Toward A Better Understanding Of Political Risk In The International Supply Chain

Abstract

This study aims to investigate how firms of various sizes in various industries perceive, detect, and mitigate political and legal risk in their international supply chains. Due to the ambiguity of political risk in today's interconnected business environment, companies struggle to find effective ways to handle political disruptions as they inevitably arise. Firms' perceptions of risk and those firms' risk mitigation strategies were determined through a series of structured interviews with supply chain executives with international supply chain experience. The candidates were chosen based on experience, industry, and company size. It was determined that although political risk affects virtually every company with international operations (and even those without), there is still no strategy to detect and mitigate political risk that can be applied to any company's business model, regardless of industry, size, or region in which they operate. This lends itself to the idea that political risk is still a relatively unclear area of research. Future areas of research include a more in-depth investigation into regional discrepancies and the impact that capital structure has on the risk mitigation strategies of firms.