Transmission of geopolitical shocks to firm behavior: a synthesis and integrative model

Abstract This study examines the transmission of geopolitical shocks to firm behavior. While previous research has primarily focused on the direct relation between shocks and firm behavior, we provide a more nuanced understanding by conceptualizing geopolitical shocks as disruptions that evolve through explicit and implicit channels to influence firm behavior. Based on a systematic review of 159 articles, we identify the key mechanisms that transmit the impacts of a geopolitical shock. Our findings reveal that geopolitical shocks manifest in institutions and their lower-level mechanisms, and such transmission is neither uniform nor random. Furthermore, we categorize firm behavior into distinct response modalities. The resulting integrative model formalizes geopolitical shocks as dynamic processes in which firms are both subjects and agents within the institutional environments in which they compete. We offer several promising avenues for future research in international business theory and policy.