Reading on and between the lines: risk identification in collaborative and adversarial buyer–supplier relationships

Abstract

Purpose This paper aims to investigate how supply chain risks can be identified in both collaborative and adversarial buyer–supplier relationships (BSRs). Design/methodology/approach This research includes a multiple-case study involving ten Chinese manufacturers with two informants per organisation. Data have been interpreted from a multi-level social capital perspective (i.e. from both an individual and organisational level), supplemented by signalling theory. Findings Buyers use different risk identification strategies or apply the same strategy in different ways according to the BSR type. The impact of organisational social capital on risk identification is contingent upon the degree to which individual social capital is deployed in a way that benefits an individual’s own agenda versus that of the organisation. Signalling theory generally complements social capital theory and helps further understand how buyers can identify risks, especially in adversarial BSRs, e.g. by using indirect signals from suppliers or other supply chain actors to “read between the lines” and anticipate risks. Research limitations/implications Data collection is focussed on China and is from the buyer side only. Future research could explore other contexts and include the supplier perspective. Practical implications The types of relationships that are developed by buyers with their supply chain partners at an organisational and an individual level have implications for risk exposure and how risks can be identified. The multi-level analysis highlights how strategies such as employee rotation and retention can be deployed to support risk identification. Originality/value Much of the extant literature on supply chain risk management is focussed on risk mitigation, whereas risk identification is under-represented. A unique case-based insight is provided into risk identification in different types of BSRs by using a multi-level social capital approach complemented by signalling theory.

Supplier-initiating risk management behaviour and supply-side resilience: the effects of interpersonal relationships and dependence asymmetry in buyer-supplier relationships

“…Supplier-initiating risk management behaviours (SIRMB) refers to the extent to which a supplier proactively initiates efforts to better support a buyer's needs and requirements related to risk management. This measure was developed based on the work of Leuthesser (1997) and Fan and Stevenson (2018a). Respondents were asked to indicate to what extent the supplier initiates the behaviours listed in Table III using a 7-point scale (1 = "very unlikely to initiate"; 7 = "very likely to initiate").…”

“…This creates uncertainty, the perception of hidden information, and the suspicion of ulterior motives from partners with diverging interests (Eisenhardt, 1989a). But when a supplier takes deliberate, intentional actions (Zollo and Winter, 2002) and proactively initiates efforts to better understand a buyer's needs and requirements related to risk management (Leuthesser, 1997), it is likely that the buyer will be more proactive in terms of being alert, adapting, and responding to potential supply disruptions (Fan and Stevenson, 2018a).…”

“…Moreover, the distinct information capabilities created through large and diverse interpersonal relationships may encourage suppliers to do favours for buyers in order to support them (Cai et al, 2017). Such favours can take the form of risk management relational behaviours by the supplier, including supplier flexibility, providing assistance in the case of emergencies, changes, or supply problems (Noordewier et al, 1990), and a supplier proactively initiating efforts to prioritise production plans, delivery or service for the buyer in anticipation of potential supply disruptions (Fan and Stevenson, 2018a).…”

“…On the one hand, researchers have found that a set of large and diverse interpersonal relationships positively relates to firm performance, including operational supply risk mitigation (Chowdhury et al, 2019). On the other hand, favours and business support from suppliers, in the form of risk management activities, positively relate to supply-side resilience (Cai et al, 2017;Fan and Stevenson, 2018a). Hence, if interpersonal relationships (both in terms of size and range) positively affect SIRMB (Hypothesis 2 and 3), which in turn affects supply-side resilience (Hypothesis 1), then we can expect SIRMB to transmit the effects of interpersonal relationships onto buying firms' supply-side resilience.…”

The role of collaborative interorganizational relationships in supply chain risks: a systematic review using a social capital perspective

“…Consequently, the review identifies structural capital embedded in CIRs as buyer-led, supplier-led, and joint practices. Throughout the sample of papers, buyer-led practices comprised supplier management including supplier development and supplier performance management (Fan and Stevenson, 2018;Jüttner and Maklan, 2011), and sourcing practices covering sole-sourcing (Waters-Fuller, 1995), single-sourcing (Tukamuhabwa et al, 2015), and multi-sourcing (Chopra and 8 Sodhi, 2004). Supplier-led practices encompassed customer portfolio management (Hua et al, 2011).…”