Sourcing governance and de-risking strategies in Europe: a comparative study of Germany, Italy and Spain

The risks associated with conducting business internationally have increased significantly in the recent years due to escalating geopolitical tensions. In this context, extremely long and complex supply value chain configurations are unlikely to hold in the event of a disruption, pushing firms to engage in de-risking strategies. Using a common set of questions in the national business surveys conducted in Germany, Italy and Spain in 2023, this paper aims to test whether and to what extent the type of governance mode in sourcing inputs from abroad influences the decision to engage in de-risking activities. Our findings indicate that relations perceived as more complex and less substitutable are typically the first targets of derisking efforts. This finding contrasts with the notion that arm's length transactions are more likely to be revised due to their lower cost and ease of reconfiguration.