Risky Suppliers or Risky Supply Chains? An Empirical Analysis of Sub-Tier Supply Network Structure on Firm Performance in the High-Tech Sector
| Autor: | Ravi Anupindi, Jun Li, Yixin (Iris) Wang |
|---|---|
| Rok vydání: | 2015 |
| Předmět: |
Structure (mathematical logic)
Supply chain risk management History Polymers and Plastics Supply chain High tech Industrial and Manufacturing Engineering Standard deviation Empirical research Supply network Business Metric (unit) Business and International Management Marketing Industrial organization |
| Zdroj: | SSRN Electronic Journal. |
| ISSN: | 1556-5068 |
| DOI: | 10.2139/ssrn.2705654 |
| Popis: | Past research in supply chain risk management has focused on the interactions between buyers and their immediate suppliers and/or assumed independence of risks imposed by these suppliers. However, supply network structure may induce inter-dependency of risks due, for example, to overlapping sub-tier suppliers. This paper empirically studies the prevalence of overlapping sub-tier suppliers and their impact on financial performance for firms in the high-tech sector. Using firm-level supplier-customer relationship data, we find that on average 20 (2.3) percent of tier-2 suppliers are shared by at least two (five) tier-1 suppliers. We also find that the risk, measured as stock return volatility, of the focal tier-0 firm is positively associated with common tier-2 supplier risk, and the association is stronger for suppliers with a higher degree of tier-2 commonality. To disentangle the impact of risky supply network structure from risky tier-2 suppliers, we define two network metrics, viz., diamond ratio and cosine commonality score. We find that a one standard deviation increase in each of these metric leads to an increase in standard deviation of 0.58 and 0.41 respectively in tier-0 firm's risk. Our results reveal substantial unmanaged supply chain risks due to overlapping sub-tier suppliers, and highlight the need for firms to increase visibility into their extended supply network. |
| Databáze: | OpenAIRE |
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