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Are business continuity programs (BCPs) useful in improving company performance? Risk management research suggests that BCPs are important in response and recovery from disruptions. However, critics suggest that BCPs rely too much on known risks and are overly complicated. This creates a decision dilemma regarding whether to invest in BCPs or not. Using two empirical studies, this manuscript offers theoretical and empirical evidence as to whether BCPs help limit the damage caused by supply chain disruptions and improve company financial performance. Using structural contingency and organizational information processing theories, the study develops hypotheses on how BCPs channel resources to recover from supply chain disruptions, contingent on a company's flexible or procedural response orientation. In Study‐1, the hypotheses are tested based on a combination of subjective (Likert‐based responses) and objective (historical financial performance) data gathered and matched from a cross‐section of Italian companies. Results suggest that BCPs are beneficial to companies with a procedural or flexible orientation in limiting the damage caused by supply chain disruptions. Companies with strong BCPs show better financial performance in comparison to their competition. In Study‐2, a vignette‐based factorial experiment is used to offer insight on how managers perceive the effect of flexible or procedural response orientation on limiting the operational damage of disruptions. Finally, post‐hoc analyses using fuzzy set qualitative comparative analysis (fsQCA) offers further evidence of a strong link between BCPs and financial performance (return on assets).

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We assess the effectiveness of incorporating three types of redundancy practices(pre-positioning inventory, backup suppliers, and protected suppliers) intoa firm's supply chainthat isexposed to two types of risk: supply risk and environmental risk. Supply risk disrupts an individual supplier, while environmental risk makes a number of suppliers in a given region unavailable.An additional factor is supplier interdependence,where a disruption in one supplier may also disrupt other active suppliers. Utilizing the concept of a decision tree to capture different disruption scenarios, we develop a two-stage mixed-integer programming (two-stage MIP) model as a General Model to address the problem of supplier selection and order allocationunder supplier dependencies and risk of disruptions.In the General Model, multi-sourcing is the only supplier strategy that the firm implements. Then we develop three separate extensions of theGeneral Model,one foreach of the three redundancy practices, and evaluate the expected supply chain costof each extended model. We quantitatively show how adding redundancy to the supply chain in different forms, along with contingency plans, can help firms mitigate the impact of supply chain disruptions.The findings suggest thatall three strategies reduce costs and risks compared to the General Model. An analysis of reliability, risks, dependence, and costs is conducted on each strategy to provide insights into supplier selection, demand allocation, and capability development in a supply chain under supply chain risks.Finally, we show that regionalizinga supply chain is an effective way to mitigate the negative impacts ofenvironmental disruptionson the supply chain.