How Does Industrial Relocation Reshape Industrial Chain Resilience? A Theoretical Analysis Based on Complex Production Networks
Year: 2026
Type: article
Abstract: Industrial relocation reshapes both the geography of production and the input relationships linking firms, with implications for delivery under regional disruptions. We develop a directed production-network model in which critical suppliers may exit as orders are redirected. Resilience is assessed by expected maximum deliverable output and the probability of failing to meet a minimum delivery target across disruption states. The two-region model shows that geographic dispersion alone need not improve either measure. Following the exit of an incumbent supplier, both measures improve only if the destination can meet the target independently and the expected location gain exceeds the loss of inputs at the origin. A privately profitable relocation decision may nevertheless reduce deliveries across the production network. Even if the final configuration is more resilient, firms remaining at the origin may be unable to finance supplier retention until an independent production path is operational at the destination, creating a temporary supply gap. A three-stage numerical example further shows that moving the same share of assembly capacity can produce opposite resilience outcomes under different upstream production arrangements. The results point to the importance of independent delivery capacity, the continued operation of critical suppliers, and coordination between relocation and changes in production relationships.
Source: Economics and Public Policy
DOI: 10.63313/epp.9059
Authors: Yanzhao Yin, Caiyuan Guo, Changbao Qin
Institution: Hunan University of Science and Technology
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W7225609713