This paper examines how multinational enterprises (MNEs) reconfigure their global value chains (GVCs) in response to global disruptions, focusing on the US-China trade war and COVID-19. Global disruptions compel MNEs to relocate some of their value chain activities and reconfigure their GVCs to stem its adverse impacts. However, in doing so, MNEs face a reactivity-resiliency tradeoff that has not been examined in the literature thus far. Thus, we theorize and empirically investigate how MNEs’ responses vary systematically across industries of varying technological intensity. We argue that MNEs' response to global disruptions significantly depends on the technological intensity in their affiliate industry because it affects the complexity of their value chain activities (VCAs) and the structure of their GVCs. The higher technological intensity of MNEs increases their reliance on tacit knowledge and increases the interdependence between their VCAs. In turn, MNEs need high levels of relational capital, i.e., have more interfirm and intrafirm connections in their GVC networks. Lower knowledge intensity of MNEs, on the other hand, means low levels of interdependence between their VCAs and less reliance on tacit knowledge. Such MNEs have relatively simpler GVCs and lower reliance on relational capital. The implication is that less knowledge-intensive MNEs react faster to global disruptions but have less resilient GVC network structures, unlike more knowledge-intensive MNEs that respond slowly to disruptions but have more resilient GVC network structures.
