The COVID-19 Pandemic: Supply Chain Disruption, Wealth Effects, and Corporate Responses

66 Pages Posted: 11 Sep 2020 Last revised: 16 Oct 2020

See all articles by Karca Aral

Karca Aral

Syracuse University - Department of Supply Chain Management

Erasmo Giambona

Syracuse University - Whitman School of Management - Finance Department; James D. Kuhn Center for Real Estate

Ricardo Lopez Aliouchkin

Syracuse University - Whitman School of Management

Date Written: September 3, 2020

Abstract

How did the COVID-19 pandemic affect firm-supplier-customer relationships? We find that, by the end of 2020q1, U.S. firms lost as many as 10.3% of their Chinese suppliers, suffering market value losses of up to $1.4 trillion. Affected U.S. firms were unable to relocate their supply chains, leading to lower inventory, sales, and operating performance. In response, these firms tapped the debt market, and partly built cash reserves. Employment decreased by 5.2%. Chinese suppliers suffered milder consequences. Sourcing from a single manufacturing hub has drawbacks, but policymakers should avoid trade tensions because firms face constraints trying to relocate their supply chains.

Keywords: Firm-supplier-customer relationships, supply chain disruption, wealth effects, COVID-19, sourcing strategies, inventory, credit, cash reserves, investment, employment

JEL Classification: G12, G14, G31, G32, G33, L1, L2, L5

Suggested Citation

Aral, Karca and Giambona, Erasmo and Lopez Aliouchkin, Ricardo, The COVID-19 Pandemic: Supply Chain Disruption, Wealth Effects, and Corporate Responses (September 3, 2020). Available at SSRN: https://ssrn.com/abstract=3686744 or http://dx.doi.org/10.2139/ssrn.3686744

Karca Aral

Syracuse University - Department of Supply Chain Management ( email )

United States

Erasmo Giambona (Contact Author)

Syracuse University - Whitman School of Management - Finance Department; James D. Kuhn Center for Real Estate ( email )

721 University Avenue
RM 640
Syracuse, NY 13244-2450
United States
315 443-4885 (Phone)

Ricardo Lopez Aliouchkin

Syracuse University - Whitman School of Management ( email )

721 University Ave
Syracuse, NY NY 13244
United States
+13154433672 (Phone)

HOME PAGE: http://www.ricardolopezaliouchkin.com/

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