Robustness and resilience of supply chains during the COVID‐19 pandemic

Abstract

Using a unique firm‐level data set from Asia, this study examines what determined the robustness and resilience of supply chain links, that is, the ability of maintaining links and recovering disrupted links by substitution, respectively, when firms faced economic shocks due to the spread of the coronavirus disease (COVID‐19). We find that a supply chain link was likely to be robust if the link was between a foreign‐owned firm and a firm located in the foreign‐owned firm's home country, implying that homophily on a certain dimension generates strong ties and thus supply chain robustness. We also find that firms with geographic diversity of customers and suppliers tended to increase their transaction volume with one partner while decreasing the volume with others. This evidence shows that firms with diversified customers and suppliers are resilient, mitigating the damage from supply chain disruption through the substitution of partners. Furthermore, the robustness and resilience of supply chains are found to have led to higher performance.

Las políticas de desarrollo productivo frente a los nuevos imperativos de las cadenas globales de valor. Edición 2024

“…Frente a este nuevo contexto, las firmas pueden actuar en dos dimensiones principales: una es tomando medidas para minimizar las disrupciones, y otra es tomando medidas para recuperarse rápidamente en el caso de que esas disrupciones ocurran. 19 Algunos autores sugieren que la primera dimensión hace referencia a la robustez de las CGV, y la segunda a la resiliencia (Miroudot, 2020a;Baldwin y Freeman, 2022;Todo et al, 2022), mientras que otros unifican las dos dimensiones bajo el paraguas de la resiliencia (Schwellnus et al, 2023). Para la mayor parte de este estudio, se seguirá este último criterio (una discusión sobre las interacciones entre robustez y resiliencia se presenta en el Box 2.3).…”

Uncertainty of supply chains: Risk and ambiguity

“…To provide a context, we start the brief review of the relevant literature by evidencing the propagation of idiosyncratic and aggregate shocks through supply chains and the cascading disruptions at the aggregate level (e.g. Elliott & Golub, 2022; Todo et al., 2023).…”

“…Todo et al. (2023) use firm‐level survey data for 10 ASEAN countries and India to study the degree of the impacts of COVID‐19 on supply chains. Firm‐level evidence from East Asia confirms that firms with diversified customers and suppliers are more resilient, mitigating the damage from supply chain disruption through the substitution of upstream suppliers.…”

“…In the age of globalisation of complex cross‐border production networks, lower cost is usually associated with economies of scale in input sourcing, whereas higher quality inputs tend to be found in markets with niche expertise—both driving company participation in GSCs (Baldwin & Freeman, 2022). The specialisation and cost advantages that arise from involvement in GSCs are unavoidably associated with greater uncertainty in the face of shocks, such as global pandemics, the climate crisis and adversarial attacks (Todo et al., 2023). In the same time, the landscape of hybrid threats is expanding including new forms such as the weaponisation of global supply chains (Hybrid CoE, 2022).…”

Las políticas de desarrollo productivo frente a los nuevos imperativos de las cadenas globales de valor

“…Estas medidas tuvieron su máximo alcance hacia abril de 2020 y se fueron flexibilizando gradualmente a lo largo de ese año y el siguiente, para prácticamente desaparecer en 2022. Nuevamente dando cuenta de la capacidad de propagación de eventos inesperados, el impacto se hizo sentir no solamente en las economías locales directamente afectadas por estas restricciones sino también en otras economías indirectamente vinculadas y afectadas por las disrupciones resultantes en las cadenas de suministro (Todo et al, 2022). Un pilar fundamental que esta crisis afectó fue el del transporte internacional de bienes (ver Box 2.2).…”