Strategic decisions by Canadian and U.S. firms in a post-9/11 regulatory environment
Vance, Anneliese Louise
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This dissertation investigates possible economic geographic effects of a changing regulatory environment. Specifically, it addresses the effects of border-hardening, antiterrorism legislation on cross-border supply chains in a Canada-U.S. borderland region. Following September 11, 2001, the U.S. and Canadian federal governments increased restrictions on materials and people crossing the border. Antiterrorism regulations have introduced costly compliance requirements, clearance delays, and unpredictable border wait times for companies conducting business across the international border. A previous study indicates that firms with cross-border supply chains may be considering geographic strategies in order to avoid or address changing border requirements. This study follows twenty-six firms that had previously indicated interest in geographic strategies. Key questions of interest include (1) How do decision-makers in borderland-located firms perceive the changing environment? (2) How are firms affected by regulatory shifts? (3) How have firms dealt with initial effects of new regulations? (4) What future trends are expected in the changing regulatory environment? And (5) How are firms preparing for anticipated regulatory changes? Findings suggest that firms are quickly adjusting to new security requirements and are improving communication channels throughout cross-border supply chains to stay abreast of new developments. Preparedness, however, takes a number of different forms. While most firms seem prepared to deal with the current regulatory environment, a number of firms may still be vulnerable to the possibility of unforeseen future disruptions. Findings from this study have important implications for future corporate behavior, North American cross-border supply chains and trade, and economic geography theory. While all firms in this study demonstrated resilience to some degree, several are satisfied enough with the current state of the border, that they have abandoned future plans. In the event of a future border disruption or tighter regulatory environment, these firms may find themselves at a disadvantage to better prepared and cross-border competitors. North American cross-border supply chains and trade are still generally healthy for the time being. However warehousing decisions by individual firms in international supply chains signal a return to just-in-case systems as a consequence of international border controls. Implications for economic geographic theory and cross-border commerce indicate that Canadian firms in cross-border regions continue to focus on access to the U.S. economy. However, border disruptions threaten the viability of local cross-border contracts. Geographically distant customers are less likely to be disrupted by border delays than local cross-border customers.