As supply chains become more complex, firms face increasing risks of supply disruptions. The process through which buyers make decisions in the face of these risks, however, has not been explored. Despite research highlighting the importance of behavioral approaches to risk, there is limited research that applies these views of risk in the supply chain literature. This paper addresses this gap by drawing on behavioral risk theory to investigate the causal relationships amongst situation, representations of risk, and decision‐making within the purchasing domain. We operationalize and explore the relationship between three representations of supply disruption risk: magnitude of supply disruption, probability of supply disruption, and overall supply disruption risk. Additionally, we draw on exchange theories to identify product and market factors that impact buyers’ perceptions of the probability and magnitude of supply disruption. Finally, we look at how representations of risk affect the decision to seek alternative sources of supply. We test our model using data collected from 223 purchasing managers and buyers of direct materials. Our results show that both the probability and the magnitude of supply disruption are important to buyers’ overall perceptions of supply disruption risk. We also find that product and market situational factors impact perceptions of risk, but they are best understood through their impact on perceptions of probability and magnitude. Finally, we find that decisions are based on assessments of overall risk. These findings provide insight into the decision‐making process and show that all three representations of risk are necessary for fully understanding risky decision‐making with respect to supply disruptions.

The rich stream of supply disruption risk (SDR) literature incorporates several different theories and constructs across studies, but lacks a unifying decision‐making framework. We review 79 SDR studies and advance a comprehensive framework, grounded in enactment theory, which integrates the disparate elements of SDR research and offers new insights into the SDR decision‐making process. Enactment theory posits a three‐stage, closed‐loop process, consisting of enactment, selection and retention, through which individuals process and make sense of equivocal environments. We suggest that this sense‐making process also underlies SDR decision‐making, and provides the theoretical underpinnings for the environmental, organizational and individual factors that affect the formation of buyers' perceptions of SDR and the actions they take to mitigate such risks. In accordance with our conceptual framework, we develop seven propositions that advance the social and psychological factors that drive the idiosyncratic nature of SDR decision‐making.

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T his study uses a service operations management (SOM) strategy lens to investigate chain store retailers' strategic design responsiveness (SDR)-a term that captures the degree to which retailers dynamically coordinate investments in human and structural capital with the complexity of their service and product offerings. Labor force and physical capital are respectively used as proxies for investments in human capital and structural capital, whereas gross margins are proxies for product/service offering complexity. Consequently, SDR broadly reflects three salient complementary choices of SOM design strategy. We test the effects of "brick and mortar" chain store retailers' SDR on current and future firm performance using publically available panel data collected from Compustat and the University of Michigan American Customer Satisfaction Index databases for the period 1996-2011. We find that retailers that fail to keep pace with investments in both structural and human capital exhibit short-term financial benefits, but have worse ongoing operational performance. These findings corroborate the importance of managers strategically maintaining the complementarity of design-related choices for improving and maintaining business performance.

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We develop a model to evaluate retail store operational design strategies using an information-processing perspective of organizational design. We propose that three model constructs pertaining to in-store shopper task uncertainty-the product mix complexity, the service production complexity, and the product mix changeover-create shopper encounter information requirements (IR). These requirements can be met using specific retail service operational design choices for managing shopper encounters, namely, designing layouts for self-service (SS) and providing employees with task empowerment (TE). The model is then operationalized using a two-stage approach to develop new multi-item, measurement scales. The psychometric properties and predictive validity of the scales and model are then confirmed by using structural equation modeling with survey data from 175 merchandise retail store managers. We find that our model can be generically applied across the retail industry to understand how shopper encounter IR motivate retailer store design choices and can be used to determine whether to design stores for SS or to provide store employees with TE. We then evaluate the efficacy of the studied store design choices on customer delivery satisfaction, and offer some suggestions for future research.