Adaptive Management Frameworks for Resilient International Trade

Abstract

International trade has long been seen as the most dependable source of improving the economies of both poorer and richer countries; however, recent developments suggest that the current international trading system is now in a prolonged period of structural instability. For instance, between late 2018 and the end of 2024, the global trade system has experienced: 1) The US-China trade dispute; 2) The COVID-19-induced shock to demand and the logistics systems responsible for handling global shipping volume; 3) Russia's invasion of Ukraine, and the numerous sanctions placed on the latter as a result; and 4) A large number of nations affecting the flow of global goods through the implementation of industrial policies (i.e. the US's CHIPS and Science Acts, and the European Union's Carbon Border Adjustment Mechanism). The net result of these events is a global trade system that has become more interdependent and more challenged than at any point since World War II. As a result of these changes, the strategic management literature has responded to this environment by increasing interest on resilience as a fundamental goal of the individual organisation. However, resilience is viewed by many to be a stable characteristic of an organisation; that is, an organisation either possesses resilience or does not [6]. This paper calls for a more comprehensive definition to describe resilience in organisations, and proposes an Adaptive Management Framework (AMF) to identify how organisations can: 1) detect early warning signals of a trade disruption; 2) choose appropriate strategies to deal with the disruption; and 3) continue to evolve the way they conduct operations to adapt to the environment.