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Influence of supply chain risks on project financial performance

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  • Chen, Hong Long

Abstract

Facing more frequent and severe disruptions, risk management in supply chains (SCs) has received considerable attention and extensive research. Yet, insights on how changes in SC risks (SCRs) influence project financial performance remain underdeveloped. In this study, we investigate the relationships among industry-specific risk, organizational risk, project SCRs, and project financial performance from the viewpoint of marginal risk product (MRP) using longitudinal project survey data. Structural equation modeling shows that project SCR factors completely negatively mediate the connections among industry-specific risk, organizational risk, and project financial performance. The presence of this full mediation implies that industry-specific risk and organizational risk only indirectly negatively influence project financial performance. Further analysis reveals that industry-specific risk influences project financial performance mainly through project internal-process integration risk, whereas organizational risk's influence is mostly through project demand and internal-process integration risks. A direct implication is that managers who want to increase project financial performance by enhancing the management performance of industry-specific risk and organizational risk should also enhance the management performance of project demand and internal process integration risks to magnify their impact. Analysis also shows that project internal process integration risk and project demand risk possess the largest and the next-largest negative MRP effects on project financial performance, respectively, despite both having no indirect effects. Future research should further clarify the nonsignificant mediating effects of project supply risk on industry-specific risk and organizational risk, although possible explanations are provided.

Suggested Citation

  • Chen, Hong Long, 2023. "Influence of supply chain risks on project financial performance," International Journal of Production Economics, Elsevier, vol. 260(C).
    • Handle: RePEc:eee:proeco:v:260:y:2023:i:c:s0925527323001020
    DOI: 10.1016/j.ijpe.2023.108870
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