Global Supply Chains in Response to COVID-19: Adopting a Real Options Mindset

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.