Crises in global supply chains: The role of impression management communications

Manufacturers have long considered the best approach to take after a supply chain disruption occurs. Because serious disruptions likely will escalate into organizational crises announced in the national news, managing the effects of the disruptions and communications with relevant stakeholders becomes critical to mitigating possible damages. One of the major stakeholders of a firm are the shareholders, and the current literature provides no direction regarding the strategies firms should deploy in communicating with shareholders. This study provides direction by examining effectiveness of organizational communication based upon the level of responsibility that a firm claims after a supply chain crisis is announced. An event study methodology (n = 204) was used to investigate the firm's communication and the associated shareholder reaction using abnormal stock returns as a proxy. The results of the study revealed that the less responsibility a firm accepted for the supply chain crisis, the less negative the abnormal stock return. From a short-term corporate financial perspective, it is attractive to assume less responsibility and even blame other firms. However, from a long-term supply chain perspective, more collaboration with buyers and suppliers is critical. The short-term abnormal stock returns could be weathered to assure more long-term collaboration. This research relies upon impression management communications as a theoretical foundation; whereby the results align with attribution theory. This study provides new links between impression management communications and supply chain management literatures.