Operational supply risk mitigation of SME and its impact on operational performance

Abstract

Purpose The purpose of this paper is to investigate how buyer–supplier social capital may help mitigate operational supply risk (OSR) of small- and medium-sized enterprises (SMEs). It empirically examines a framework that posits the direct and mediated impacts of three dimensions of buyer–supplier social capital – structural, relational and cognitive – and supplier integration on the OSR of SMEs and consequently their operational performance. Design/methodology/approach This study uses data collected via a questionnaire from 485 manufacturing SMEs in Bangladesh for analysis using structural equation modeling. Findings The analysis reveals that all the three dimensions of buyer–supplier social capital can effectively reduce the OSR of SMEs, either directly or indirectly through supplier integration. The mediating role of supplier integration in the relationship between social capital and OSR is confirmed and the negative impact of OSR on operational performances of SMEs is verified. Research limitations/implications Generalization of the findings needs to be prudent since the study gathered information only from manufacturing SMEs in Bangladesh on the buyer side of the buyer–supplier dyad. Practical implications Findings of this study can provide references for SME practitioners to formulate their OSR mitigation strategies for enhancing operational performance. Originality/value This study adds to the currently scarce literature on OSR of SMEs by combining antecedents and consequences of OSR in a single framework. It also extends the use of buyer–supplier social capital to risk mitigation research.

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