Terrorism affected regions : the impact of different supply chain risk management strategies on financial performance

Abstract

Purpose: Current geo-political events, such as terrorism and climatologic adversities, have highlighted the potential risks to supply chains (SCs), and their disastrous financial impacts on supply chains. Within supply chains, risk management plays a major role in successfully managing business processes in a proactive manner and ensuring the business continuity and financial performance (FP). The purpose of this study is to explore the supply chain risks and strategies in a terrorism-affected region (TAR), and to examine supply chain risk management (SCRM) strategies and their impacts on FP, including the war on terror (WoT) and its impacts on the local logistics industry. In addition, this study investigates the knowledge gaps in the published research on terrorism-related risk in supply chains, and develops a framework of strategies and effective decision-making to enable practitioners to address terrorism-related risks for SCRM.Methodology: The study initially adopts a novel combination of triangulated methods comprising a systematic literature review, text mining, and network analysis. Additionally, risk identification, risk analysis and strategies scrutiny are conducted by using semi-structured interviews and Qualitative Content Analysis in a TAR. A model of strategies was developed from a review of existing studies and interviews. The model is empirically tested with survey data of 80 firms using fuzzy-set Qualitative Comparative Analysis (fsQCA).Findings: This study reveals a number of key themes in the field of SCRM linked with terrorism. It identifies relevant mitigation strategies and practices for effective strategic decision-making. This subsequently leads to development of a strategic framework, consisting of strategies and effective-decision making practices to address terrorism-related risks that affect SCRM. It also identifies key the knowledge gaps in the literature and explores the main contributions by disciplines (e.g., business schools, engineering, and maritime institutions) and countries.Further, it identifies the SC risks in a TAR, which consist of value streams: disruption risks, operational risks and financial risks. Among these, the emerging risks emcompass terrorist groups’ demand for protection money, smog, paedophilia and the use of containers to block protesters. To mitigate these risks, firms frequently implemented the following strategies: information sharing, SC coordination, risk sharing, SC finance, SC security and facilitation payment. Five strategies out of the six (except facilitation payment) are able to lead to FP, confirmed quantitatively as well. There are various equifinal configurations of SCRM strategies leading to FP. In addition, information sharing acts as a moderator in the relationship between SC security and FP. SC coordination has a mediating role in the relationship between information sharing and SC security capabilities and FP.Research limitations/Contribution: The sample size a limitation of the study, meaning that the findings should be generalized with caution. The most valuable implications is the identification of configurations of strategies that can help managers and policymakers in implementing those findings.Originality/value: No empirical study was found in the SCRM literature that specifically investigates the relationships between the identified strategies and FP with fsQCA, in particular in a TAR context; this study thus fills an important gap in the SCRM literature and contributes empirically

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