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The limits of local laws in global supply chains: Cutting ties or “edutrading” procurement partners?

Hendrik Keilbach et al.

Journal of Development Economics2026https://doi.org/10.1016/j.jdeveco.2026.103804article
AJG 3ABDC A*
Weight
0.50

What the paper says

We study the procurement patterns of non-listed firms and examine how these often-overlooked, yet pivotal players in global supply chains adjust their sourcing when they anticipate accountability for externalities beyond their organizational boundaries. Using granular customs data and a surprise information release about the German Supply Chain Due Diligence Act, product-level regressions reveal that importing firms are 3.5 percentage points less likely to source a product from countries where the relevant production sector exhibits elevated ESG-related risks, suggesting that firms tend to cut ties with higher-risk suppliers. The effects are concentrated among firms with well-diversified supplier networks for a product and higher profitability, suggesting they have the necessary flexibility to respond quickly to anticipated regulatory pressure. Our findings suggest that mandates requiring firms to incorporate broad sustainability considerations into their operational decisions may have limits, particularly for non-listed firms. • Can regulation mandating firms to “edutrade” suppliers be effective? • Accountability for supply chain ESG risks linked to dropping risky suppliers. • Diversified supplier network and high profits allow firms to adjust sourcing. • Big Four-audited firms show stronger procurement adjustments. • Potential limits of supply chain due diligence mandates for non-listed firms.

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https://doi.org/https://doi.org/10.1016/j.jdeveco.2026.103804

Or copy a formatted citation

@article{hendrik2026,
  title        = {{The limits of local laws in global supply chains: Cutting ties or “edutrading” procurement partners?}},
  author       = {Hendrik Keilbach et al.},
  journal      = {Journal of Development Economics},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1016/j.jdeveco.2026.103804},
}

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.