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Supply chain risk: Changes in supplier composition and vertical integration

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  • Ersahin, Nuri
  • Giannetti, Mariassunta
  • Huang, Ruidi

Abstract

Using textual analysis of earnings conference calls, we quantify firms' supply chain risk and explore how firms react when supply chain risk increases. We show that firms with supply chains that span across continents, multinationals, and firms with fewer suppliers of an input face higher supply chain risk. In addition, firms exhibit high supply chain risk when their suppliers also do so. Firms manage supply chain risk by establishing relationships with closer and domestic suppliers and with suppliers that are industry leaders and by vertically integrating, but they continue to work with suppliers in other continents.

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  • Ersahin, Nuri & Giannetti, Mariassunta & Huang, Ruidi, 2024. "Supply chain risk: Changes in supplier composition and vertical integration," Journal of International Economics, Elsevier, vol. 147(C).
    • Handle: RePEc:eee:inecon:v:147:y:2024:i:c:s002219962300140x
    DOI: 10.1016/j.jinteco.2023.103854
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    More about this item

    Keywords

    Supply chains; Nearshoring; Fragmentation; Textual analysis; Vertical integration; M&As;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • F15 - International Economics - - Trade - - - Economic Integration

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