Int. J.

Production Economics xxx (xxxx) xxx

Contents lists available at ScienceDirect

International Journal of Production Economics

journal homepage: http://www.elsevier.com/locate/ijpe

Supply chain and external conditions under which supply chain resilience
pays: An organizational information processing theorization
Christina W.Y. Wong a, Taih-Cherng Lirn b, Ching-Chiao Yang c, *, Kuo-Chung Shang d
a
Business Division, Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China
b
Department of Shipping and Transportation Management, National Taiwan Ocean University, No.2, Beining Rd., Jhongjheng District, Keelung City 202, Taiwan, ROC
c
Department of Shipping and Transportation Management, National Kaohsiung University of Science and Technology, No. 142, Haijhuan Road, Kaohsiung City 811,
Taiwan, ROC
d
Department of Transportation Science, National Taiwan Ocean University, No.2, Beining Rd., Jhongjheng District, Keelung City 202, Taiwan, ROC

A R T I C L E I N F O A B S T R A C T

Keywords: While firms are increasingly exposed to catastrophes due to global presence of their supply chains, the devel­
Disruption management opment of supply chain resilience becomes crucial to businesses. Thus, it is important to examine business values
Supply chain resilience for supply chain resilience under different types and levels of disruptions. Drawing on the organizational in­
Supply chain management
formation process theory, a theoretical model was developed to examine the moderating effects of the various
Organizational information processing theory
supply chain disruptions on performance outcomes. Empirical evidence, collected from primary and secondary
Structural equation modeling
data sources, suggests that supply chain resilience is found to be positively associated with risk management,
market, and financial performance. In particular, supply chain resilience has shown importance in contributing
to the risk management and market performance when firms experience high levels of supply side, infrastructure,
and catastrophic disruptions.

1. Introduction
While managing global supply chains and working with numerous
international partners, firms are increasingly exposed to risks of supply
chain disruptions caused by such unexpected events as supplier shut­
down, natural disaster, manmade catastrophes, and terrorists acts. In
view of the significant adverse impact of supply chain disruptions to
businesses, Innovate UK, the Department for Environment, Food, and
Rural Affair of the UK, and the Biotechnology and Biological Sciences
Research Council, offer £11 million funding to support firms in the food
and drink industry to develop and improve supply chain resilience.
These industry intelligence and government funding programs signify
the practical significance and potential values of strengthening supply
chain resilience to businesses as well as economic development.
Supply chain resilience is concerned with the capacity of firms to
recover supply chain operations from unforeseen disruptions (Christo­
pher and Peck, 2004; Sheffi and Rice, 2005). It helps mitigate disrup­
tions by planning, preparing, and taking actions in advance (Tomlin,
2006), such as maintaining buffering capacity in production and in­
ventory (Chopra and Sodhi, 2014). When firms face an internal and
external impact, resilience capability can allow them to reduce the
impact of a disruption and recover to its original. Thus, supply chain
resilience is considered as a dynamic capability of enabling supply chain
to effectively adapt, response, and recover from disruptions and which
in turn increasing firms’ competitive advantage (Golgeci and Pono­
marov, 2013; Chowdhury and Quaddus, 2017; Yu et al., 2019).
Although anecdotal evidence has shown the importance of supply
chain resilience in coping with disruptions, prior studies are confined to
investigate approaches to prevent (Blackhurst et al., 2011) and mitigate
of supply chain disruptions (Papadakis, 2006). The performance impact
of firms in response to disruptions is examined in Hendricks et al.
(2009). Yet, the performance impacts were measured in terms of stock
market reaction, which is largely related to response of investors but not
on the performance impact of organizational operations due to disrup­
tions. It is also important to note that the building of resilience requires
resources and costs to investment, and it is difficult for a firm to
monetize the payback. The types and levels of disruptions they have
prevented due to firms supply chain resilience capability are difficult to
assess (Pettit et al., 2019).
Prior studies assumed the positive impact of supply chain resilience

* Corresponding author.
E-mail addresses: christina.wy.wong@polyu.edu.hk (C.W.Y. Wong), tedlirn@mail.ntou.edu.tw (T.-C. Lirn), yangcc@nkust.edu.tw (C.-C. Yang), gordon@mail.
ntou.edu.tw (K.-C. Shang).

https://doi.org/10.1016/j.ijpe.2019.107610
Received 27 June 2018; Received in revised form 3 December 2019; Accepted 28 December 2019
Available online 30 December 2019
0925-5273/© 2019 Elsevier B.V. All rights reserved.

Please cite this article as: Christina W.Y. Wong, Int. J. Production Economics, https://doi.org/10.1016/j.ijpe.2019.107610
C.W.Y. Wong et al.
to performance outcomes due to its ability to cope with disruptions.
However, there is little understanding on the strategic and business
values of possessing supply chain resilience as a capacity to maintain
and acquire resources, and orchestrate them to mitigate operations
disruptions. This omission in the literature is undesirable as managers
have little knowledge on the business values of supply chain resilience
when experiencing different levels of supply chain disruptions. The
organizational information processing theory asserted supply chain
resilience as processing mechanisms that can be considered a stabilizing
mechanism in face of disruptions. The theory provides a theoretical
foundation for this study to develop and empirically validate a theo­
retical model that explains the performance outcomes of supply chain
resilience, and under what types and levels disruptions supply chain
resilience affects performance.
The significance of this research is twofold. First, it is intuitively
appealing to develop supply chain resilience to cope with unforeseen
disruptions in supply chains that are exposed to threats and hazards.
However, the building of supply chain resilience may impose additional
costs on firms, which incur inefficiency in supply chain operations (e.g.,
additional resources) (Bakshi and Kleindorfer, 2009; Zailani et al., 2015;
Yang and Hsu, 2018). The cost-effectiveness issue thus should be
considered when developing supply chain resilience (Ambulkar et al.,
2015; Tukamuhabwa et al., 2015). In particular, supply chain disruption
orientation and resource reconfiguration can help firms develop to
supply chain disruptions (Tukamuhabwa et al., 2015; Parker and
Ameen, 2018). To advance knowledge of the business values of supply
chain resilience, a major contribution of this study is to distinguish the
performance impact of supply chain resilience under different types and
levels of disruptions, providing insights into the performance impacts of
supply chain resilience when facing different situational conditions. On
the other hand, organizational information processing theory suggests
the importance of “fit” between organizational processing mechanisms
(e.g., supply chain resilience) and organizational context (e.g., different
types of disruptions) to attain desirable performance (Galbraith, 1973).
In this study, we consider supply chain resilience as processing mecha­
nisms for firms to operate their processes, while the different types of
disruptions are the unpredictable organizational context that affect the
performance results of the processing mechanisms. Thus, based on the
contingency approach of organizational information processing theory,
this study contributes to knowledge of supply chain resilience by pin­
pointing the point of “fit” between the levels of supply chain disruptions
and supply chain resilience.
2. Theoretical background and hypotheses
2.1. Organizational information processing theory
Given an open system, organizations must respond to several un­
certain conditions. One is inherent in supply chain operations such as
changing customer demand, competitors’ unpredictability, and the
complexity of inter-organizational activities. Another is largely uncon­
trollable by firms such as natural disasters or catastrophes (Cegielski
et al., 2012). Such uncertainties or disruptions make decision complex;
thus, information processing capability is strategic important for firms to
recover more quickly from catastrophes events. Rooted in the open
systems theory of organizations (Boulding, 1953), the organizational
information processing theory (OIPT) suggests that the presence of un­
certainties and complexity are inherent in business environment and
coordination amongst partner firms. Galbraith (1973) pointed out that
increasing their information processing capability would help organi­
zations cope with environmental uncertainty and thereby improve the
performance. The theory reasons that firms need a stabilizing mecha­
nism by possessing resources and capacity in operations to cope with
uncertainties and manage unforeseen events that threaten the normal
operations of business processes.
The OIPT theory advocates that while there are uncertainties/
2
International Journal of Production Economics xxx (xxxx) xxx
disruptions introduced in the environment, firms need to have capacity
buffers and enough information process capability to cope with the
disruptions. As an approach of contingency theory, the OIPT suggests
that the most effective strategy to improve performance is the fit be­
tween the excess organizational capacity (information processing ca­
pacity) and the shock that requires capacity to process (information
processing needs) (Tushman and Nadler, 1978). Thus, supply chain
resilience can be positively associated with performance when its ca­
pacity fits the scale of disruptions. The OIPT theory provides a holistic
theoretical foundation for building a supply chain resilience research
framework to explain the performance impact of supply chain resilience
by suggesting performance outcomes are contingent on exogenous fac­
tors as well as their extent of impact can affect supply chain operations,
such as supply chain disruptions.
2.2. Supply chain resilience
The development of supply chain resilience is under the assumption
that not all events that have an impact on supply chain operations can be
prevented. Prior studies pointed out that in the case of alternative sup­
pliers, design information substitutability and portability were required
by firms to improve supply chain resilience capability (Fujimoto, 2011;
Haraguchi and Lall, 2015). The cause of supply chain disruptions varies
from natural to man-made hazards. These unfortunate events have dis­
rupted supply chains of many firms, leading to significant financial lost
at the very least. Yet, in some cases, have led to industry-changing
consequences that cost reputation and life of businesses (Mukherjee,
2008). These lessons prompt managers and researchers to be increas­
ingly concerned about the development of supply chain resilience to
allow timely recovery from disruptions by having available capacity in a
supply chain.
Though there is no consensus on the definition of supply chain
resilience in the literature, it has been defined as the ability of supply
chain to return to its original state of operations or maintain or move to a
new, more desirable state after being disturbed (Christopher and Peck,
2004). From the organizational perspective, supply chain resilience is
defined as the organizational capacity or ability to facilitating available
operational resources to copy with internal and external shocks (Pono­
marov and Holcomb, 2009; Annarelli and Nonino, 2015). Thus, supply
chain resilience refers to the behavioral responses of firms, national
economics, and systems in the contexts of social and economic (Pono­
marov and Holcomb, 2009). While few studies had examined the supply
chain resilience and disruption issues by the quantitative methods
(Cardoso et al., 2015; Kamalahmadi and Mellat-Parast, 2016b; Yang and
Fan, 2016; Ivanov et al., 2017), systematic literature reviews on the
theoretical foundations of supply chain resilience can find that the
resilience basically can be static or dynamic (Tukamuhabwa et al., 2015;
Kamalahmadi and Mellat-Parast, 2016a; Yang and Hsu, 2018). Notably,
most studies defined the supply chain resilience and proposed the
measurement scale from the capability view (Christopher and Peck,
2004; Ponomarov and Holcomb, 2009; Ambulkar et al., 2015; Tuka­
muhabwa et al., 2015; Kamalahmadi and Mellat-Parast, 2016a, b;
Brusset and Teller, 2017; Adobor and McMullen, 2018; Yu et al., 2019).
As a part of business continuity strategy, supply chain resilience
prepares firms with capacity to cope with and recover from disruptions
to the original state of operations. It reflects an organization’s ability to
survive, adapt, response, recovery, and grow confronted with change
and uncertainty (Knemeyer et al., 2009; Chowdhury and Quaddus,
2017; Adobor and McMullen, 2018). Researchers also view supply chain
resilience as a dynamic capability when founded on the ability of
managing disruptions and events to increase the speed of recovery to its
original state (Golgeci and Ponomarov, 2013; Chowdhury and Quaddus,
2017; Parker and Ameen, 2018; Yu et al., 2019). To examine the impact
of resilience on performance outcomes under dynamic environmental
with different types and levels of disruptions, the measures for supply
chain resilience in this study were based on the capability view, which is
C.W.Y. Wong et al.
in line with Golgeci and Ponomarov (2013) work.
2.3. Hypotheses development
2.3.1. Performance impacts of supply chain resilience
Fig. 1 shows the framework of this study. A rationale for the pro­
posed linkages is provided below.
A large number of empirical studies had demonstrated the perfor­
mance impacts of supply chain resilience. Pettit et al. (2010) argued
supply chain resilience capability can enhance manufacturing firms’
competitiveness and financial performance. The resilience capability
allows a firm to quickly respond to changes in the environment, and
actively adjust its response strategies to prevent major disruption to its
supply chain. Typically, the supply chain resilience capability has been
proven to improve customer service (Wieland and Wallenburg, 2013;
Peng et al., 2014; Srinivasan and Swink, 2018). Thus, the firms can input
more efforts to develop their supply chain resilience capability and
which in turn improve their financial, risk performance and market
performance (Hendricks et al., 2009; Lee and Rha, 2016; Yang and Hsu,
2018).
While having a collaborative supply chain relationship with a com­
mon goal of business continuity, supply chain resilience provides firms
with access to available assets across internal functions and supply chain
partners, as well as sharing and processing information collected from
various functions to plan and coordinate business activities (Dhanaraj
and Parkhe, 2006). Supply chain resilience encourages information ex­
change, joint decision making, and building trust across functions and
supply chain partners (Bakshi and Kleindorfer, 2009). Supply chain
resilience provides firms with flexibility to effectively respond to busi­
ness opportunities and market demands (Nohria and Gulati, 1996). Also,
the maintenance of supply chain visibility enables firms to be aware of
changes of market demands, and collect latest market intelligence,
enabling firms to develop products that are meeting customer needs
(Pettit et al., 2010). These views on the performance impact of supply
chain resilience suggest the influence of situational conditions that
result in the change of performance outcomes of supply chain resilience.
Specifically, according to the organizational information processing
theory, the performance impact of supply chain resilience is likely to be
affected by the types and scales of disruptions, when the excess capacity
Risk management
performance
H1a, H2a, H3a
Market performance
SC
resilience
H1b, H2b, H3b
Financial performance
ROA
ROE
H1c, H2c, H3c
Profit
Moderators
Supply side disruptions
Infrastructure disruptions
Catastrophic disruptions
Fig. 1. Research framework.
3
International Journal of Production Economics xxx (xxxx) xxx
is utilized to achieve performance.
2.3.2. Impacts of disruptions
In the events of supply chain disruptions, increasing the information
processing needs to identify alternatives and solutions to mitigate im­
pacts caused by the disruptions. Ambulkar et al. (2015) noted that in a
high impact disruption context, namely, supply disruption, logisti­
cs/delivery disruptions, in house/plant disruption, and natural hazard­
s/political issues, resource reconfiguration can fully mediate the
relationship between supply chain disruption orientation and firm
resilience. Supply chain resilience can serve as the stabilizing mecha­
nism to provide firms with excess capacity. Based on the real-life cases
and the literature, interruptions to supply chain operations are often
caused by three common forms of disruptions, namely supply side
disruption (Ambulkar et al., 2015; Zsidisin and Wagner, 2010), cata­
strophic disruption (Kleindorfer and Saad, 2005; Ambulkar et al., 2015),
and infrastructure disruption (Culp, 2013; Chopra and Sodhi, 2014;
Ambulkar et al., 2015).
Supply side disruption is concerned with the reliability of suppliers in
supplying and delivering the amount and quality of products needed to
support the operations of a focal firm business (Hendricks and Singhal,
2005; Wagner and Bode, 2006). This disruption is related to such issues
as supplier quality, delivery dependability, production capacity, tech­
nological capability, financial distress, or even bankruptcy, which cause
suspension to supply (Tomlin, 2006). Supply side disruption has been
found in many real-life cases. For example, the launch and availability of
Apple Watch in 2015 were delayed due to the manufacturers of the
display panel were unable to resolve production issues of the flexible
OLED display that had a 30% yield rate, resulting in a shortage of display
panel supply for production of Apple Watch. Supply chain resilience
helps firms mitigate the problem of supply by enabling firms to identify
and obtain new source of supply, which are supported by maintaining
flexibility in supply management. Also, the characteristics of supply
chain resilience such as supply chain visibility, supply chain collabora­
tion and excess resources can help firms in coping with such disruptions
(Wieland and Wallenburg, 2013). However, according to the organiza­
tional information processing theory, supply chain resilience might not
contribute to performance improvement in the time of low supply
disruption. The additional capacity that were set aside to helps supply
chain operations bounce back cannot be fully utilized to improve per­
formance in face of low supply side disruption, resulting in a waste in
resources utilizing that fails to contribute to performance improvement.
Thus, we theorize that:
Hypothesis 1. The relationships between (a) risk management per­
formance, (b) market performance, and (c) financial performance (i.e.,
ROA, ROE, and net profit) and supply chain resilience are moderated by
supply side disruptions; the relationships are strengthened when the
supply side disruption is high.
Infrastructure disruption is concerned with the breakdown or failure of
such systems as information network, production line, and trans­
portation infrastructure that halt communication, information sharing,
and movement of goods in a supply chain (Chopra and Sodhi, 2014). For
example, the American West Coast Longshoremen strike in 2012 resul­
ted in an enormous loss of the American economy. The Hong Kong
protest also causes airport disruption also resulted in the delay or cancel
of transportation service in 2019. Such disruption can be caused by
accident, system malfunctions, disaster, human errors, or attack that
inhibit normal operations of processes in supply chain, and unable to
synthesize internal and external information to support supply chain
coordination. It is related to systematic vulnerabilities of firms as it
disrupts the chain of actions in a supply chain due to loss of connectivity
amongst supply chain partners (Snediker et al., 2008). Firms are unable
to perform their processes as planned due to the lack of necessary in­
formation to precede, the halt of communication with partners, and the
absence of materials or goods for trade. The possession of supply chain
C.W.Y. Wong et al. International Journal of Production Economics xxx (xxxx) xxx

resilience equips firms with excess capacity and resources, and adapt­ approximately 88% of the total output of the industrial sector in Taiwan
ability in operations. Such capacity enables quick response of firms to that contributes to 30% of its GDP and has long served as an important
the disruption by having flexibility in making changes to products production bases for the global supply source of electronic hardware
and/or processes to maintain services and fulfill orders to customers. products, including chip, notebook, and liquid crystal display (LCD)
Yet, the excess capacity being kept in organizational processes is likely (Industrial Development Bureau IDB, 2013), the sample of this study
to have no impact on performance improvement when infrastructure was the manufacturing companies listed on the Taiwan Stock Exchange
disruption does not occur. We therefore conjecture that: (TWSE) and Gre Tai Securities Market (GTSM) (i.e., Over-the-Counter
(OTC) Market and Emerging Stock Market). The sample included a
Hypothesis 2. The relationships between (a) risk management per­
total of 1180 listed companies, whereas 649 companies listed in TSE,
formance, (b) market performance, and (c) financial performance (i.e.,
and 531 in OTC. The initial mailing elicited 142 responses. A follow-up
ROA, ROE, and net profit) and supply chain resilience are moderated by
mailing was sent to 1038 non-respondents after the initial mailing. An
infrastructure disruptions; the relationships are strengthened when the
additional 94 responses were received after the second mailing. A total
infrastructure disruption is high.
of 236 questionnaires were returned with a response rate of 20.0%,
Catastrophic disruption often arises from natural disasters and politi­ which is similar to prior studies using key informants for data collection
cal crises that interrupt supply chain operations (Kleindorfer and Saad, in operations management (Malhotra and Grover, 1998). Thirty three
2005). This disruption is largely unpredictable due to very limited returned questionnaires were disqualified due to incomplete responses.
warning in advance and the impact of disruption is difficult to foresee Thus, the total number of useable responses was 203. Table 1 summa­
until the events unfold. Catastrophic disruption can extend for a period rizes the demographic characteristics of respondents.
of time and has been found with severe financial damages. For example,
the wafer fab fire in the Philips semiconductor manufacturing plant in
3.2. Bias issues
Albuquerque, New Mexico halted production line for approximately six
weeks and resulted in a loss of $400 million to Ericsson one year after the
To detect the potential problem of non-response bias in this study, we
fire (Bradley, 2014). Also, the other real-life case is the Trump admin­
used the extrapolation method recommended by Armstrong and Over­
istration abruptly imposed 10% and 25% tariffs on a number of Chinese
ton (1977) to compare the early and late respondents by conducting a
products in 2018 (Yu et al., 2019). Due to this catastrophic disruption,
t-test analysis. Results showed that there were no statistical differences
Ericsson’s inability to cope with the disruption resulted in severe loss of
across the 7 measures at the 5% significance level, suggesting that
share in the mobile phone market due to its failure in satisfying market
non-response bias is not an issue in this study.
needs due to the shortage of its key components.
To address the problem of common method variance, we collected
Considering the damages and supply chain costs caused by cata­
data from multiple sources, namely perceptual inputs and objective
strophic disruptions, these rare but catastrophic disruptions are an
data. The independent variable measures and the dependent variables
extreme form of variability in supply chains and so significant buffers
(risk management performance, RMP; market performance, MP) were
are needed to cope with and mitigate the impacts of catastrophic dis­
self-reported perceptual measures, while the financial variables were
ruptions (Sheffi and Rice, 2005; Bradley, 2015). Park et al. (2013)
objective measure that was collected from the annual reports of the
suggested that firms can improve critical capabilities of supply chain
sample firms. Following Podsakoff et al. (2003) suggestions, several
information design, portability, and dispersion, and which in turn adopt
steps were conducted to detect if common method variance is an issue in
robust and responsive supply chain strategies to respond to disruptions
this study. First, respondents were assured that their identity would be
caused by catastrophic natural disasters. The supply chain resilience and
confidential and anonymous in the reporting of the results in order to
robustness were determined by the dependence on suppliers, visibility of
encourage them to answer as honestly as possible. Second, 61.4% of the
supply chains, design information substitutability, and design informa­
respondents held a senior position and 69.5% of the respondents had at
tion portability (Haraguchi and Lall, 2015). In the case of the 2011
least seven-year tenure, which are assumed to be knowledgeable about
Thailand floods, Nissan thus can recover more quickly than it major
the operations of their firms. Third, we conducted Harman’s one-factor
competitors due to its availability of alternative suppliers and design
test to ensure that no single factor accounted for the majority of
information substitutability (Fujimoto, 2011; Haraguchi and Lall,
covariance (Podsakoff and Organ, 1986). Result showed seven factors
2015).
In face of catastrophic disruption, being able to respond quickly by
acquiring resources and working collaboratively with supply chain Table 1
Demographic data of respondents.
partners is critical to firms in coping with the disruptions. A collabora­
tive recovery capability based on the supply chain coordination mech­ Demographic characteristics Number of Percentage of
anism could be developed for catastrophic disruption management respondents respondents

(Matsuo, 2015). Adaptability of operations is also critical by providing Job title Vice President 62 30.5
flexibility in recovery. However, the non-existence or low of cata­ or above
General 47 23.2
strophic disruption utilize little of the capacity of supply chain resil­
manager
ience, which is likely to result in insignificant performance Manager 61 30.0
improvement. Director 15 7.4
Other 18 8.9
Hypothesis 3. The relationships between (a) risk management per­ Number of employees <100 20 9.9
formance, (b) market performance, and (c) financial performance (i.e., 101–200 38 18.7
ROA, ROE, and net profit) and supply chain resilience are moderated by 201–400 41 20.2
401–600 22 10.8
catastrophic disruptions; the relationships are strengthened when the
601-1000 32 15.8
scale of catastrophic disruptions is high. >1001 50 24.6
Annual revenue of <1.0 32 15.8
3. Research Methodology firm (billion NT$a) 1.1–2.0 47 23.1
2.1–3.0 30 14.8
3.1–5.0 27 13.3
3.1. Sample frame and data collection
5.1–10.0 22 10.8
>10.1 45 22.2
Considering the manufacturing industry of Taiwan accounts for
Notes: a One U.S. dollar equals approximately 32.5 New Taiwanese (NT) dollars.

4
C.W.Y. Wong et al. International Journal of Production Economics xxx (xxxx) xxx

with eigenvalue greater than 1 were extracted from all the measurement Table 2
items, and explained 73.32% of the variances, with the first factor ac­ Measures and questionnaire items.
counting for only 26.11% of the variance. Since no one factor accounted Constructs and reflective indicators Loadings C.R.
for a majority of the variance, the common method variance does not 2
Supply chain resilience (χ ¼ 4.42, df ¼ 2; CFI ¼ 0.99; RMR ¼ 0.01; IFI ¼ 0.99; TLI ¼
appear to be a problem in this study. 0.98; Cronbach’s alpha ¼ 0.84; Composite reliability ¼ 0.84; AVE ¼ 0.58)
(Scale: 1 ¼ not at all, 5 ¼ to a great extent) (Source: Golgeci and Ponomarov, 2013)
3.3. Measurement development SCR1: Our firm’s supply chain can quickly return to its original 0.57 —a
state after being disrupted
SCR2: Our firm’s supply chain has the ability to maintain a 0.85 8.40
The measures and questionnaire items adopted from prior studies desired level of connectedness among its members at the
were summarized in Table 2. To ensure linguistic equivalence of the time of disruption.
measurements, we followed prior studies to conducted back-translation SCR3: Our firm’s supply chain has the ability to maintain a 0.70 7.52
of the measurement (Dai et al., 2010; Hutting et al., 2014). We first desired level of control over structure and function at the
time of disruption
invited the two bilingual executives to translate the measurement scales
SCR4: Our firm’s supply chain has the knowledge to recover 0.89 8.49
into Chinese. We then invited the two bilingual supply chain academics from disruptions and unexpected events
to back-translate the measurement scales into English. The panel agreed Risk management performance (χ2 ¼ N/A, df ¼ N/A; CFI–N/A; RMR ¼ N/A; IFI–N/
that the translation consistent, thus suggesting linguistic equivalent of A; TLI ¼ N/A; Cronbach’s alpha ¼ 0.87; Composite reliability ¼ 0.86; AVE ¼ 0.67)
the measurement scales. We then conducted a pilot test with a group of (Scale: 1 ¼ not at all, 5 ¼ to a great extent) (Source: Self-developed based on
interview)
thirty executives of manufacturers to ensure the questionnaire read­ RMP1: Comparing with three years ago, our firm has improved 0.79 –
ability and the surveyees’ comprehension on the questionnaires in the the ability to cope with threats.
formal round of survey. The pilot test resulted in slight modifications to RMP2: Comparing with three years ago, our firm has improved 0.91 11.77
a few wording of the measurement items. the risk management capability.
RMP3: Comparing with three years ago, our firm has improved 0.74 10.81
Flynn et al. (1990) argued that firm size often have an impact on
the operational flexibility.
organizational practices and abilities in resilience and experience in 2
Market performance (χ ¼ N/A, df ¼ N/A; CFI–N/A; RMR ¼ N/A; IFI–N/A; TLI ¼ N/
handling with disruptions. It means large firms may have more resources A; Cronbach’s alpha ¼ 0.88; Composite reliability ¼ 0.88; AVE ¼ 0.71)
to implement supply chain practices in uncertain marketplace and thus (Scale: 1 ¼ not at all, 5 ¼ to a great extent) (Source: Kim, 2009)
may achieve better organizational performance than the small ones (Yu MP1: Comparing with our major competitor, our firm has 0.88 –
higher customer loyalty.
et al., 2019). Accordingly, firm size are reflected in firm age and number MP2: Comparing with our major competitor, our firm has 0.88 14.20
of employee was treated as control variable in the model. Measures for higher customer satisfaction.
the supply chain resilience were from the capability view and treated it MP3: Comparing with our major competitor, our firm has 0.77 12.54
as the ability of recovery from disruptions. Four items derived from corporation image improvement.
Supply side disruption(χ2 ¼ 14.37, df ¼ 2; CFI ¼ 0.98; RMR ¼ 0.02; IFI ¼ 0.98; TLI ¼
Golgeci and Ponomarov (2013) study were selected to measure the
0.93; Cronbach’s alpha ¼ 0.91; Composite reliability ¼ 0.91; AVE ¼ 0.71)
supply chain resilience. (Scale: 1 ¼ not at all, 5 ¼ to a great extent) (Source: Wagner and Bode, 2006)
Performance analysis is used to measure and compare the actual In the past three years, the scale of the followings is observed in our supply
levels of achievement of specific objectives. The performance outcomes chain:
of supply chain resilience generally could be measured in financial and SSD1: Poor logistics performance of suppliers (e.g., delivery 0.86 –
dependability, order fulfillment capacity)
operational or non-financial performances (Venkatraman and Ram­ SSD2: Poor or inconsistent supply quality 0.87 15.45
anujam, 1986). The objective financial performance was measured by SSD3: Sudden demise of suppliers (e.g., due to bankruptcy) 0.84 14.64
three common indicators, namely ROA, ROE, and profit and was SSD4: Capacity fluctuations or shortages on the supply markets 0.81 14.01
collected from the annual reports of the sample firms listed in TWSE and Infrastructure disruption(χ2 ¼ 17.68, df ¼ 2; CFI ¼ 0.98; RMR ¼ 0.02; IFI ¼ 0.98; TLI
¼ 0.94; Cronbach’s alpha ¼ 0.94; Composite reliability ¼ 0.93; AVE ¼ 0.77)
GTSM database in 2015. On the other hand, prior studies (Wieland and
(Scale: 1 ¼ not at all, 5 ¼ to a great extent) (Source: Wagner and Bode, 2006)
Wallenburg, 2013; Lee and Rha, 2016) had proved the impact of resil­ In the past three years, the scale of the following is observed in our supply
ience on operational performance such as risk, customer value, oper­ chain:
ating efficiency, and product or service quality. The operational ID1: Downtime or loss of own production capacity due to local 0.80 –
performance is here further divided into risk management performance disruptions (e.g., labor strike, fire, explosion, industrial
accidents).
and market performance. The risk management is the protection of or­ ID2: Interruption or breakdown of internal IT infrastructure. 0.94 16.50
ganizations from adverse events (Colicchia et al., 2010). If the firms ID3: Loss of own production capacity due to technical reasons 0.82 13.43
develop a resilient supply chain, it can help them reduce the likelihood (e.g., machine deterioration).
of risk occurrence and face unforeseen events in advance and further to ID4: Interruption or breakdown of external IT infrastructure. 0.95 16.83
Catastrophic disruption(χ2 ¼ 2.53, df ¼ 2; CFI ¼ 1.00; RMR ¼ 0.01; IFI ¼ 1.00; TLI ¼
improve its risk management performance. Three items were
0.99; Cronbach’s alpha ¼ 0.94; Composite reliability ¼ 0.94; AVE ¼ 0.80)
self-developed based on interview and Zsidisin and Ellram (2003) study (Scale: 1 ¼ not at all, 5 ¼ to a great extent) (Source: Wagner and Bode, 2006)
for measuring risk management performance. In the past three years, the scale of the following is observed in our supply
With respect to market performance, customers are the key driver for chain:
firms to survive in the market. The better customer service quality they CD1: Political instability, war, civil unrest, or other socio- 0.88 –
political crises.
provide, the better their market performance will be. It is thus impera­
CD2: Diseases or epidemics (e.g., SARS, MERS). 0.89 18.21
tive for a firm to be speed and uninterruptedness in serving customers CD3: Natural disasters (e.g., earthquake, flooding, tsunami). 0.94 20.30
and creating value for them. Three commonly used items were adapted CD4: Terrorist attacks (e.g., 2005 London and 2004 Madrid 0.87 17.57
from prior studies to measure the market performance, namely customer terrorist attack).
loyalty, customer satisfaction, and corporation image. Note: a Indicating a parameter fixed at 1.0 in the original solution.

3.4. Measurement validation and reliability
To assess the internal consistency and reliability of the individual
measurement constructs, Cronbach’s alpha and composite reliability
were examined. As summarized in Table 2, Cronbach’s alpha and
composite reliability of all constructs were well above the suggested
threshold of 0.8, which is considered adequate for confirming a
satisfactory level of reliability (Fornell and Larcker, 1981; Nunnally,
1984). A confirmatory factor analysis (CFA) on all of the theoretical
constructs was subsequently conducted to ensure the validity of the
measurement model. Results, shown in Table 3, indicated that the GFI,
AGFI and relative fit indices (IFI, NFI, RFI, CFI) were well above the
recommended cut-off value of 0.90. Moreover, the absolute fit indices,

5
C.W.Y. Wong et al. International Journal of Production Economics xxx (xxxx) xxx

such as RMR and RMSEA were below the recommended threshold of
0.05, and the normed Chi-Square (χ2/df) also had a value of 1.372 and
fell well within the recommended range of 3.0, suggesting all constructs
exhibit a good fit of the data (Hu and Bentler, 1990; Hair et al., 2010).
Convergent validity was assessed by the statistics significance of
factor loadings and average variance extracted (AVE) (Fornell and
Larcker, 1981; Anderson and Gerbing, 1988; Hair et al., 2010). Table 3
showed that all indicators are statistically significantly loaded to their
respective constructs with loadings from 0.5 to 0.9, suggesting that the
indicators measure their respective constructs and providing pre­
liminary evidence of convergent validity. In addition, Table 3 revealed
the AVE of each construct exceeds the threshold value of 0.5, providing
further evidence of convergent validity of the construct (Fornell and
Larcker, 1981).
The means, standard deviations, and correlations of the theoretical
constructs were summarized in Table 4. The correlations among the
supply chain resilience, risk management performance, and market
performance ranging from 0.416 to 0.621 and are significant at the p <
0.01 level, indicating acceptable criterion validity (Nunnally, 1984). We
tested the possibility of multicollinearity by calculating the Variance
Inflation Factor values (VIFs), which evaluates the degree to which each
variable can be explained by other variables (Hair et al., 2010). The VIF
value of the constructs is all below the recommended cut-off value of 10,
suggesting multicollinearity is not a concern of this study. Although the
coefficient of correlation between the supply side disruption (SSD),
infrastructure disruption (ID), and catastrophic disruption (CD) are
high, following examples are discussed to support the classification of
these disruptions.
To assess the discriminant validity, a rigorous method is to compare
the average variance extracted (AVE) values for any two constructs with
the squared correlation between these two constructs (Hair et al., 2010).
Discriminant validity exists if the AVE values were greater than the
squared correlation, implying a latent construct explain more of the
variance in its item measures that it shares with another construct.
Table 4 showed that the square root of the AVE for all the constructs is
greater than the correlation between any pair of them, providing evi­
dence of discriminant validity (Hair et al., 2010).
4. Hypotheses Testing
To examine the contingency effect of supply chain disruptions on the
relationships between supply chain resilience and the various perfor­
mance outcomes, namely, risk management performance, market per­
formance, and financial performance in terms of ROA, ROE, and net
profit, a structural equation model was established in this study. Since
the moderating influence (supply chain disruption) is measured in a
continuous manner, a new variable that is the product of the main effect
(X) and moderating variable (M) was created. Following the steps
suggested by previous researchers (Ping, 1995; Cadogan, 2003; Little
et al., 2007), a structural equation modelling analysis with interaction
term (XM) and control variables in AMOS 21.0 is thus used to test the
research hypotheses. If the effect of interaction term (XM) is significant,
then the moderating effect was founded, implying the effect of X on Y is
dependent on the levels of moderating variable (Little et al., 2007).
To mitigate the potential multicollinearity, both dependent and in­
dependent variables were mean-centered and used in this study (Jaccard
and Turrisi, 2003). Given the large firms may have more resources to
implement supply chain practices in resilience and experience in
handling with disruptions in uncertain marketplace, they may achieve
better performance than small ones, implying the size of a firm may
affect the outcomes gained from the supply chain resilience (Flynn et al.,
1990; Brusset and Teller, 2017; Yu et al., 2019). Thus, firm size measure
by firm age and number of employee was treated as a control variable in
the model. Three models were performed to examine the contingencies
of the relationships of supply chain resilience with the various perfor­
mance outcomes under three kinds of supply chain disruptions. As
shown in Table 5, results indicated that all structural models provide a
reasonable fit of the data with fit indices.
4.1. Contingency determinants: Supply side disruption
Model 1 examined the moderating effect of supply side disruption on
the relationship between supply chain resilience and various perfor­
mance outcomes. Results showed that none of the control variables had
a significant impact on performance outcomes. Table 5 also indicated
that supply chain resilience was positively related to risk management
performance (ß ¼ 0.869, t ¼ 5.458), market performance (ß ¼ 0.720, t ¼
5.808), ROA (ß ¼ 0.224, t ¼ 1.849), ROE (ß ¼ 0.223, t ¼ 1.741), and net
profit (ß ¼ 0.207, t ¼ 1.751). More specifically, supply chain resilience
had the highest coefficient on risk management performance, followed
by market performance, ROA, ROE, and net profit. The interaction term
(SCR X SSD) was found to have a significant impact on risk management
performance (ß ¼ 0.230, t ¼ 3.489) and market performance (ß ¼ 0.206,
t ¼ 3.039), offering support for the moderating role of supply side
disruption on supply chain resilience and risk management performance
and market performance. The moderating effect of supply side disrup­
tion was shown in Fig. 2a and b. Results supported the notion that for
firms under a high level of supply side disruption, the relationships
between supply chain resilience and risk management performance, and
market performance are stronger. The findings imply supply chain
resilience has a stronger effect on risk management performance and
market performance when firms facing high level of supply side dis­
ruptions. In particular, supply chain resilience is more influential to the
risk management performance than market performance under a high
level of supply side disruption. However, the moderating effect of supply
side disruption on supply chain resilience and financial performance in

Table 3
Results of CFA analysis for the whole model.
Latent variables Factors Factor loading Standardized factor loading S.D. Critical ratio R2 AVE

SCR SCR1 0.670 0.587 0.076 8.816 0.345 0.587

SCR2 0.984 0.863 0.069 14.261 0.744
SCR3 1.000 0.876 —a – 0.768
SCR4 0.799 0.701 0.073 10.945 0.491
RMP RMP1 0.934 0.817 0.071 13.155 0.667 0.668
RMP2 1.000 0.874 – – 0.764
RMP3 0.866 0.757 0.072 12.028 0.573
MP MP1 1.000 0.880 – – 0.775 0.712
MP2 0.988 0.870 0.065 15.200 0.757
MP3 0.883 0.778 0.067 13.179 0.605
FP ROA 0.904 0.924 0.026 34.769 0.854 0.880
ROE 1.000 1.000 – – 1.000
Profit 0.867 0.886 0.032 27.094 0.786

Note: a: Indicates a parameter fixed at 1.0 in the original solution. SCR: supply chain resilience; RMP: risk management performance; MP: market performance; Fit
index: χ2 ¼ 80.956, df ¼ 59, χ2/df ¼ 1.372, RMR ¼ 0.045, RMSEA ¼ 0.043, GFI ¼ 0.944; AGFI ¼ 0.913; NFI ¼ 0.960, RFI ¼ 0.947, IFI ¼ 0.989, CFI ¼ 0.989.

6
C.W.Y. Wong et al. International Journal of Production Economics xxx (xxxx) xxx

Table 4
Mean, standard deviations, and correlations of the constructs.
Variables/Constructs Mean S.D. SCR RMP MP SSD ID CD ROA ROE Profit

SCR 3.815 0.538 0.762

RMP 3.807 0.502 .456** 0.819
MP 3.770 0.580 .416** .620** 0.843
SSD 2.548 1.017 -.173** -.106 -.116 0.843
ID 2.266 1.084 -.109 -.087 -.116 .765** 0.877
CD 2.163 1.142 -.037 -.098 -.061 .692** .778** 0.894
ROA 0.044 0.101 .135* .082 .084 -.086 -.018 -.004 –
ROE 0.066 0.222 .126* .057 .094 -.077 -.050 -.012 .945** –
Profit 0.055 0.311 .105 .058 .054 -.100 -.093 -.048 .820** .906** –

Note: Square root of AVE is on the diagonal; SCR: supply chain resilience; RMP: risk management performance; MP: market performance; SSD: supply side disruption;
ID: infrastructure disruption; CD: catastrophic distribution; **p < 0.05 (two-tailed); *p < 0.1 level (two-tailed).

Table 5
Results of moderating effect with SEM.
Dependent variables RMP MP ROA ROE Profit
Independent variables
ß t-values ß t-values ß t-values ß t-values ß t-values

Model 1: Supply side disruption (χ2142.542 (122); p ¼ 0.099; GFI ¼ 0.937; RMR ¼ 0.077; CFI ¼ 0.992; IFI ¼ 0.992; TLI ¼ 0.987)
Age of firm 0.050 0.752 0.054 0.791 0.014 0.206 0.027 0.384 0.041 0.593
Number of employee 0.012 0.184 0.078 1.140 0.046 0.663 0.061 0.870 0.028 0.401
SCR 0.869 5.458** 0.720 5.808** 0.224 1.849* 0.223 1.741* 0.207 1.751*
SSD 0.147 0.935 0.062 0.609 0.896 1.115 0.995 1.116 0.863 1.115
SCR X SSD 0.230 3.489** 0.206 3.039** 0.004 0.055 0.024 0.343 0.050 0.725
Model 2: Infrastructure disruption (χ2169.077 (122); p ¼ 0.003; GFI ¼ 0.926; RMR ¼ 0.079; CFI ¼ 0.983; IFI ¼ 0.983; TLI ¼ 0.973)
Age of firm 0.062 0.953 0.065 0.983 0.015 0.210 0.025 0.355 0.037 0.532
Number of employee 0.012 0.181 0.074 1.111 0.045 0.639 0.058 0.829 0.030 0.431
SCR 0.836 6.169** 0.728 6.426** 0.259 2.255** 0.269 2.218** 0.251 2.226**
ID 0.172 0.353 0.092 0.341 0.887 0.360 0.984 0.360 0.853 0.360
SCR X ID 0.262 4.049** 0.244 3.684** 0.042 0.605 0.001 0.018 0.045 0.652
Model 3: Catastrophic disruption (χ2161.733 (122); p ¼ 0.009; GFI ¼ 0.929; RMR ¼ 0.079; CFI ¼ 0.985; IFI ¼ 0.986; TLI ¼ 0.977)
Age of firm 0.052 0.801 0.056 0.838 0.010 0.140 0.021 0.303 0.036 0.520
Number of employee 0.005 0.072 0.059 0.881 0.030 0.435 0.045 0.645 0.039 0.556
SCR 0.850 5.977** 0.730 6.260** 0.262 2.243** 0.268 2.166** 0.247 2.159**
CD 0.172 0.494 0.087 0.461 0.885 0.505 0.986 0.505 0.852 0.505
SCR X CD 0.231 3.537** 0.233 3.497** 0.023 0.339 0.009 0.133 0.041 0.587

Note:** significant at the p ¼ 0.05 level; * significant at the p ¼ 0.1 level; ß is standardized path coefficient.

terms of ROA, ROE, and net profit was not found in this study, sug­
gesting hypothesis H1c was not supported in this study. In summary,
when firms facing high level of supply side disruption, enhancing its
supply chain resilience capability will have a stronger impact on risk
management performance and market performance, lending support for
H1a and H1b.
4.2. Contingency determinants: Infrastructure disruption
Similarly, model 2 tested the influence of infrastructure disruption
and show that none of the control variables has a significant impact on
performance outcomes. Table 5 indicated that supply chain resilience
was positively associated with risk management performance (ß ¼
0.836, t ¼ 6.169), market performance (ß ¼ 0.728, t ¼ 6.426), ROA (ß ¼
0.259, t ¼ 2.255), ROE (ß ¼ 0.269, t ¼ 2.218), and net profit (ß ¼ 0.251,
t ¼ 2.226). Similarly, supply chain resilience was found to have highest
coefficient on risk management performance, followed by market per­
formance, ROE, ROA, and net profit. The interaction term (SCR X ID)
was also found to have a significant impact on risk management per­
formance (ß ¼ 0.262, t ¼ 4.049) and market performance (ß ¼ 0.244, t
¼ 3.684), implying the relationships between supply chain resilience
and risk management performance and market performance are
contingent on infrastructure disruption which is consistent with the
literature and our theorization. Thus, we found support for the contin­
gency role of infrastructure disruption on the relationships between
supply chain resilience, and risk management performance and market
performance. From Fig. 3a and b, the findings supported the notion that
supply chain resilience had a stronger positive impact on risk
management performance and market performance for firms operating
in a high level of infrastructure disruption. The supply chain resilience
was also found to be more influential to the risk management perfor­
mance than market performance under a high level of infrastructure
disruption. However, the moderating role of infrastructure disruption on
supply chain resilience and financial performance in terms of ROA, ROE,
and net profit was not found in this study, indicating hypothesis H2c was
not supported in this study. To sum up, under high level of infrastructure
disruption in firms’ operations, improving firms’ supply chain resilience
will have a stronger positive impact on its risk management performance
and market performance, lending support for hypotheses H2a and H2b.
4.3. Contingency determinants: Catastrophic disruption
Finally, model 3 assessed the moderating effect of catastrophic
disruption on the relationship between supply chain resilience and
various performance outcomes. Results showed that none of the control
variables has a significant impact on performance outcomes, but supply
chain resilience was positively associated with risk management per­
formance (ß ¼ 0.850, t ¼ 5.977), market performance (ß ¼ 0.730, t ¼
6.260), ROA (ß ¼ 0.262, t ¼ 2.243), ROE (ß ¼ 0.268, t ¼ 2.166), and net
profit (ß ¼ 0.247, t ¼ 2.159). Supply chain resilience was found to have
highest coefficient on risk management performance. Again, the inter­
action term (SCR X CD) was found to have a significant effect on risk
management performance (ß ¼ 0.231, t ¼ 3.537) and market perfor­
mance (ß ¼ 0.233, t ¼ 3.497), supporting for the contingency role of
catastrophic disruption on the relationships between supply chain
resilience, and risk management performance and market performance.

7
C.W.Y. Wong et al. International Journal of Production Economics xxx (xxxx) xxx

(2a) Risk management performance (3a) Risk management performance

5 5

Risk management performance

Risk management performance

4.5 4.5
4 4
3.5 3.5
Low SSD Low ID
3 3
High SSD High ID
2.5 2.5
2 2
1.5 1.5
1 1
Low SCR High SCR Low SCR High SCR

(3b) Market performance

5
4.5

Market performance
4

(2b) Market performance 3.5

Low ID
3
High ID
5
2.5
4.5
2
Market perofrmance

4
1.5
3.5
1
Low SSD
3 Low SCR High SCR
High SSD
2.5
2 Fig. 3. Moderating effect of infrastructure disruptions.

1.5
1 (4a) Risk management performance
Low SCR High SCR

5
Fig. 2. Moderating effect of supply side disruptions.
Risk management performance

4.5
4
Fig. 4a and b indicated that supply chain resilience is useful in
contributing to the risk management performance and market perfor­ 3.5
Low CD
mance measures when firms undergo a high level of catastrophic 3
High CD
disruption. Notably, supply chain resilience is more influential to the 2.5
market performance than risk management performance under a high
level of catastrophic disruption. However, the interaction term was not 2
found to have a significant impact on financial performance in terms of 1.5
ROA, ROE, and net profit, implying the moderating role of catastrophic 1
disruption on supply chain resilience and financial performance was not Low SCR High SCR
exist; that is hypothesis H3c was not supported in this study. To sum up,
if firms operated undergo a high level of catastrophic disruption, (4b)Market performance
improving its supply chain resilience can have a stronger positive impact
on its risk management performance and market performance, lending 5
support for H3a and H3b. 4.5
4
Market performance

5. Discussion and implications

3.5
5.1. Theoretical implications 3
Low CD
High CD
2.5
Supply chain resilience is found to be positively associated with
market and risk management performance, and ROA, ROE, and net 2
profit, consisting with previous studies asserting that firm resilience has 1.5
significant impact on financial and non-financial performance (Hen­
1
dricks et al., 2009; Pettit et al., 2010; Wieland and Wallenburg, 2013; Low SCR High SCR
Lee and Rha, 2016; Yang and Hsu, 2018; Yu et al., 2019). This advances
the literature that it is worth for a firm to invest in the building of
Fig. 4. Moderating effect of catastrophic disruptions.

8
C.W.Y. Wong et al.
resilience capability in this uncertain and turbulent environment.
Notably, the development of supply chain resilience can be positioned as
a firm’s dynamic capability to effectively return, maintain, and recover
from various disruptions and unexpected events in a supply chain which
in turn improve its performance, which is consistent with previous
studies (Golgeci and Ponomarov, 2013; Chowdhury and Quaddus, 2017;
Yu et al., 2019).
The findings also indicate that three kind of supply chain disruptions
were only found to moderate the relationships between supply chain
resilience and risk management and market performance, suggesting the
performance impacts of supply chain resilience are contingent to the
types and levels of disruptions which consistent with previous works
(Golgeci and Ponomarov, 2013; Ambulkar et al., 2015). In particular,
supply chain resilience was positively related to risk management and
market performance under a high level of supply side disruption. Thus, a
firm facing high possibility of supply chain disruptions should engage in
building its resilience capability to cope with disruptions. However,
supply side disruption does not have a moderating effect on the rela­
tionship between supply chain resilience and financial performance in
terms of ROA, ROE, and net profit, suggesting that supply side disrup­
tion does not moderate the relationship. That is supply chain resilience
contributes to financial performance regardless the level of supply side
disruption.
Similarly, infrastructure disruption moderates the relationships be­
tween supply chain resilience and the risk management and market
performance. This finding suggests that supply chain resilience is of
particular importance when in face of a high level of infrastructure
disruption. Thus, a firm was suggested to build supply chain resilience
capability for improving risk management and market performance in
face of a high level of infrastructure disruption, which can be related to
breakdown of production or IT infrastructure. However, infrastructure
disruption was not found to have a moderating effect on the relationship
between supply chain resilience and financial performance in terms of
ROA, ROE, and net profit, implying supply chain resilience contributes
to financial performance regardless the level of infrastructure
disruption.
The study also reveals that catastrophic disruption moderate the
effect of supply chain resilience on risk management and market per­
formance. It is important to note that unlike infrastructure and supply
side disruption that can be prepared for by maintaining buffering ca­
pacity, catastrophic disruption is highly unpredictable with little pre­
vention can be done in advance and it always causes huge losses. Thus, a
frim should engage in improving its resilience capability to react and
recovery from the catastrophic disruption which in turn reduce the
financial losses and improve risk management and market performance.
In particular, a firm facing high possibility of catastrophic disruptions
could enhance its resilience capability to achieve superior risk man­
agement and market performance.
Finally, supply chain resilience is regarded as continuous processing
mechanisms requiring resources and costs to serve as dynamic capability
for a firm to cope with disruptions in a supply chain. The finding con­
tributes to theory by providing empirical evidence that the performance
impact of supply chain resilience as resources and organizational pro­
cessing capacity is contingent on the types of disruptions. This implies
that supply chain disruptions can be coped with by maintaining capacity
and firms are able to strengthen their risk management and market
performance due to the fit of the excess organizational capacity and the
need of additional capacity caused by the disruptions.
5.2. Managerial implications
This study has several managerial implications. First, a firm often
wonders is the developing of resilience worth it? This study finds that
supply chain resilience can be viewed treated as a dynamic capability for
firm to effectively return, maintain, and recover from the disruptions
and has been demonstrated to not only improve firms’ risk management
9
International Journal of Production Economics xxx (xxxx) xxx
and market performance, but also increase the financial performance in
terms of ROA, ROE, and net profit. Managers are thus suggested to invest
resources and excess capacity in supply chain operations and improve its
resilience capability to cope with the various supply chain disruptions.
Second, the firms may never know what types and levels of disrup­
tions they have prevented and what impacts were reduced or avoided
thanks to its supply chain resilience capability. The moderating effect of
disruptions in terms of supply side, infrastructure, and catastrophic, on
risk management and market performance was found in this study. That
is the SCR was found to have positive impact on risk management and
market performance under different levels and types of disruptions. In
particular, a firm facing high possibility of disruptions such as supply
side, infrastructure, and catastrophic was suggested to strength its
resilience capability with buffering resources and capacity to cope with
these disruptions. This enables firms to achieve risk management and
market performance improvement in a high level of supply side, infra­
structure, and catastrophic disruptions. Thus, firms should consider
establishing supply chain resilience to cope with disruptions that are
conventional like supply side, infrastructure and catastrophic
disruptions.
Finally, unlike supply side and infrastructure disruptions, cata­
strophic disruption is highly unpredictable and difficult for prevention
actions to be done in advance. Catastrophic events may interrupt supply
chains for extended periods and resulted in sever financial lost. In
particular, supply chain resilience is found to have more influential to
the market performance than risk management performance under a
high level of catastrophic disruption. Managers were thus suggested to
improving firms’ supply chain resilience which in turn will have a higher
impact on market performance than risk management performance
under a high level of catastrophic disruption.
5.3. Limitations and future research directions
Our work can be extended in a number of directions. First, although
the empirical evidence supports our theoretical reasoning, a proportion
of the variance remains unexplained like most empirical organizational
studies. Moreover, supply chain resilience is conceptualized as multi­
dimensional structure. Future research might incorporate other de­
terminants that are instrumental to develop supply chain resilience.
Second, this study examined three major disruptions that are often
found in real-life cases. Future research might consider examining how
the performance impact of supply chain resilience can be affected by
other situational factors, such as environmental uncertainty and envi­
ronmental munificence, and relational conditions between supply chain
partners. The managers are also suggested to assess the risks when face
these disruptions. Third, supply chain resilience is found to have no
significant influence on the financial performance of these manufac­
turers under the three type of disruption environment. The part of the
reason might be the objective performance (financial index) is an
accumulation of many years of a company’s effort (a sort of panel data),
while the subjective performance (risk management performance and
market performance) is obtained from a cross-sectional survey.
Furthermore, Phillips et al. (2003) noted earnings management via the
employment of deferred tax do have impacts on the actual current
taxable income and therefore the financial index is not an actual
reflection of the current financial performance of a firm. Johnson and
Kaplan (1991) also indicated the financial index used sometimes do not
have relevance to the real financial health condition of a firm. Thus,
future research requires an in-depth future research to investigate the
causes and could examine the issues of inefficiencies and negative
impact on financial performance. Finally, this study was limited to
examine the performance outcomes of supply chain resilience under
different disruptions in manufacturing industry and one country. Future
research could generalize our research model and findings to the other
industries and countries. The model can also help managers to make a
decision when design their supply chain all over the world.
C.W.Y. Wong et al.
Author contribution statement
Ching-Chiao Yang is the corresponding author and is responsible for
ensuring that the descriptions are accurate and agreed by all authors.
Christina W.Y. Wong: Writing- Original draft preparation, Conceptu­
alization, Methodology, Software, Revising. Taih-Cherng Lirn: Writing-
Reviewing and Editing, Visualization, Revising. Ching-Chiao Yang:
Writing- Reviewing and Editing, Methodology, Software, Validation,
Revising. Kuo-Chung Shang: Writing- Reviewing and Editing, Ques­
tionnaire design, Data curation, Investigation, Revising.
Acknowledgments
This work was supported by the Ministry of Science and Technology
in Taiwan (R.O.C) [grant number NSC 101-2410-H-019-024]. The first
author is partially supported by The Hong Kong Polytechnic University
under grant no. G-UA5N.
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