Belt and road initiative (BRI) supply chain risks: propositions and model development

• Published date: 08 September 2020
• Date: 08 September 2020
• DOI: https://doi.org/10.1108/IJLM-12-2019-0366
• Pages: 777-799
• Author: Jiwat Ram,Zeyang Zhang
• Subject Matter: Management science & operations,Logistics

Belt and road initiative (BRI)

supply chain risks:

propositions and

model development

Jiwat Ram

La Rochelle Business School - Excelia Group, La Rochelle, France, and

Zeyang Zhang

Department of Computer Science, University College London, London, UK

Abstract

Purpose –Belt and road initiative (BRI) is a transcontinental endeavor strategically connecting supply chains

(SCs) and economic infrastructures to ignite business activities and achieve trade benefits. However, the rising

global SC failure costs and risks associated with this initiative (owing to unique geopolitical, economic and

mega-connectivity involving over 70 countries) necessitate examining BRI SC risks. Yet, research on the

subject remains limited, and the purpose of this paper is to address this gap in knowledge.

Design/methodology/approach –A two-pronged approach was taken. First, a data sample of 554 articles

was analyzed and 178 articles found relevant were used to present a systematic, structured framework of risk

factors along operational, economic, financial, social and security dimensions. Then informed by the theory of

risk management and supplemented by literature evidence, we have built a BRI SC risk model.

Findings –The results presented through the model show that BRI SCs face a combination of risks triggered

by operational processes, informational and environmental (PIE) deficiencies. Findings show that lack ofrisk

and liability management, unbalanced risk-sharing partnerships, lack of transparency, inadequate project

evaluation, incompatible corporate governance structures and cyber security all pose threats to BRI SCs

specifically and SCs in general.

Research limitations/implications –Academica lly, the results facilitate theory developme nt by

identifying and proposing seven risk factors and modeling relationship among them and BRI SC risks

outcome. The results also extend application of theory of risk management to SC context.

Practical implications –The findings provide a decision-making tool for managers to assess risk factors in

their SCs, thus enabling improved decision making to avoid, mitigate, transfer or accept risks.

Originality/value –Identifies and proposes a set of seven risk factors that drive BRI SC risks. Develops a

model of BRI SC risks which help build theory of SC risk management.

Keywords Supply chain management, Belt and road initiative (BRI), Theory of risk management, Processes/

Operations, Information, Environment (PIE), “One belt one road”

Paper type Research paper

1. Introduction

The launch of the transcontinental belt and road initiative (BRI) by China in 2013 to connect

people, business operations, supply chains (SCs) and economic infrastructure has changed

the strategic realities for businesses on the path line of this initiative (Th€

urer et al., 2020). The

six economic corridors—making up the core of BRI and attracting heavy investments of an

estimated $1 trillion over the BRI lifecycle (e.g. $46 billion in China Pakistan Economic

Corridor (CPEC) alone), appear to offer opportunities—while posing new challenges—for the

businesses in these corridors (Hahm and Raihan, 2018).

BRI supply

chain risks

777

This paper forms part of a special section “Impacts of the Belt and Road Initiative on Global

Supply Chain and International Logistics”, guest edited by Paul Tae-Woo Lee, Kamonchanok

Suthiwartnarueput, Kevin X. Li, and Ying-En Ge.

The authors would like to sincerely thank the EIC and two anonymous reviewers for their

constructive comments and insightful suggestions on earlier versions of this paper.

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/0957-4093.htm

Received 25 December 2019

Revised 26 May 2020

Accepted 13 August 2020

The International Journal of

Logistics Management

Vol. 31 No. 4, 2020

pp. 777-799

© Emerald Publishing Limited

0957-4093

DOI 10.1108/IJLM-12-2019-0366

It is predicted that all the six corridors will yield sizeable economic gains for the participating

economies. For instance, the China-Indochina Peninsula Corridor is expected to yield an

estimated USD 372 billion or about 3.5% of the group’s total GDP—thelargest gains amongthe

six corridors, followed by USD 216 billion by the New Eurasian Land Bridge, USD 190 billion by

the China-Central-West Asia Economic Corridor, USD 167 billion by the Bangladesh-China-

India-Myanmar Corridor, USD 152 billion by the China-Mongolia-Russia Economic Corridor and

USD 86 billion by the China–Pakistan Economic Corridor (Hahm and Raihan, 2018).

Notwithstanding these potential benefits and gains, businesses connected through BRI

face significant challenges including, but not limited to, financial, security, legal, SC,

transcontinental trade issues and cultural diversities (Wang, 2018). These concerns are

substantiated in a recent report which suggests that “the number of cases Hong Kong

International Arbitration Centre handled involving parties from nations covered by the Belt

and Road Initiative jumped from 77% to 124 last year”(Ng, 2018).

Particularly, establishing BRI SCs (type of global SCs involving trade among over 70

countries) that are operationally sustainable, value-driven and secure remains a priority for

businesses wishing to reap the benefits of connectivity and developments along BRI

economic corridors (Th€

urer et al., 2020). Such priorities are not to be discounted, as a recent

report indicates that global SC risks are on rise costing the “global economy upwards of

£600 billion a year”(PortTechnology, 2018).

The complex geopolitical nature of BRI further exacerbates the situation making BRI SC

seven more susceptible to risks involving financial, operational and security threats among

others (Gholizadeh et al., 2020;Wang, 2018). The debt-financed BRI-based projects raise

concern for BRI SC sustainability (Wijeratne et al., 2018).

Despitethe high stakes for BRI-oriented businessand trade, the existing knowledgeon BRI

SC context,in particular, is limited and the researchon the subject “remains largelyignored”in

SC literature (Alon et al.,2019;Kundu and Sheu, 2019;Th€

urer et al.,2020). While some

researchershave investigatedrisks related to BRI (e.g. Chan,2017;Das, 2017); and SC risks (e.g.

Qazi et al.,2018;Wang et al., 2020) in isolation,little or no research exists thathas examined the

SC risks or the factorsthat explain SC risks in BRI contextspecifically. The studies thatexist

(e.g. Lin, 2017;Wang, 2018;Yuan et al., 2019)provide disparate accountof BRI SC risks which

makes it challengingto understand the risks, even more so given that BRI is still at an early

stage of development. Moreover, studies that are underpinned by a theoreticalstance remain

almost non-existent; this not onlyhampers creation of knowledgein a robust, coherent manner

on one hand but also dilutes potential knowledge transfer to industry, on the other.

We argue that BRI SCs face unique risks compared to other global SCs given the

geopolitical and cultural complexities associated with BRI. Trkman and McCormack (2009)

concur and argue that risks in SCs embedded in different environments (e.g. global SCs such

as BRI) should be investigated specifically due to differing risks structures, intricacies of

supplier relationships, and environmental turbulence factors. Hence, a number of authors

(e.g. Peng, 2018;Th€

urer et al., 2020) have emphasized the importance of furthering research in

BRI SC risks and the conditions that induce such risks.

Addressing the above-discussed gap in knowledge, this study examines the following

research question:

What are the risk factors that explain the risks in SCs associated with BRI?

The main idea of this research is to advance knowledge about the factors that explain BRI SC

risks and modeling them to develop a theoretical understanding of the relationship between

risk factors and outcome. Achieving such an objective is also in line with the argument of

Heckmann et al. (2015), who stressed the need for modeling SC risks by arguing that “the real

challenge in the field of SC risk management is still the quantification and modeling of SC

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