Risk and Redesign of the Global Supply Chains: A Theoretical Proposal for a Current Reality

Abstract

The role that nowadays global supply chains (GSC) play in determining worldwide flows of both trade and direct investment demands a specific theoretical approach. Thus, the proposed model puts forward that the structure and the complexity of GSC, defined by their length and degree of internationalization, are determined by the set of risks that affect them, so that variations in these risks explain changes in the GSC’s structure. The model explains how the final stage of the GSC’s structural variation process is a result of decisions taken by the firms that actively participate in it, depending on the two basic entrepreneurial decision taking variables, i.e., risk and profitability. 

Keywords:

global supply chains, internationalization, risks, vertical integration, off-shoring, re-shoring, trade flows, foreign direct investment flows

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