An exploration of factors influencing the choice of commodity price risk mitigation strategies |
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| Authors: | Barbara Gaudenzi George A. Zsidisin Janet L. Hartley Lutz Kaufmann |
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| Affiliation: | 1. Department of Business Administration, University of Verona, Italy;2. Department of Supply Chain Management and Analytics, School of Business, Virginia Commonwealth University, Richmond, VA 23284, USA;3. Department of Management, College of Business, Bowling Green State University, Bowling Green, OH 43403, USA;4. SCM Group, WHU – Otto Beisheim School of Management, 56179 Vallendar, Germany |
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| Abstract: | Most firms are exposed to price volatility associated with commodities, which can significantly affect the price paid for raw materials, energy, packaging, shipping, and component purchases. Commodity price risk represents the financial, operational and informational effects of commodity price volatility (CPV). The purpose of this paper is to contribute to the supply chain risk management literature by providing a taxonomy of commodity price risk mitigation strategies and factors that may influence the adoption of these strategies. A qualitative study was conducted using a grounded theory approach, based on case studies of companies with home operations in Italy, Germany, and the US. The paper provides some initial evidence for theory and practice as to: 1) how firms can mitigate the risk from CPV by implementing various sourcing, contracting, and financing strategies; and 2) the influence of commodity/product factors, buying organization factors, supply chain factors, and external environment factors on strategy capability and choice. |
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| Keywords: | Commodity price volatility Supply risk Risk mitigation strategies Qualitative research Grounded theory |
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