Rethinking Boundary and Location Decisions: Lessons from Covid-19 Pandemic

In recent decades, multinational corporations (MNCs) has evolved from highly internalized organizations to orchestrators of global value chains (GVCs) transforming MNCs into global factories. This operating model has enabled MNCs to become leaner and more efficient. However, the heavy reliance on globally dispersed, efficiency-driven GVCs has made the modern MNE fragile to supply shocks and supply chain disruptions. The COVID-19 pandemic had exposed the risks and vulnerabilities of this model of doing business. However, the COVID pandemic is only the latest in a series of discontinuous risks, that is, episodic events that are difficult to anticipate or predict but have substantial impact on a firm and its operating environment if happening. The purpose of this article is to reflect upon the impact of the of pandemic on IB and draw lessons from this experience in terms of how to avoid or manage similar discontinuous risks in the future. We draw upon the growing literature on GVCs and supply chain risk management to offer suggestions that might help MNCs develop better preparedness for future disruptions which affect the operations and stability of MNCs and GVCs.