How firms navigate de-risking regimes

Ideas about the global economy in the West are amidst a paradigm shift. Shared beliefs in a virtuous cycle
of tighter economic integration, increased global prosperity, and strengthened common security are
increasingly being replaced by fears that economic interdependence has morphed into a tool for
projections of power and coercion (Farrell and Newman 2019). The neoliberal global order is seemingly
crumbling (Gerstle 2022), giving way to a new age of “unpeace” where economic interdependencies are
understood as potential vulnerabilities (Leonard 2021). In an effort to “de-risk” and protect securityrelated industries and reduce vulnerabilities on rival states, Western governments are establishing export
control, investment screening, and national industrial policy – as reflected notably in the US Inflation
Reduction Act (IRA) and the EU´s European Economic Security Strategy.
However, while the return of the state and the emergence of the “Economic Security State” (Newman and
Farrell 2023) is palpable, the actual task of de-risking overwhelmingly falls to private firms, whose
supply chains, investments, and exports are affected. The point of departure for DERISK is that despite
firms´ importance, we have very little systematic knowledge about how firms behave in response to
signals and regulation from governments about de-risking. We know, for example, that the
implementation of de-risking policies is costly and might undermine the competitive posture of
businesses in the global economy (Attinasi et al. 2023). Consequently, private companies increasingly
find themselves in the crossfires between conflicting public pressures and shareholder demands. But we
do not know how firms assess and act on government signals, what determines their approach to calls for
de-risking, and whether there are systematic patterns in how different types of firms respond.
DERISK aims to deliver such systematic knowledge, thus also contributing to a broader debate about a
seeming paradox in state market relations: when the state become more assertive and intervenes in the
market in the name of security and de-risking, it simultaneously becomes more, not less, dependent on the
very firms who make up that market to do its bidding. Concretely, DERISK will develop an integrated
research design with three overarching steps. Step 1 systematically maps variation in emerging de-risking
regimes, focused on the US, EU, and select European countries. Step 2 identifies variation in corporate
responses and strategies. Step 3 investigates the interactions between governments and firms, zooming in
on ‘who rules’ in the new world of economic security. In so doing DERISK aims to provide systematic
knowledge on firm behavior in response to de-risking signals from governments, identify key
determinants of variation in firm behavior, and develop new insights on the evolving features of statemarket relations under conditions of a risk-focused economic policy