Ripple effect of disruptions on performance in supply chains: an empirical study

Abstract

Purpose: The present study is performed to identify the propagation mechanism of the ripple effect as well as examine the simultaneous impact of risks on supply chain (SC) performance. Design/methodology/approach: A theoretical framework with many hypotheses regarding the relationships between SC risk types and performance is established. The data are collected from a large-scale survey supported by a project of the Japanese government to promote sustainable socioeconomic development for the Association of Southeast Asian Nations (ASEAN) region, with the participation of 207 firms. Structural equation modeling (SEM) is used to test the hypotheses of the theoretical framework. Findings: It is indicated that human-made risk causes operational risk, while natural risk causes both supply risk and operational risk. Furthermore, the impacts of human-made risk and natural risk on performance are amplified through operational risk. Research limitations/implications: This study is one of the first attempts that identifies the propagation mechanism of the ripple effect and examines the simultaneous impact of risks on performance in construction SCs. Originality/value: Although many studies on risk management in construction SCs have been carried out, they mainly focus on risk identification or quantification of risk impact. It is observed that research on the ripple effect of disruptions has been very scarce.