Differences in security risk perceptions between logistics companies and cargo owners

• Pages: 418-437
• Published date: 08 August 2016
• DOI: https://doi.org/10.1108/IJLM-02-2014-0034
• Date: 08 August 2016
• Author: Luca Urciuoli,Juha Hintsa
• Subject Matter: Management science & operations,Logistics

Differences in security risk

perceptions between logistics

companies and cargo owners

Luca Urciuoli

MIT International Logistics Programme,

Zaragoza Logistics Center, Zaragoza, Spain, and

Juha Hintsa

Cross-border Research Association, Echandens, Switzerland and

Department of Operations, HEC Université de Lausanne,

Lausanne, Switzerland

Abstract

Purpose –Supply chain stakeholders may perceive security risks differently and thereby misalign

mitigation strategies. Hence, causing weak spots in supply chains and thereby disruptions. The

purpose of this paper is to determine whether supply chain companies actually perceive security risks

and effectiveness of mitigation strategies differently.

Design/methodology/approach –Two survey studies measuring perception of security risks and

effectiveness of measures have been developed and used to collect data from European and Latin

American companies, grouped as cargo owners and logistics companies.

Findings –The findings of the surveys unveil that only two (out of six) security risks, namely,

violation of customs non-fiscal regulations and illegal immigration, show significant differences

between the two groups of companies. In addition, the surveys show that companies perceive equally

the effectiveness of security measures. This study concludes that supply chains seem to have good

visibility over the security risks of their partners. Hence, in terms of security, supply chain companies

seem to have achieved a common understanding of risks and furthermore are able to act jointly to

secure assets and operations.

Originality/value –Previous research claim supply chain stakeholders may perceive risks

differently and thereby may fail to correctly align mitigation strategies. Yet, to the authors knowledge,

previous research has not empirically demonstrated these differences in perceptions of risks and

mitigation strategies.

Keywords Transportation management, Supply chain management, Risk management,

Supply chain security

Paper type Research paper

1. Introduction

Security is ranked among the top five priorities in supply chain companies (Thomas,

2006). Supply chain security (SCS) has been mainly concerned with preventing crimes

like theft and illicit trade; however, after the terrorist attacks on September 11, 2001,

counterterrorism endeavors have been introduced on the SCS agenda (Sheffi, 2001; Lee

and Whang, 2005; Williamset al., 2008). The consequences of SCSincidents are amplified

by the level of globalization of modern supply chains (Closs and McGarrell, 2004).

The International Journal of

Logistics Management

Vol. 27 No. 2, 2016

pp. 418-437

©Emerald Group Publishing Limited

0957-4093

DOI 10.1108/IJLM-02-2014-0034

Received 25 February 2014

Revised 26 August 2014

1 February 2015

14 April 2015

Accepted 5 May 2015

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

www.emeraldinsight.com/0957-4093.htm

The authors of this paper would like to thank the CORE project (Consistently Optimised Resilient

Secure Global Supply Chains, Grant Agreement No. 603993), a project funded under the

European Union’s Seventh Framework Programme for research, technological development, and

demonstration. This publication reflects the views only of the authors, and the EU Commission

cannot be held responsible for any use which may be made of the information contained therein.

418

IJLM

27,2

Likewise, following from the “9/11”incident, new security initiatives and standards

covering international trade have increased remarkably (Kommerskollegium, 2008).

Security risks –among many other risks –undermine supply chains and therefore

are often clustered under the theoretical umbrella of supply chain risk management

(Williams et al., 2008). Companies in supply chains are expected to cyclically identify,

assess, mitigate and optimally respond to risks (Sodhi et al., 2012). In addition, this

process needs to be performed in a collaborative manner by taking into consideration

the risks of all the partners in the supply chain and ultimately by implementing

common and equally effective mitigation strategies, i.e. aligning strategies (Christoph er

and Peck, 2004). However, SCS experts commonly warn that major misunderstanding

and misalignment of strategies exist today, especially between goods owners an d

companies like shippers and carriers that are primarily in contact with cargo and

containers (OECD, 2005). These misalignments may not equally incentivize companies

in improving security, thus ultimately leading to increased vulnerability and exposures

to disruptions (Sheffi, 2001; Rice and Spayd, 2005; Goodchild et al., 2012).

Previous research gives indication that supply chain companies may perceive risks

differently (Sitkin and Weingart, 1995; Brookes and Singh, 2009). It is well known that risks

are subjective by nature and may be perceived differently depending on the “risk appetite”

of managers –e.g. risk taking, neutral or risk-averse –or the specific business environment

in which a company operates (e.g. political instability, local culture, level of corruption/

transparency, etc.) (Manuj and Mentzer, 2008). Other research explains that in order to

eliminate weak points in the supply chain it is crucial to align strategies; in other words, the

mitigation strategies implemented by supply chain stakeholders have to be perceived as

equally effective (Jüttner et al., 2003; Christopher and Peck, 2004). Hence, researchers agree

that lack of this common understanding of risks and mitigation strategies implies lack of

equal incentives to mitigate risks (Mitchell, 1995; Goodchild et al., 2012). Yet, to our

knowledge, previous research has not empirically demonstrated these differences in

perceptions of risks and mitigation strategies.

The main research question of this study is:

RQ1. Do supply chain companies perceive security risks and mitigation measures in

a different or a similar manner?

To understand the potential differences supply chain companies are grouped in two

main clusters, that is cargo owners and logistics companies; thereafter a survey to

measure perceptions about the degree of relevance of security risks and available

security measures is developed.

The structure of this paper is the following: after the introduction section, the theoretical

framework is expounded, including three main topics: supply chain risk management, SCS

and unequal perceptions of security risks and effectiveness of mitigation strategies. This is

followed by the methodology, the results and the final conclusions.

2. Literature review

2.1 Supply chain risk management

SCS risks analyzed in this paper have been identified to form a component of supply

chain risk management (Williams et al., 2008). Hence, this section starts with an

overview of risk management activities in supply chains. Sodhi et al. (2012) synthesize

the supply chain risk management process elements as identification of risk,

assessment of risk, mitigation of risk and responsiveness to risk (Figure 1). The first

step in a risk management process, identification of risk, includes collecting and

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Differences in

security risk

perceptions