Econometric Analysis of Geopolitical Risk Hedging Strategies in Supply Chains

Abstract

Geopolitical uncertainty has emerged as a critical challenge for globally integrated supply chains due to trade wars, sanctions, regional conflicts, export restrictions, and political instability. These disruptions increasingly affect procurement efficiency, logistics continuity, operational flexibility, and organizational profitability across industries. This study examined the impact of geopolitical risk exposure on supply chain performance and evaluated the effectiveness of managerial hedging strategies in strengthening organizational resilience under volatile international conditions. The research adopted a quantitative and explanatory design grounded in managerial economics and econometric modeling. Data were collected from 328 supply chain executives and logistics professionals representing manufacturing, logistics, electronics, retail, pharmaceuticals, and energy sectors. The study employed correlation analysis, multiple regression, Structural Equation Modeling, mediation analysis, and moderation analysis using SPSS, STATA, and SmartPLS/AMOS. The findings revealed that geopolitical risk exposure exerted a significant negative effect on supply chain performance (β = −0.426, p < 0.001), while hedging strategies positively improved resilience and operational continuity (β = 0.351, p < 0.001). Supply chain resilience also demonstrated a strong positive influence on organizational performance (β = 0.417, p < 0.001), whereas digital risk monitoring significantly enhanced responsiveness and adaptability (β = 0.228, p < 0.001). The regression model explained 69.2% of the variance in supply chain performance (R² = 0.692). Furthermore, resilience partially mediated the relationship between hedging strategies and organizational performance through an indirect effect of 0.174. The results further indicated that technologically advanced and larger firms derived greater benefits from resilience investments and hedging mechanisms. Electronics and semiconductor industries reported the highest geopolitical risk exposure (Mean = 4.41), whereas pharmaceutical firms demonstrated the highest resilience capability (Mean = 4.12). As a result, the study highlights the practical importance of supplier diversification, regionalization, inventory buffering, reshoring, and digital monitoring systems in improving resilience, competitiveness, and long-term sustainability under increasing geopolitical fragmentation.