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Publications
  • 2012
  • Working Paper
  • HBS Working Paper Series

When Supply-Chain Disruptions Matter

By: William Schmidt and Ananth Raman
  • Format:Print
  • | Language:English
  • | Pages:36
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Abstract

Supply-chain disruptions have a material effect on company value, but this impact can vary considerably. Thus, it is important for managers and investors to recognize the types of disruptions and the organizational factors that lead to the worst outcomes. Prior research remains unsettled as to whether improvements to firm operational efficiency aggravate or alleviate the impact of disruptions. Improved operational efficiency may leave firms more exposed when a disruption occurs, or it may improve firms' agility and allow them to respond more effectively to a disruption. We hypothesize that the impact of improved operational efficiency depends on whether the disruption is due to factors that are internal versus external to the firm and its supply chain. We use a sample of over 500 disruptions collected from company press releases and find empirical evidence that a higher rate of improvement in operating performance aggravates the impact of internal disruptions but not external disruptions. By taking advantage of an exogenous policy shock regarding corporate disclosure rules, we also find that managers show systematic bias in the disruptions they choose to announce, and we control for this effect in our model specifications.

Keywords

Supply Chain; Operations; Performance Efficiency

Citation

Schmidt, William, and Ananth Raman. "When Supply-Chain Disruptions Matter." Harvard Business School Working Paper, No. 13-006, July 2012. (Revised January 2013.)
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About The Author

Ananth Raman

Technology and Operations Management
→More Publications

More from the Authors

    • January–February 2022
    • Manufacturing & Service Operations Management

    Operational Disruptions, Firm Risk, and Control Systems

    By: William Schmidt and Ananth Raman
    • 2021
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    Multiple Team Membership, Turnover, and On-Time Delivery: Evidence from Construction Services

    By: Hise O. Gibson, Bradely R. Staats and Ananth Raman
    • June 2021 (Revised October 2021)
    • Faculty Research

    Nissan's Response to the COVID-19 Pandemic

    By: Ananth Raman, William Schmidt and Ann Winslow
More from the Authors
  • Operational Disruptions, Firm Risk, and Control Systems By: William Schmidt and Ananth Raman
  • Multiple Team Membership, Turnover, and On-Time Delivery: Evidence from Construction Services By: Hise O. Gibson, Bradely R. Staats and Ananth Raman
  • Nissan's Response to the COVID-19 Pandemic By: Ananth Raman, William Schmidt and Ann Winslow
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