Investment Ties as Supply Chain Signals: Leveraging Reciprocal and Triadic FDI Networks to Optimize Multi-Tier Sourcing, Bidirectional Logistics Corridors, and Shock-Resilient Regionalization
DOI:
https://doi.org/10.37591/njorm.v9i1.1796Keywords:
Exponential random graph models, foreign direct investment, global production networks, network theory, risk management, supply chain networksAbstract
Global supplier networks are increasingly influenced by cross-border foreign direct investment (FDI), which shapes how sourcing relationships emerge, concentrate, and evolve across multiple supply chain tiers. This study reframes an FDI-based network perspective as a strategic decision-support tool for multi-tier supply chain configuration and risk governance. By applying a count-based network modeling approach, the research interprets reciprocal investment ties as indicators of dependable two-way logistics channels and interdependent supplier–buyer relationships. In contrast, transitive connections – where investment links close through shared partners – are used to identify industrial clustering that can simultaneously enhance operational resilience and amplify systemic disruption risks. The proposed framework combines traditional gravity-based market factors with endogenous network dynamics to explain how investment relationships diffuse across production systems. This integration allows managers to anticipate how structural investment patterns influence supplier reliability, coordination efficiency, and geographic concentration. The findings indicate that mutually reinforced investment ties are associated with lower onboarding costs and smoother coordination for both upstream and downstream flows. However, highly interconnected triadic structures, while offering scale efficiencies and knowledge spillovers, also increase vulnerability to cluster-wide shocks. From a managerial perspective, the framework enables informed portfolio rebalancing by highlighting locations that combine strong market fundamentals with manageable levels of network closure. Such insights support strategic decisions related to supplier diversification, dual sourcing, nearshoring, and buffer placement. Overall, the study provides actionable guidance for aligning procurement, logistics, and financial strategies to reduce spillover risk while maintaining access to specialized production capabilities.
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