Mitigating Supply Chain Disruption Risks:Structural Pre-Design,Resource Pre-Allocation And Relationship Post-Restoration

With mounting trade disputes,frequenting natural disasters,and spreading COVID-19,the business environment has become increasingly complex and volatile in recent years.The resulting supply chain disruption has become the primary risk of today’s firms,posing a severe challenge to their production and operations.Therefore,it is of great practical and theoretical significance to study the impact of supply chain disruption risk and its mitigation strategies.Although the economic impact of supply chain disruption risk has been widely discussed in the literature,its direct impact on firm operations is still not fully understood.In addition,existing research has reached no consensus on the effectiveness of disruption risk mitigation strategies,and more studies are warranted.To fill these gaps,the current research makes an empirical analysis of supply chain disruption risk,and puts forward two types of risk mitigation strategies,i.e.,proactive and reactive.Specifically,focusing on how to reduce the negative impacts of supply chain disruption risk on firm operations,this research explores the effects of inter-organizational supply chain structure design and intraorganizational slack resource allocation strategies from a proactive perspective,and the effects of inter-organizational relationship restoration strategies from a reactive perspective.The following three studies are conducted:(1)Based on the relational view and resource dependence theory,Study One investigates the effectiveness of supply chain structure design(i.e.,customer concentration versus customer diversification)in mitigating supply chain disruption risk from a proactive perspective.Using the level of export trade friction as a proxy for the demand disruption risk,this study empirically examines the impact of disruption risk on the firm’s operational efficiency as well as the moderating effect of customer structure characteristics(i.e.,customer concentration).(2)Drawn on the organizational information processing theory,Study Two analyzes the value of internal slack resources in mitigating the impact of disruption risk from a proactive perspective.Using the severity of the COVID-19 epidemic as a proxy for supply chain disruption risk,this study examines the moderating effects of absorbed and unabsorbed slacks on the relationship between disruption risk and operational efficiency.The three-way moderating role of supplier structure characteristic(i.e.,supplier concentration)is also tested.(3)Grounded on the complexity theory and from a reactive perspective,Study Three explores the conditional effectiveness of inter-organizational relationship restoration strategies after supply disruptions.Using qualitative comparative analysis of questionnaire data from Chinese firms,this study identifies the complex interaction between suppliers’ response strategies and a range of situational factors on the inter-organizational relationship continuity.The results reveal several valuable findings.(1)The direct impact of supply chain disruption risk on firm operations:There is an inverted U-shaped relationship between the demand disruption risk and a firm’s operational efficiency.That is,a firm’s operational efficiency will be negatively affected by a higher demand disruption risk,while exposure to a lower demand disruption risk can stimulate the firm to improve its operations.(2)The effectiveness of supply chain structure design strategy:Customer concentration can moderate the inverted U-shaped effect of demand disruption risk on operational efficiency.Specifically,when the demand disruption risk is at a lower level,customer concentration may enhance the positive effect of this risk on operational efficiency.However,when the demand disruption risk is at a higher level,customer diversification is more conducive to reducing the negative impact of this risk on operational efficiency.(3)The effectiveness of slack resource allocation strategy:Both absorbed and unabsorbed slack resources can moderate the impact of supply chain disruption risk on a firm’s operational efficiency.Specifically,with more slack resources,a firm’s operational efficiency is less negatively affected by supply chain disruption risk.Moreover,the moderating effect of unabsorbed slack is stronger when suppliers are diversified.(4)The effectiveness of inter-organizational relationship restoration strategies:After supply disruptions,suppliers can use verbal and/or substantive responses to repair inter-organizational relationships,thus ensuring the stability of firm operations.Notably,their effectiveness is influenced jointly by the severity of the supply disruption,the B2B buyer’s attribution of the disruption event,and the B2B buyer’s dependence on the supplier.This research contributes to the literature in several aspects.(1)This paper reveals the direct effect of supply chain disruption risk,namely the non-linear impact of demand disruption risk on a firm’s operational efficiency.Hence,it enriches the literature on the consequences of supply chain disruption risk.(2)The finding of the effectiveness of supply chain structure design,i.e.,the positive role of customer diversification under high demand disruption risk,extends the supply chain disruption risk management theory from the resource dependence perspective.(3)By revealing the positive roles of slack resources under disruption risk and their boundary condition,this research not only verifies the logic of organizational information processing theory but also extends the literature on the mechanism of action of slack resources.(4)This research provides a more comprehensive perspective into understanding inter-organizational relationship restoration after supply disruptions,which not only enriches the disruption risk management literature based on the complexity theory but also provides new empirical evidence for inter-organizational trust repair.This research provides practical guidance for supply chain structure design and slack resource allocation under the global supply chain disruption risk,and also renders suggestions on how to repair inter-organizational relationships after supply chain disruptions.