Are interregional linkages associated with firm upgrading in value chains? Governance, multiscalar networks and firm performance in Chile

Although global value chain (GVC) research has largely emphasized the local-global binary, less is known about how interregional linkages and subnational governance structures are associated with firm upgrading. This paper examines how firm heterogeneity, the geographic scope of inter-firm linkages, and governance structures are associated with firm performance in Chile. Using a balanced panel of Chilean firms, we estimate survey-weighted Generalized Estimating Equations (GEE) models to derive population-averaged associations for value-added, profit, and wage productivity, complemented by fixed-effects and random-effects robustness checks. Nine subnational governance structures are constructed by combining three coordination forms (hierarchical, quasi-hierarchical, and market/relational) with three spatial scales (local/intraregional, interregional, and global), enabling identification of how governance operates at different regional scales. Firm size and internal capabilities are the most consistent correlates of performance. Global integration is associated with stronger outcomes across multiple performance dimensions, whereas intraregional customer linkages are particularly associated with higher value added and profit among micro and small firms, underscoring the role of regional production networks for smaller firms. Hierarchical governance at interregional and global scales is associated with the highest value added and profit in GEE estimates; however, fixed-effects estimates do not support equivalent within-firm effects, suggesting these patterns reflect between-firm differences and possible selection into spatially extensive configurations. Greater value capture is not accompanied by proportionate wage productivity gains, revealing a divergence between economic performance and labor efficiency. The findings indicate that the geographic scale of linkages and governance form condition who captures value and where, with implications for territorial inequality in spatially concentrated Latin American economies.