The effect of a geographically dispersed supply base on downside risk: Developing and testing the N-shaped theory |
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| Institution: | 1. University of Essex, Essex Business School, Elmer Approach, Southend-on-Sea SS1 1LW, United Kingdom;2. University of Sheffield Management School, Sheffield S1 4DT, United Kingdom;3. Fatih University, Department of Banking and Finance, 34500 Buyukcekmece, Istanbul, Turkey;4. Fatih University, Department of Management, 34500 Buyukcekmece, Istanbul, Turkey;1. University of Leuven, Belgium;2. EDHEC Business School, France;1. Rutgers University, 1 Washington Park, Newark, NJ 07102, United States;2. Radboud University Nijmegen, PO Box 9108, 6500 HK Nijmegen, The Netherlands;1. University of Calgary, McCaig Chair in Management, Haskayne School of Business, 2500 University Drive NW, Calgary, AB T2N 1N4, Canada;2. Assistant Professor of Strategy and International Business Haskayne School of Business, University of Calgary, Calgary, Alberta T2N 1N4, Canada;3. Associate Professor Stu Clark Chair in Entrepreneurship and Innovation Asper School of Business, University of Manitoba, Winnipeg, Manitoba R3T 5V4, Canada;1. University of Kent, Kent Business School, Canterbury CT2 7PE, UK;2. Bradford University School of Management, Emm Lane, Bradford BD9 4JL, UK;3. Queen''s University, Smith School of Business, 143 Union Street, Kingston, Ontario, Canada K7L 3N6 |
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| Abstract: | Globalisation, and its resultant complexity, has been called the most significant factor in the increase of supply chain risk. In this paper, we investigate the effects of supply base complexity that result from geographic dispersion and how that affects supply chain risk. Informed by several theories, an N-shaped theory for the relationship is hypothesised. A regression analysis that uses survey data from manufacturing firms operating in Finland is utilised to test the hypothesis. Contrary to our hypothesis, we find support for an inverse U-shaped association of supply base complexity due to geographic dispersion and the negative effects of supply risk. The possible causes of the result and how it can be reconciled with the N-shaped theory are discussed. Supply managers are advised to avoid international complexity creeping into supply and to engage in cross-functional discussion about the implications of supply base dispersion. |
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| Keywords: | Internationalisation of supply Global sourcing Geographic dispersion Complexity Supply risk Survey |
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