Making dairy supply chains robust against corruption risk: a systemic exploratory study

AuthorXiaojing Liu, Tiru Arthanari, Yangyan Shi
Publication Date11 Nov 2019
Making dairy supply chains
robust against corruption risk:
a systemic exploratory study
Xiaojing Liu
Department of Information Systems &Operations Management, Business School,
The University of Auckland, Auckland, New Zealand and
Department of Management Science and Engineering,
School of Economics and Management,
Zhejiang Sci-Tech University, Hangzhou, China
Tiru Arthanari
ISOM Department,
University of Auckland Business School, Auckland, New Zealand, and
Yangyan Shi
College of Economics and Management,
Nanjing Agricultural University, Nanjing, China;
Department of Management, Macquarie Business School,
Macquarie University, Sydney, Australia and
Centre for Supply Chain Management,
University of Auckland, Auckland, New Zealand
Purpose To improve robustness of a dairy supply chain (SC) against corruption, the purpose of this paper
is to propose a systemic model of a corruption impacted dairy SC, exposing relationships among SC
operations, risks and the impact of corruption.
Design/methodology/approach Cases from the dairy industry in New Zealand (NZ) are used for
thematic analysis of interview data collected from participants at senior levels of NZ dairy firms. Based on
these and other inputs from literature, a systemic model is built subsequently.
Findings Mitigating certain risks can significantly alleviate the impact of corruption, an external factor, on
supply chain performance (SCP). The causal loop diagram (CLD) developed here brings out the modifying
effect of corruption on dairy risks and SCP.
Practical implications The illustration of the CLD helps business managers better understand the
interactions among risk variables and explains the systemic reasons for SC vulnerability.
Originality/value This is the first paper to construct a holistic system to comprehensively reveal the
interactionsof supply chain risks (SCRs) and the impact of corruption.Also, by utilizing SCR interactions,this
studyindicates a pathway to mitigatethe negative effectsof corruption throughimproving dairy SC robustness.
Keywords Australia, Process management, Qualitative interviews, Supply chain risk
Paper type Research paper
1. Introduction
Corruption is the abuse of entrusted power for private gain(Transparency International, 2018),
and has various forms, including bribery of public officials, bribery and embezzlement in the
private sector, trading in influence, obstruction of justice and abuse of function (United Nations
Global Compact, 2010). From the perspective of supply chains (SCs), private-to-public corruption
The International Journal of
Logistics Management
Vol. 30 No. 4, 2019
pp. 1078-1100
© Emerald PublishingLimited
DOI 10.1108/IJLM-02-2018-0039
Received 16 February 2018
Revised 29 August 2018
10 April 2019
19 July 2019
Accepted 19 August 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
The authors acknowledge the sponsorship of A project funded by the Priority Academic Program
Development of Jiangsu Higher Education Institutions (PAPD)and Fundamental research funds for
the central universities of China (Project No. SKCX2018002).
(companies bribe government officials for contracts or services) only occupies a minor proportion
(Transparency International, 2009). Different researchers study corruption from varying
perspectives like culture, economy and politics. Lack of systemic research on corruption led Ullah
and Arthanari (2011) and Ullah et al. (2012) to integrate variables related to corruption in various
realms into a holistic system. These studies present a high-level system dynamic model of the
complex interactions among such variables. Corruption is a matter of concern, also due to the
disastrous impacts and penetration over the whole SC. However, research works on corruption
from the perspective of SCs are rather limited (Arnold et al., 2012; Webb, 2016). Prevention of
corruption involves high cost (United Nations Global Compact, 2010). Low cost-effectiveness of
preventive strategies motivates exploration of ways to mitigate corruptionsimpactonSCs.
The complexityof SCs arises from interrelationships and interdependenciesamong entities
in the supply system(Ghadge et al., 2013). Such interdependencies lead to uncertainty (Pfeffer
and Salancik,1978), and SCs are thus exposed to disruptions in various processes.Corruption
would increase the complexity of disrupted SCs. The effect of SC disruptions could be
modified in the presence of corruption. However, the impact of corruption on SCs is lack of
elaborate research; also, no research focuses on how to mitigate corruptionsimpactonSCs.
Proactive and reactive strategies are recognized to improve resilient ability of firms
(Wieland and Wallenburg, 2012, 2013), i.e., robustness (proactive) and agility (reactive).
Wieland and Wallenburg (2012) suggest more robustness studies are needed, and
robustness is defined as the ability of a supply chain to resist change without adapting its
initial stable configuration.A robustness strategy cannot deal with all SC disruptions,
and robustness against somethingis highlighted as an important aspect in Monostoris
(2018) study.
This paper investigates robustness against an external factor corruption, which
modifies the effect of internal factors (i.e. supply chain risks (SCRs)) and consequently
modifies supply chain performance (SCP). This adds to robustness research by offering a
new perspective. Meanwhile, enhancing SC robustness against corruption complements the
purpose of mitigating corruptions impact on SCs.
As a sensitive topic, corruption within SCs has not been well elaborated in industrial
practices. The nature of this topic determines the difficulty of data collection. The sensitivity
inhibits participants from free expression of their perceptions. Choosing New Zealand (NZ),
one of the least corrupt countries, is beneficial to reducing sensitivity in the process of data
collection. In terms of businesses, NZ still needs to fight against corruption, since there is
little relationship between national corruption level and actual bribery performed by its
firms ( Jeong and Weiner, 2012). Further, we collected empirical data in NZ dairy industry to
operationalize this research. Consecutive crises in the dairy sector result in heightened
concerns in firms and individuals about product quality and safety. NZ is an international
leader in producing and exporting dairy products, with more probable exposure to
corruption. Its dairy industry forms a large portion of export, taking up 3.5 percent of the
national GDP (Ballingall and Pambudi, 2017). NZ dominates 28 percent of the international
dairy trade, and only less than 4 percent of the production of milk is served to the domestic
markets (Shadbolt and Apparao, 2016).
The purpose of this study is to provide a ground study for robustness analysis against
corruption, with empirical data collected from NZ dairy firms. There are three major
research questions:
RQ1. What types of SCRs exist in the NZ dairy industry?
RQ2. How does corruption modify the effect of dairy risks and SCP?
RQ3. How does a firm improve SC robustness against corruption from the perspective of
a holistic system?
Making dairy
SC robust
corruption risk

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