Rethinking liability of origin and network strategy in geopolitical decoupling: Insights from the global semiconductor industry

This study examines how geopolitical policy shifts reshape international business networks in an era of geopolitical decoupling. We conceptualize a new, geopolitical form of liability of origin (LOR) as a critical challenge confronting firms in their internationalization processes. Building on this premise, we develop a theoretical framework that links the macro-level geopolitical environment (e.g., decoupling policies) to firm-level network interactions and the resulting heterogeneous exposures to geopolitical liability of origin (LOR). These firm-level dynamics, in turn, generate system-level network effects that either sustain or moderate geopolitical decoupling. Underlying the moderating effect is a feedback mechanism through which imbalanced and misaligned policies become attenuated, as geopolitical decoupling generates escalating costs for global business networks, including third-party actors that function as critical bridges between rival-country networks. Drawing on Business Network Theory and Structural Hole Theory, we offer new insights into the network strategies that firms can adopt, such as reconfiguring their ties, adjusting the depth and frequency of interactions, and deploying flag-of-convenience signals, to mitigate geopolitical LOR, with particular attention to the semiconductor industry. We further develop a set of propositions that form the study's core theoretical contributions, integrating business network perspectives with a detailed analysis of global semiconductor dynamics.