Abstract: Do corporate supply chains embed governments’ geopolitical objectives? Exploiting rotations onto the United Nations Security Council (UNSC) as a quasi-natural experiment, we show that U.S. firms significantly increase sourcing from newly elected countries. The increase is unique to U.S. imports, absent for exports, concentrated in products where elected countries lack comparative advantage, and strongest for geopolitical “swing” countries. We identify two channels: policy concessions through trade policy and procurement, and firms’ political incentives to cultivate regulatory goodwill. The sourcing response weakens when supplier switching is costly and is associated with lower operating margins but higher market valuation and lower political risk. Countries receiving larger sourcing increases subsequently exhibit voting and rhetoric more closely aligned with U.S. geopolitical interests.
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