Title: Global value chains and liability of international connectivity: MNE strategy post COVID-19

Authors: Sarah McWilliam; Bo Bernhard Nielsen; Constantina Kottaridi

Addresses: University of Sydney, Corner Abercrombie Street & Codrington Street, Darlington, NSW, Australia ' University of Sydney, Corner Abercrombie Street & Codrington Street, Darlington, NSW, Australia ' University of Piraeus, Karaoli & Dimitriou St. 80, Piraeus, Athens, Greece; Hellenic Open University, Aristotelous 18, Patra, Greece

Abstract: The COVID-19 pandemic has impacted the world economy to such an extent that there is now widespread debate about how multinational enterprises (MNEs) may restructure global value chains and potentially retreat from globalisation. This article unpacks the consequences of the pandemic for MNEs and develops a new concept of the Liability of International Connectivity (LOIC). We illustrate how the LOIC affects ownership, location and internalisation advantages and may compromise lead MNE control of supply, production, or distribution due to (1) global value chain (GVC) governance; (2) power asymmetries with nation states; and (3) power asymmetries with suppliers. We further discuss how the sudden exposure of MNE vulnerability in relation to international connections within GVCs may alter MNEs' orchestration of activities and generate new strategic directions in pursuit of more optimal ownership, location and internalisation advantages. Our paper advances understanding of why MNE responses to the COVID-19 pandemic may span a continuum that ranges from minimal change through to extensive reconfiguration of GVC governance and geographic structures.

Keywords: COVID-19; pandemic; liability of international connectivity; global value chain; MNE strategy; internationalisation; GVC governance; OLI.

DOI: 10.1504/EJIM.2023.132812

European Journal of International Management, 2023 Vol.21 No.1, pp.121 - 139

Received: 11 Aug 2020
Accepted: 27 Nov 2020
Published online: 10 Aug 2023 *