Risk contingencies in the reconfiguration of global value chains
Risk contingencies in the reconfiguration of global value chains
We examine how firms reconfigure global supply chains in response to two forms of risk :internal risk, reflecting firm-level perceptions of political and strategic uncertainty, and external risk, arising from major exogenous shocks. Using a global firm-level panel combining FactSet supplier data with textual risk measures from earnings calls, we analyze adjustments in hori-zontal complexity (number of suppliers) and spatial complexity (geographic dispersion). Firms facing higher internal risk tend to simplify their networks, reducing suppliers and sourcing more regionally, while firms exposed to external shocks—such as the 2011 Japan tsunami,2017 U.S. tariffs, 2018 U.S.–China trade war, and 2020 Brexit—diversify across suppliers and geographies. Internal risk moderates these adjustments, dampening diversification after shocks. The findings reveal that supply chain reconfiguration reflects a micro-level trade-off between efficiency and security, offering new insight into how firms balance coordination costs and resilience in uncertain global environments.
Supply chain diversification, supply chain simplification, firm-level risk, external shocks, supply chain complexity
Dey, Jishu
6fc81b71-20e4-49d5-946d-5f0d65b9f979
Homroy, Swarnodeep
bf9526ca-76e9-4d1f-8b8e-0be867b684f1
Rauf, Asad
4140c39d-f49d-4fb5-9c03-44438bd1bedd
Dey, Jishu
6fc81b71-20e4-49d5-946d-5f0d65b9f979
Homroy, Swarnodeep
bf9526ca-76e9-4d1f-8b8e-0be867b684f1
Rauf, Asad
4140c39d-f49d-4fb5-9c03-44438bd1bedd
Dey, Jishu, Homroy, Swarnodeep and Rauf, Asad
(2025)
Risk contingencies in the reconfiguration of global value chains.
Strategic Management Journal, [9948244].
(Submitted)
Abstract
We examine how firms reconfigure global supply chains in response to two forms of risk :internal risk, reflecting firm-level perceptions of political and strategic uncertainty, and external risk, arising from major exogenous shocks. Using a global firm-level panel combining FactSet supplier data with textual risk measures from earnings calls, we analyze adjustments in hori-zontal complexity (number of suppliers) and spatial complexity (geographic dispersion). Firms facing higher internal risk tend to simplify their networks, reducing suppliers and sourcing more regionally, while firms exposed to external shocks—such as the 2011 Japan tsunami,2017 U.S. tariffs, 2018 U.S.–China trade war, and 2020 Brexit—diversify across suppliers and geographies. Internal risk moderates these adjustments, dampening diversification after shocks. The findings reveal that supply chain reconfiguration reflects a micro-level trade-off between efficiency and security, offering new insight into how firms balance coordination costs and resilience in uncertain global environments.
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Submitted date: 30 October 2025
Keywords:
Supply chain diversification, supply chain simplification, firm-level risk, external shocks, supply chain complexity
Identifiers
Local EPrints ID: 507589
URI: http://eprints.soton.ac.uk/id/eprint/507589
ISSN: 0143-2095
PURE UUID: 76f6238b-7db8-4246-b343-22269a483800
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Date deposited: 15 Dec 2025 17:34
Last modified: 16 Dec 2025 03:11
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Contributors
Author:
Jishu Dey
Author:
Swarnodeep Homroy
Author:
Asad Rauf
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