Interactions Between Cybersecurity and International Trade: A Systematic Framework

57 Pages Posted: 15 Apr 2019

See all articles by Keman Huang

Keman Huang

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Stuart Madnick

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Simon Johnson

Massachusetts Institute of Technology (MIT) - Entrepreneurship Center; National Bureau of Economic Research (NBER)

Date Written: November 1, 2018

Abstract

Issues of international trade policy have gained increased attention while cybersecurity has not been a key issue for trade policy until recently. Cybersecurity concerns have presented significant challenges, and cybersecurity-related allegations have become a major source of growing commercial disputes. The future of cybersecurity in international trade will shape not only cyberspace for the countries directly, but also the broader globalized society. However, it is still not clear how cybersecurity and international trade can impact each other, whether the current implemented policies can sufficiently resolve problems, and what can be done to retune the negative impacts of cybersecurity concerns on international trade. To investigate these influences, this paper uses real-world case study, in-depth domain subject expert interviews and workshop practices to develop a systematic framework to understand the relations between cybersecurity concern and international trade. We focus on the different types of cybersecurity concerns, national and organizational actions for cybersecurity concerns and global supply chain management. From these we identify three scenarios (regulation compliance scenario, supply chain strategy scenario and geopolitical scenario) and three mechanisms (the gap between national cybersecurity concerns, public-private cybersecurity management and supply chain risk management) which represent the interaction between cybersecurity concern and international trade. This study reveals that cybersecurity concerns in international trade are not just a regulation compliance issue but should be considered a business strategy issue and geopolitical issue. More importantly, to return the current “tit for tat” circle, businesses should not only passively react to cybersecurity concerns in international trade context, but need to actively involve themselves in cybersecurity concerns mitigation and policy implementation procedures. In this way, cybersecurity concern pressure can even be used to improve the global supply chain and create competitive advantage.

Suggested Citation

Huang, Keman and Madnick, Stuart E. and Johnson, Simon, Interactions Between Cybersecurity and International Trade: A Systematic Framework (November 1, 2018). MIT Sloan Research Paper No. 5727-18. Available at SSRN: https://ssrn.com/abstract=3370562 or http://dx.doi.org/10.2139/ssrn.3370562

Keman Huang

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

77 Massachusetts Ave. E62-663
Cambridge, MA 02142
United States

Stuart E. Madnick (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

E53-321
Cambridge, MA 02142
United States
617-253-6671 (Phone)
617-253-3321 (Fax)

Simon Johnson

Massachusetts Institute of Technology (MIT) - Entrepreneurship Center ( email )

United States
617-253-8412 (Phone)
617-258-6855 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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