How Shocks Travel: The Cross-Border Impact of Natural Disasters in Firm Networks

Do the boundaries of the multinational firm shape how shocks propagate through global production networks? We link U.S. Bill of Lading microdata, geocoded natural disaster records, and cross-border ownership data to trace the transmission of exogenous supply disruptions from foreign suppliers to U.S. importers. Exploiting the quasi-random timing and location of natural disasters in a staggered event-study design, we document that disasters abroad generate sharp, persistent export declines at affected suppliers, shocks that propagate downstream, reducing the growth rate of U.S. importers total purchases by up to 25 percentage points. Transmission, however, is far from uniform: non-MNC buyers contract roughly twice as much as importers belonging to global corporations, and intra-firm relationships contract about a third less than arms-length ones. These patterns point to the internal networks of multinational firms as shock absorbers that attenuate and redirect supply-side disruptions, suggesting that firm boundaries are not merely organizational choices but also determinants of macroeconomic resilience.