Knowledge that Transforms

AbstractIn response to consumers' growing interest in how products are sourced, produced, and distributed, organizations are increasingly transparent about their supply chain sustainability practices. Supply chain transparency (SCT) efforts are intended to signal positive information about the company to consumers but the benefits are often unclear, especially when consumers receive multiple, but mixed signals that include negative events. We draw on signaling theory to explore how consumers develop impressions of a company's products based on different evaluative dimensions: the positive integrity signal of SCT and the negative capability signal of a product recall. The incongruent signal set creates ambiguity for consumers in assessing product quality and subsequent purchase decisions. We develop two scenario‐based experiments to test aspects of interdimensional signal incongruence. Experiment 1 investigates the magnitude of signal incongruity by considering combinations of different levels of SCT and product recall severity. Experiment 2 investigates the temporal effect of the incongruent signals, considering the restorative effect of SCT after a product recall signal has been received. While product recall signals are salient for consumers in shaping perceptions of product quality and purchase intentions across both experiments, we demonstrate the strategic value of SCT as a positive integrity signal to consumers.

AbstractAlthough the supply chain (SC) literature has discussed the influence of the political environment on global SC decisions, the role of political leaders has been overlooked. To fill this research void, we predict and show that the turnover of a country's top political leader (hereafter, “politician turnover”) increases policy uncertainty in the country, which drives multinational corporations (MNCs) to adjust their SC involvement there. We also identify three politician‐related contingency factors: the market‐friendliness of the successor relative to the incumbent, the length of the successor's political career, and corruption in the turnover country. In an analysis of politician turnover events from 2003 to 2018 and the global supplier‐customer relationships of US‐incorporated MNCs, we find that politician turnover causes MNCs to reduce SC involvement (measured as the proportions of an MNC's customers, suppliers, and the transaction volume that are located in the turnover country). The negative effect of politician turnover on SC involvement is exacerbated by corruption in the turnover country, mitigated when the successor has a long political career, and exacerbated when the successor is less market‐friendly than the incumbent; the effect becomes positive when the successor is more market‐friendly than the incumbent.

AbstractNumerous studies have examined the relationship between inventory management and financial performance. However, the focus of such empirical work has primarily been on how a firm's own inventory characteristics affect its performance. Our objective is to extend this body of literature beyond the firm‐level. We draw on inventory theory and resource‐based theories to hypothesize about the effect of supplier inventory leanness on a focal firm's financial performance and how supplier and focal firm inventory leanness interact to affect such outcomes. We test our hypotheses using a large panel dataset of supplier‐focal firm relationships obtained from Compustat's Customer Segment database and aggregated to the focal firm‐quarter level, as well as firm financial information from Compustat's Fundamentals Quarterly database. The econometric analyses provide evidence that supplier inventory leanness influences focal firm financial performance indirectly through the interaction with the firm's own inventory leanness. In particular, our estimation results detail how supplier inventory leanness affects the non‐linearity of the focal firm's inventory leanness‐financial performance relationship and its optimal inventory leanness level. The findings broaden the scope of empirical inventory literature and highlight supplier inventory leanness as an important consideration in firm‐level inventory decision making.

AbstractGovernment trade actions are an increasing source of supply chain risk. This research provides empirical evidence of the stock market reaction to trade actions against a targeted firm on other firms in the targeted firm's supply chain eco‐system. We test our hypothesized stock price effects using the case of the 2018 US government ban on US firms from supplying to ZTE, a Chinese telecommunications manufacturer. We estimate the ban's effects on ZTE's tier‐one US and non‐US suppliers, as well as the upstream and downstream supply chain propagation effects by considering ZTE's tier‐two suppliers and business customers. We also estimate impacts to ZTE's competitors. We find that tier‐one US suppliers experienced a stock price effect of −3.33% following the ban, and the reaction was more negative for those suppliers more dependent on ZTE for revenues. We find a stock price effect on tier‐two suppliers of −0.40%, but an insignificant effect on non‐US tier‐one suppliers. Business customers experienced a stock price effect of 0.66%, and the competitors' stock price effect was 1.34%. The reversal of the ban 4 weeks later resulted in a stock price effect of 1.56% for tier‐one US suppliers, 1.72% for tier‐one non‐US suppliers, and 1.35% for competitors.

AbstractInterorganizational projects often suffer disruptions that require participating organizations to adapt in order to restore project operations. We study the role of communication style in facilitating adaptation to such disruptions. Whereas the literature on interorganizational communication has emphasized communication mode and frequency, we study the content and features of written communication in seven U.K. construction projects. Communication style mattered for adaptation quality in these projects, and we found that several properties of communication style were particularly important for adaptation: cost and information orientation, as well as informality, precision and authenticity. Moreover, managerial slack and organizational reputation were important precursors of communication style. These results provide novel insights into the role of communication style in adaptation to interorganizational project disruptions. We discuss the implications of these insights for research on interorganizational projects in operations and supply chain management.

AbstractWhile the literature tends to take a dichotomous view of supplier‐induced disruptions, we take a continuum perspective: a buyer perceives a disruption induced by the supplier to varying degrees (i.e., attributing varying levels of responsibility to the supplier), thus affecting the buyer's decisions in switching suppliers. By focusing on the recurrent disruptions, we argue that imputed buyers' attributions of responsibility are characterized by disruptions' recurrent nature and locus of causality—whether the disruptions were repeatedly triggered by recurrent events internal or external to the supplier. Furthermore, while previous studies have identified either buyers' attributions of disruptions or suppliers' justice approaches (to resolve disruptions) as independent factors driving buyers' decisions, we integrate attribution and justice theories and investigate their combined effect—how responsibility attributions affect buyers' switching intentions given suppliers' justice approaches. Using three vignette‐based studies of 705 purchasing managers (supplemented by three robustness check studies), we show that distributive justice attenuates the damaging impact of disruptions triggered by suppliers' internal incidents (internal locus) on buyers' switching intentions, whereas procedural and interactional justice are more instrumental in disruptions triggered by external events (external locus). We conclude by offering substantive guidance for suppliers regarding appropriate actions in preserving the relationship.

AbstractRecent research has documented that companies are pursuing a variety of strategies to enhance supply‐chain resilience. This paper examines how managers actually think about resilience strategies, and then analyzes the relationship between operations, supply‐chain characteristics, and the implemented strategies. We define a “Triple‐P” framework that matches resilience strategies to supply‐chain archetypes by examining Product, Partnership, and Process complexity based on interviews of senior supply‐chain executives. These interviews revealed two major influencers of resilience strategy, that is, Homogeneity of internal supply‐chain processes and Integration with other actors in their end‐to‐end supply chains. We found that the supply chains have different resilience requirements, have different ways to achieve resilience (which we conceptualize as “bespoke supply‐chain resilience”), and face different obstacles to resilience. This study aims at initiating a dialogue between supply‐chain scholars and practitioners to support more research for developing an effective supply‐chain resilience strategy.

AbstractMultinational corporations have benefited tremendously from free trade in the past few decades. However, the dynamism of international relations, paired with the global recession, has rekindled the debate over frictionless trade. In this study, we examine how trade friction, created by tariff trade barriers, affects the operational performance of domestic firms which source from the affected countries. We also investigate how various supply chain characteristics and strategies can moderate the impact of such trade friction. Motivated by the 2018 U.S.–China trade war, we conducted a difference‐in‐difference analysis to examine the impact of trade tariffs on performance indicators of U.S. firms with direct supplier connections in China. Specifically, we found that U.S. firms with direct supply partners (i.e., first‐tier suppliers) in China had a worse performance than the U.S. firms without direct supply partners in China in terms of inventory (i.e., days of supply) and profitability (return‐on‐assets). We further found that the negative impacts were more severe for firms with a higher degree of outsourcing, and horizontal and spatial supply base complexity. We discuss the implications for international operations management, supply chain networks, supply risk management, and provide suggestions to supply chain practitioners and trade policymakers.