Embeddedness, disruption, and recomposition: Korea–China co-invention under geopolitical shocks

This study examines how geopolitical shocks reshape the country composition of firms’ cross-border R&D collaboration portfolios. Moving beyond the question of whether geopolitical risk reduces international collaboration overall, we develop a portfolio-recomposition perspective, arguing that firms may reallocate collaboration away from politically exposed partner countries while remaining internationally collaborative. Using Korean firms’ China-linked co-invention as the empirical setting, we analyse sequential shocks from the 2016 THAAD crisis and the post-2018 U.S.–China trade-war environment with a firm-year panel of family-deduplicated patent applications from 2000 to 2024. The results show that the THAAD crisis produced the clearest portfolio adjustment: Korea–China collaboration declined, while broader cross-border collaboration did not uniformly collapse. This effect was stronger among firms with deeper China market embeddedness, consistent with a market-political exposure mechanism. Evidence for the trade-war period is more conditional, weakening after accounting for prior THAAD-era adjustment. The study contributes to research on geopolitical risk and international innovation by showing that geopolitical shocks can redirect, rather than simply suppress, cross-border knowledge collaboration.