Managing country disruption risks and improving operational performance: risk management along integrated supply chains

Increasingly complex supply chains and heightened disruption risks are bringing risk management to the forefront of managerial and research efforts. We examine how country disruption risks are related to the adoption of combined risk management and external supply chain integration practices, and how these combinations in turn are related to operational performance. We frame our propositions using information processing theory and complementarity theory. We combine primary data from the 6th International Manufacturing Strategy Survey on 21 countries, and secondary data on country level disruption risks to study these links. Our results indicate that companies in riskier countries, characterized by high operational contingencies risk, natural hazard and terrorism and political instability, use combined arcs of external supply chain integration and risk management practices. Such a combined approach is also related to higher operational performance. The findings suggest to managers that companies adopting risk management practices in combination with external integration achieve best operational results. We extend the arcs of integration concept to include also risk management practices thus showing that holistic risk management approaches along supply chains are positively related to operational performance. The combination of primary and secondary data, as well as the focus on exogenous risks distinguishes our approach from previous, mostly conceptual, studies on risks.