The Impact of Biodiversity Risk on Supply Chain Strategy: Evidence From the Chinese MNEs

ABSTRACT Biodiversity risk (BR) poses a significant challenge to the supply chain strategies of multinational enterprises (MNEs). This study examines the impact of BRs in both home and host countries on the supply chain strategies of Chinese A‐share listed MNEs from 1999 to 2023. We first identify the key drivers of supply chain strategy using the least absolute shrinkage and selection operator (LASSO) machine learning algorithm. Subsequently, partialing‐out LASSO linear regression (POLR) and double selection LASSO linear regression (DSLR) techniques are employed to analyze the effect of BR on supply chain decision‐making. The results indicate that BR in the home country encourages MNEs to adopt more diversified supply chains, whereas BR in the host country promotes supply chain concentration (SSC). Additionally, institutional and geographic distances weaken the positive effect of host country BR on SSC, while cultural distance does not significantly influence this relationship. The findings guide MNEs to manage their global supply chains in the face of BR, with particular attention to the institutional and geographic distances between their home and host countries.