The impact of operational risk on performance in supply chains and the moderating role of integration

PurposeThis study aims to empirically investigate the impact of operational risk (i.e. supply, manufacturing and demand risks) on supply chain performance and the moderating role of integration (i.e. supplier, internal and customer integrations) in mitigating the impact of these risks, respectively.Design/methodology/approachA research framework of hypotheses is tested by structural equation modeling with data collected from the fourth round of the high-performance manufacturing project.FindingsIt is revealed that manufacturing and demand risks negatively impact operational performance, and more importantly, internal and customer integrations help to reduce the impact of these two risks. Additionally, the effects of both supply risk and supplier integration are only significant for large firms.Practical implicationsSupply chain managers need to appropriately develop the levels of integration to mitigate the adverse impact of operational risk.Originality/valueOperational performance is always threatened by different types of risk that adversely affect the supply, production and demand sides of manufacturing firms. Despite this fact, large-scale data-based empirical research on the impact of operational risk on the performance of supply chains has been scarce. This study aims to fill this literature gap.

Automated summary

This study aims to empirically investigate the impact of operational risk on supply chain performance and the moderating role of integration in mitigating the impact of these risks. The findings show that manufacturing and demand risks negatively impact operational performance, and internal and customer integrations help to reduce the impact of these two risks. Additionally, the effects of supply risk and supplier integration are only significant for large firms.