Abstract
Businesses and governments may have been overconfident in their ability to react efficiently to black swan consequences. COVID-19 levied unforeseen isolation and border closings threatening the survival of global supply chains and the bankruptcy of governments and organizations alike. As a response to this challenge, our proposal takes a real options approach to mitigate supply chain disruptions by developing regional partnerships outside of densely populated areas. Its inherent novelty is twofold: (1) it anticipates survival uncertainties by securing the continued production of goods and services worldwide and (2) it recognizes a change in the relationship’s dynamic between global and regional actors.
Highlights
Societies have learned to anticipate the repercussions of wide-reaching natural and human-made catastrophes for centuries
We call on governments and organizations alike to add a new protocol to their arsenal of governance and managerial practices, namely a real options mindset that can mitigate the costs of future black swan consequences of this magnitude
Few acknowledge that adverse effects will inevitably occur or that they have the capacity to wipe out entire organizations and decimate countries
Summary
Large May result in global system survival tential expansion of a firm’s international boundaries to include regional partnerships outside of densely populated large urban areas, or megacities, would mitigate eventual supply chain disruptions threatening global connectedness. These regional partnerships would enhance an organization’s ability to meet the regional (local) demand for products and services despite global connectedness disruptions during such critical situations.
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