We investigate how U.S. firms adapt their supply chains in China in response to geopolitical risks from the U.S.–China rivalry. We offer a legitimacy-efficiency balancing perspective to understand firm decisions. We hypothesize that to maintain legitimacy with the home government, U.S. firms in strategic industries are more likely than those in non-strategic industries to align with the U.S. government’s derisking strategy by limiting suppliers in China. However, we expect this tendency to weaken for firms with high economic dependence on China. Analyzing firm-level supplier data from 2009 to 2022, we find that the gap in the number of Chinese suppliers between strategic and non-strategic U.S. firms has widened since 2017 (the first Trump administration). Firms in strategic industries maintain fewer Chinese suppliers, potentially reflecting a more cautious approach. This disparity was initially pronounced only among Republican-leaning firms but later extended to firms across the political spectrum under the Biden administration. The gap diminished among firms with greater reliance on China for revenue or supplies, suggesting that efficiency considerations might temper the inclination to align with national strategies. Thus, U.S. firms might seek to balance political legitimacy at home with the economic benefits derived from China when making supplier decisions.
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KK 1114
- Ph.D. (Management), University of Southern California
- B.A. (Economics), Fudan University
Prof. Bo Yang is an Assistant Professor in Management and Strategy at HKU Business School. His research addresses a central question: How can firms effectively engage with various nonmarket stakeholders in external institutional environments—including government agencies, political parties, and activist groups—to manage sociopolitical risks rising from domestic politics and/or geopolitical tensions? By combining insights from strategic management, international business, and comparative politics, he has developed multiple research projects aimed at understanding how firms can achieve better performance by integrating market and nonmarket strategies in an ever-changing sociopolitical landscape. He earned his Ph.D. in Management from the University of Southern California and his B.A. in Economics from Fudan University.
- Strategic Management (HKU, USC)
- Corporate Political Strategy
- Corporate Sociopolitical Activism
- Global Supply Chains
- Political Institutions and Innovation
- “China’s Low-Productivity Innovation Drive: Evidence from Patents Production” (with Yuen Yuen Ang, Nan Jia, and Kenneth G. Huang), Comparative Political Studies. https://doi.org/10.1177/00104140231209960
- “Move to Success? Headquarters Relocation, Political Favoritism, and Corporate Performance” (with Shuo Chen and Xun Yan), Journal of Corporate Finance, 64, 101698. https://doi.org/10.1016/j.jcorpfin.2020.101698
Research Assistant (Remote or On-Site)
I am seeking motivated Research Assistants to work with me on various research projects. This role is ideal for individuals with an interest in Strategy or firm-level Economics research. Strong English proficiency is essential. Analytic skills (e.g., Stata) are preferred but not mandatory. Tasks will be matched to your current skill set. And I’m happy to offer guidance to enhance your research skills. Undergraduates or Master’s students who aim to pursue a doctoral degree are particularly recommended to apply.
If you are interested, please send your latest CV to my email.