Supply chain resilience to low-/high-impact disruptions: the influence of absorptive capacity

• DOI: https://doi.org/10.1108/IJLM-12-2020-0497
• Published date: 04 October 2021
• Date: 04 October 2021
• Pages: 214-238
• Subject Matter: Management science & operations,Logistics
• Author: Joseph Roh,Travis Tokar,Morgan Swink,Brent Williams

Supply chain resilience to

low-/high-impact disruptions:

the influence of absorptive capacity

Joseph Roh, Travis Tokar and Morgan Swink

Neeley School of Business, Texas Christian University, Fort Worth, Texas, USA, and

Brent Williams

Walton College of Business, University of Arkansas, Fayetteville, Arkansas, USA

Abstract

Purpose –The lean and global character of supply networks today opens supply chains to potential

disruptions, especially in volatile environments. Most disruptions are of relatively low potential impact;

however, firms also occasionally face high-impact disruptions that may even threaten survival. This study

applies and extends absorptive capacity concepts to organize resilience capabilities identified in the literature

and to examine whether capabilities that provide low-impact resilience are different from those that provide

high-impact resilience. A second and related objective is to evaluate whether low-impact resilience supports

high-impact resilience through “learning by experience.”

Design/methodology/approach –Survey and industry data are used to understand capabilities involved

with achieving both low-impact resilience and high-impact resilience.

Findings –The results of our analysis of survey and industry data uncover significant complex interactions in

the effects of capabilities and volatility on resilience; suggesting that different absorptive capacity capabilities

are related to low-impact resilience and high-impact resilience, respectively, and these effects depend on

industry context. Moderating influences of exploitation capability and environmental volatility are consistent

with a “learning by experience”explanation of the association of low-impact resilience to high-impact

resilience.

Originality/value –This study thus provides a unifying framework with which to consider resiliency

capabilities. Further, it answers a question raised in prior research, and it extends our understanding of

important relationships between capabilities for different levels of resilience.

Keywords Resilience, Low-impact disruptions, High-impact disruptions, Absorptive capacity

Paper type Research paper

1. Introduction

Widely reported disruptive events highlight the challenges faced by supply chain

managers who must cope with unexpected work stoppages and material shortages in their

supply chains. Disasters such as the 2011 earthquake and subsequent tsunami in Japan or

work stoppages such as the longshore union’s US west coast ports labor dispute in 2014–

2015 and the COVID-19 pandemic in 2020 underline the seriousness of operational and

financial impacts at the firm level. In addition, research quantifies the relative financial

impacts of sizable supply chain “glitches”(Hendricks and Singhal, 2005). As an example,

the disruption caused by the recent six-day blockage of the Suez Canal held up an estimated

$400 million per hour in global trade and created tremendous cost due to delayed

shipments, port congestion and some ships re-routing their voyage to Europe around

Africa (LaRocco, 2021;Faucon and Kalin, 2021). Perhaps as a result, firms are more

regularly reporting disruption information in annual reports and proxy statements

(Larsson and Kamal, 2019). Moreover, recent business publications suggest volatility in the

business environment is increasing; articles regarding technological disruption, trade wars,

food and drug safety issues, pandemics, economic restructuring in Europe and boarder

battles across Europe, Asia and North America dominate the popular press (e.g. Larsson

and Kamal, 2019, 2015; Yauch, 2018). Due to the resulting performance impacts associated

with supply chain disruption, organizations have turned their attention to better

IJLM

33,1

214

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 29 December 2020

Revised 10 April 2021

14 June 2021

15 September 2021

Accepted 16 September 2021

The International Journal of

Logistics Management

Vol. 33 No. 1, 2022

pp. 214-238

© Emerald Publishing Limited

0957-4093

DOI 10.1108/IJLM-12-2020-0497

understanding and managing supply chain risk. Accordingly, organizations have

improved their capabilities to respond to disruptions and manage supply chain risks to

maintain business continuity to reduce costly disruptions. Consequently, being resilient,

that is, minimizing operational performance effects that arise from such disruptions, has

become an important area of focus for supply chain managers (Van Hoek, 2020).

Volatility in economic, social and environmental conditions will likely continue to drive

infrequent, major disruptions in supply chains; however, the vast majority of disruptions are

more frequent and potentially less impactful. This pattern of disruptions raises interesting

questions about how firms develop resilience against both high-frequency/low-impact and

low-frequency/high-impact events. Several studies argue that capabilities required to

manage low-impact disruptions are different from those required for high-impact disruptions

(e.g. Ambulkar et al., 2015;Kleindorfer and Saad, 2005). On the other hand, Sheffi (2005)

asserts that frequent and “small”operational disruptions better condition organizations to

manage high-impact disruptions. His conversation with a UPS executive suggests that

“disruptions are really normal,”given weather, traffic, road closures and a multitude of other

low-impact problems. Sheffi (2005) suggests that, because UPS’s processes to handle

disruptions are tested daily, UPS is also better able to handle high-impact disruptions. Sitkin

(1992) makes similar arguments. However, other researchers maintain that learning from low-

impact disruptions and learning from high-impact disruptions are inherently different (e.g.

Hora and Klassen, 2013;Kleindorfer and Saad, 2005). Research to date thus provides little

guidance concerning whether the capabilities required for resilience differ between low-

impact and high-impact disruptions and whether firms “learn from experience”through

managing disruptions.

To address these issues, we first review prior literature on resilience capabilities and

employ an absorptive capacity lens to organize and unify foundational factors. Second, we

develop a conceptual model that offers an alternative view of the relationships among

absorptive capacity dimensions. We extend prior conceptualizations and empirical studies

(e.g. Zahra and George, 2002;Setia and Patel, 2013) by theorizing that each dimension of

absorptive capacity represents an independent capability (Jansen et al., 2005), and that the

capabilities interact contingently (Todorova and Durisin, 2007). Third, we analyze data

collected from a global survey of supply chain managers to investigate whether resilience

against low-impact disruptions is associated with the same or different capabilities than

those associated with resilience against high-impact disruptions. Our results show that

commonalities or differences among capabilities associated with high and low-impact

resilience depend on environmental volatility. Fourth, we develop evidence supporting the

proposition that resilience against low-impact disruptions engenders resilience against high-

impact disruptions. Significant moderating effects of exploitation capability and volatility

suggest that “learning by experience”might explain the positive association between low and

high-impact resilience. These insights could also provide important guidance to managers as

they consider various strategies and investments to safeguard their organizations from

supply chain disruptions, both large and small.

2. Literature review

2.1 Resilience in the supply chain

The topic of resilience is frequently addressed in supply chain operations related literature,

especially in terms of identifying capabilities organizations can employ to mitigate risks and

the operational performance effects of disruption events (Seyedghorban et al., 2021). Notable

studies include Craighead et al. (2007), who performed qualitative interviews to examine

supply chain disruptions. Based on practitioner interview data, the authors argue that both

warning and recovery capabilities are involved in mitigating the severity of supply chain

disruptions. They describe a warning capability that involves knowledge creation through

Supply chain

resilience

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