COVID‐19 and Alternative Conceptualisations of Value and Risk in GPN Research

The COVID‐19 pandemic represents a major disturbance that has rippled across the world’s population, states, economy, and central nervous system or global production networks transforming the traditional roles of states, firms, individuals/consumers, and geographies of production. This paper offers a critical and context‐based approach to understanding globalization and localization by challenging the conceptualization of ‘value’ and ‘risk’ within the current global production networks framework as well as identifying key operational strategies in risk management and national security. An analysis of the adaptation strategies of the GPNs of 91 companies identifies the role played by four different forms of value in configuring production networks. This is to balance ‘economic value’ with non‐price‐based sources of value and alternative values. The analysis underscores the critical role of the state in ensuring national and human security as well as its increasing power as a key actor in GPNs and the global economy. COVID‐19 is a call for exploring the relationship between profit and risk in the management of global supply chains or global production networks (GPNs). The existing literature places too much emphasis on cost versus value defined as profit in the configuration of GPNs. COVID‐19 has disrupted GPNs highlighting that, for some firms, too much emphasis has been placed on cost control rather than on balancing risk versus reward. This paper explores 91 American companies focussing on the relationship between risk and value. There are two key contributions. First, companies are reconfiguring their GPNs in response to alterations in tariffs. For 21% of firms these responses include production localisation. During COVID‐19, production location played an important role in health and national security. Second, three additional types of value are identified, including value derived from location and place‐based associations, that play an important role in balancing cost, risk and value in GPNs.