the majority of its revenue from a single product or service. The threshold for identifying mono-product firms is set at over 50% of total revenue, which is a widely accepted approach. The definitions and descriptive statistics of all variables are presented in Table 1.

Thus, our empirical model is as follows:

Logit(GVCResilience_irj) = β₀ + β₁ × EPC_irj + β₂ × ln(age_irj) + β₃ × ln(size_irj) +

+ β₄ × QualityCert_irj + β₅ × Ownership_irj + β₆ × Holding_irj +

+ β₇ × CreditAccess_irj + β₈ × TechLevel_irj + α_r + μ_j + ε_irj, (1)

Logit(GVCResilience_irj) = β₀ + β₁ × BackwardLinkages_irj +

+ β₂ × GeographicalDiversification_irj + β₃ × SingleProduct_irj +

+ β₄ × ln(age_irj) + β₅ × ln(size_irj) + β₆ × QualityCert_irj +

+ β₇ × Ownership_irj + β₈ × Holding_irj + β₉ × CreditAccess_irj +

+ β₁₀ × TechLevel_irj + α_r + μ_j + ε_irj, (2)

where: GVCResilience_irj — the dependent variable representing the ability of company­ i in region r and industry j to maintain its exporter status during the time period corresponding to an external shock; EPC_irj — a variable characterizing the company’s export price control; BackwardLinkages_irj — a dummy variable indicating whether the company engages in imports, reflecting its downstream participation in GVCs; GeographicalDiversification_irj — a variable accounting for the diversity of the company’s export markets; SingleProduct_irj — a dummy variable equal to one if the company generates the majority of its revenue from the production of a single product; ln(age_irj), ln(size_irj), QualityCert_irj, Ownership_irj, CreditAccess_irj, TechLevel_irj — a set of control variables included in both models; α_r — regional fixed effects controlling for differences across regions; μ_j — industry­ fixed effects capturing differences across industries; ε_irj— the error term.

Given the nature of the dependent variables and the structure of the data, a logit model is an appropriate estimation technique for this study. The dependent variables — whether a firm maintained export status during specific periods (the COVID-19 crisis and sanctions period) — are binary in nature, taking values of 0 or 1. Logit models are specifically designed for situations where the outcome variable is dichotomous, making them ideal for predicting the probability of an event occurring based on a set of independent variables. In this case, the model will estimate the likelihood of a firm maintaining its export status, based on factors such as pricing, geographic and product export structure, and other firm-specific characteris­tics. Furthermore, the control variables include both continuous (e.g., the number of export destinations) and binary (e.g., firm ownership, credit access) variables, which can be easily accommodated by the logit model. By applying this technique, we can estimate the odds of maintaining export status under different conditions, while accounting for various factors that may influence the likelihood of this outcome.

Additionally, when working with binary variables, a probit model can be employed (Regis, 2018; Wagner and Gelübcke, 2014). While theoretically similar to the logit regression, it differs in its underlying distribution and has certain limitations. In probit regression, coefficients cannot be directly interpreted as odds ratios, as in logit models. The latter utilize the logistic distribution, which may be more suitable for the current study, whereas probit regression is based on the normal distribution. Moreover, the use of linear probability models (Borino et al., 2024) was also considered but ultimately rejected because of its limitations, such as potential heteroskedasticity of errors and failure to account for the nonlinear nature of probabilities.

The results of econometric testing for Hypotheses 1 and 2 regarding the role of pricing in GVC resilience are presented in Table 2. Columns 1–5 display the results for GVC resilience during the COVID-19 pandemic in 2020, while Columns 6–10 cover the resilience observed during the sanctions shock of 2022. The findings indicate that when product prices are determined by the market, firms are more likely to maintain their exports during both shocks, demonstrating higher GVC resilience. Specifically, such firms have a 6.2–7.3% higher probability of preserving exports, depending on the specification. These results confirm Hypothesis 1. Conversely, when prices are regulated by the state, firms face a significantly lower likelihood of sustaining exports — by 12.1–20.8%, depending on the specification and the type of shock. This provides support for Hypothesis 2, emphasizing the negative role of government price intervention in GVC resilience.

Our analysis reveals that GVC resilience is positively associated with larger firm size, the possession of international quality certifications, and firms that report higher technological production levels relative to foreign counterparts. These findings align with existing views that more competitive firms are better positioned to build resilient global value chains. Additionally, access to credit appears to enhance GVC resilience, likely due to greater liquidity reserves compared to other firms under equal conditions. Finally, we find that state ownership in a firm’s equity structure negatively affects GVC resilience, corroborating Hypothesis 2 that government interference in pricing adversely impacts resilience.

Table 3 presents the econometric testing results for Hypotheses 3 and 4, which focus on the role of export structure in GVC resilience. Columns 1–2 provide results for the COVID-19 shock in 2020, while Columns 3–4 pertain to the 2022 sanctions shock. The results indicate that the number of export markets positively influences GVC resilience. Specifically, an increase of one export market (country or region) raises the probability of maintaining exports during shocks by 19.9–24.5%, depending on the specification. This confirms Hypothesis 3. Moreover, single-product firms are less likely to exhibit GVC resilience under similar conditions, with their probability of maintaining exports being 4.5–5.8% lower during shocks. This finding supports Hypothesis 4.

Until recently, the prevailing concept in the development of GVCs centered on maximizing efficiency and minimizing costs as the cornerstone of competitiveness. However, the COVID-19 pandemic prompted a paradigm shift, underscoring the critical importance of flexibility and adaptability for companies and entire supply chains.

Today, several factors are amplifying risks and reducing predictability in the global economy. These include growing regionalization, escalating trade wars, and the proliferation of sanctions. In this context, evaluating the factors that enhance the resilience of firms within GVCs to external shocks has gained particular importance.

Export resilience is influenced by both price and non-price factors that shape a firm’s competitiveness. Non-price factors, such as product quality, technological sophistication, and brand reputation, have a positive impact on the continuation of exports during external shocks. Our findings reveal that Russian firms with ­advanced production technologies and international quality certifications were more likely to maintain exports during both the 2020 COVID-19 pandemic and the 2022 sanctions period. This aligns with the broader literature on the role of technological­ capabilities and quality standards in enhancing firms’ export performance and resilience to external shocks (see, for instance, Pereira et al., 2022; Regis, 2018).

During crises, when operational conditions are disrupted and costs often rise, access to financing becomes a crucial factor in sustaining competitiveness (Gopalan and Reddy, 2023). Importantly, it is not only the availability of credit during crises that matters, but also whether the firm’s business model has historically relied on external financing, which enhances its financial flexibility.

Another key determinant of export resilience is the extent of a firm’s integration into GVCs. External shocks often disrupt traditional GVCs, prompting their restructuring and necessitating changes to operational models. Consequently, the adaptability of a firm’s GVC participation becomes vital. It is crucial to differen­tiate between the resilience of individual firms within GVCs and the resilience of the chains themselves. Firm-level resilience hinges on flexibility and adaptability, which can coexist with dynamic and rapidly evolving chain structures, including the emergence and dissolution of their links.

Our analysis of Russian firms from 2019 to 2022 demonstrates that GVC resilience is significantly enhanced by flexible positioning in two areas: pricing decisions and diversification of export destinations, product categories, and subcontracting networks.

Under stable conditions, specialized pricing mechanisms, such as transfer pricing, demonstrate effectiveness within GVCs (Vidal and Goetschalckx, 2001). However, during crises, market-controlled pricing proves more adaptable, as it minimizes disruptions and improves the likelihood of sustaining exports. The results of our study on GVC resilience complement other recent research, which indicates that flexible pricing mechanisms assist firms in adapting to external shocks (Hofer et al., 2019; Gupta, 2023). Conversely, attempts to pass on rising­ costs through the chain or reliance on government-imposed price controls diminish­ export resilience. While government interventions in pricing during crises may aim to mitigate negative impacts on the national economy, such measures often exacerbate imbalances at the firm level, particularly during structural crises caused by external shocks.

Flexibility in export control also provides a significant advantage. Firms that diversify geographicly and across product lines are better equipped to redirect exports when specific markets or links in the chain are disrupted. Multiproduct firms, in particular, enjoy greater adaptability, enabling them to adjust subcontracting chains and leverage alternative markets or products. Additionally, firms engaged in backward GVC activities, which utilize imports in the production of exported goods, demonstrate higher resilience despite challenges in securing inputs. Our study demonstrates that product and geographic diversification contribute to GVC resilience, aligning with research on firm resilience. Prior studies highlight the positive role of export diversification in enhancing firm performance (Boehe and Jiménez, 2016; Choksy et al., 2022) and resilience to external shocks (Wagner, 2014; Xuefeng and Yaşar, 2016; Oliveira et al., 2024).

The paper was prepared within the framework of the HSE University Basic ­Research Program.