Understanding econo-political risks: impact of sanctions on an automotive supply chain

Abstract

PurposeWe introduce econo-political risks (EPRs) to supply chains (SC). Based on case data from an automotive SC, this research identifies the mechanisms through which a subset of EPRs influences SC operations and outcomes. ApproachAn exploratory case study method is employed for theory development. Interviews with SC professionals of three case companies were the primary data source. Company documents, archival records, and direct observation provided further insights into how EPRs are perceived, how they impact a SC, how SC actors react to them, and what the overall performance results are. FindingsThe research identifies EPRs in terms of scope (flow of material, money, and knowledge) and time, and provides concrete examples, along with the channels through which their impact unfolds, and the responses available to SC actors. We find secondary impacts of EPRs through economic and regulatory channels to be significant, and bankruptcy, strategic reorientation, and single sourcing are common outcomes. By elaborating on the mechanisms through which sanctions impact upon supply chains, and the feasible response trajectories, this research can assist SC actors with more effective management of EPRs. OriginalityThis paper is novel for three reasons: first, it introduces EPRs to research into supply chain risk management (SCRM); second, it addresses SC risks in a developing country, a topic largely missing from the literature; and finally, this research focuses on postevent SC risks, whereas the bulk of SCRM literature focuses on the pre-event phase.

Supply chain risk management and risk ranking in the automotive industry

“…According to the literature consulted, these risks can be classified as external, following the logic of Shahbazi et al (2013). Normative alterations had the highest priority vector in the environmental category, which is in line with the study of Davarzani et al (2015), who prioritized political and economic risk factors, such as restrictive sanctions.…”

“…A study with a distinct focus in relation to others is that of Davarzani et al (2015), who investigated the impacts of political and economic risks on the supply chains of companies in the automotive sector. It was conducted in a developing country, described by the authors as having suffered strong political and economic sanctions in the previous 30 years.…”

The influence of perceived host country political risk on foreign subunits' supplier development strategies

“…Despite its potential for creating severe SC disruptions (Kouvelis, Dong, Boyabatli, & Li, 2011), political risk has received limited attention in the SC/OM literature. SC/OM studies have listed political risk in SC risk management frameworks (Giunipero & Eltantawy, 2004; Kleindorfer & Saad, 2005; Samvedi et al, 2013; Tang & Tomlin, 2008), forecasted political risk events (Bunn & Mustafaoglu, 1978), analyzed the impact of economic sanctions on SC/OM managers' perceptions (Davarzani, Zanjirani Farahani, & Rahmandad, 2015), and identified political risk in offshoring engagements (Hansen et al, 2017). Other studies have integrated variables from the political environment (e.g., government financial incentives, tariffs, nontariff measures) in mathematical models to determine optimal plant (Boujelben & Boulaksil, 2018; Guo et al, 2008; Kouvelis et al, 2004) and supplier locations (Munson & Rosenblatt, 1997; Wang et al, 2011).…”

Perfil de pesquisa sobre gerenciamento de riscos em cadeias de suprimentos

“…Oliveira, U. R. et al Gest. Prod., São Carlos, v. 25, n. 4, p. 671-695, 2018 4.2 Main SCRM models Jüttner et al (2003) pointed out that events like the so-called "millennium bug", spikes in fuel prices, hoof and mouth disease in the United Kingdom and terrorist attacks in the United States reveal the vulnerability of modern supply chains. They reviewed the existing literature on supply chain vulnerability and risk management and compared the findings with the perceptions of managers of various industrial, retail and logistics firms, collected through interviews.…”

“…Marija et al (2015) Utilize the same method in other firms to compare with the results presented in the article. Davarzani et al (2015) Conduct empirical studies to test the proposal of the article. Nooraie & Parast (2015) Increase the number of contextual and organizational variables considered.…”