 Political risk and corporate international supply chainXianhang Qian and Shanyun Qiu Journal of International Money and Finance, 2023, vol. 137, issue C Abstract: This paper examines the effect of countries’ political risk on corporate international supply chain. Using the survey data of firms in 32 countries, we find that political risk decreases firms’ purchasing proportion from foreign suppliers. We also find that the effect is less pronounced for firms with business association membership and whose main market is international, and firms in countries with better institutional environments and higher degree of development. Studies on influencing channels show that political risk decreases corporate international purchasing through the increase in corporate informal payments and the decrease in willingness to apply for import licenses. Finally, we find that the reduced corporate international purchasing accompanied by political risk decreases firms’ capacity utilization, expected sales, and research and development activities. Collectively, our findings provide new evidence on the role of political risk for firms’ international purchasing decisions. Keywords: Political risk; International supply chain; Institutional environment; Foreign supplier; International political economy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:137:y:2023:i:c:s0261560623001006 DOI: 10.1016/j.jimonfin.2023.102899 Access Statistics for this article Journal of International Money and Finance is currently edited by J. R. Lothian More articles in Journal of International Money and Finance from Elsevier |
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