Supply Chain Risk: Changes in Supplier Composition and Vertical Integration

69 Pages Posted: 18 Feb 2022 Last revised: 21 Nov 2023

See all articles by Nuri Ersahin

Nuri Ersahin

Southern Methodist University (SMU) - Finance Department

Mariassunta Giannetti

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swedish House of Finance

Ruidi Huang

Southern Methodist University (SMU) - Finance Department

Multiple version iconThere are 3 versions of this paper

Date Written: November 16, 2023

Abstract

Using textual analysis of earnings conference calls, we quantify firms’ supply chain risk and explore how firms react when supply chain risk increases. We show that firms with supply chains that span across continents, multinationals, and firms with fewer suppliers of an input face higher supply chain risk. In addition, firms exhibit high supply chain risk when their suppliers also do so. Firms manage supply chain risk by establishing relationships with closer and domestic suppliers and with suppliers that are industry leaders and by vertically integrating, but they continue to work with suppliers in other continents.

Keywords: Supply chains; nearshoring; fragmentation; textual analysis; vertical integration; M&As

JEL Classification: G31, G34, F15

Suggested Citation

Ersahin, Nuri and Giannetti, Mariassunta and Huang, Ruidi, Supply Chain Risk: Changes in Supplier Composition and Vertical Integration (November 16, 2023). Journal of International Economics, Forthcoming, SMU Cox School of Business Research Paper No. 22-07, Swedish House of Finance Research Paper No. 22-07, European Corporate Governance Institute – Finance Working Paper No. 848/2022, Available at SSRN: https://ssrn.com/abstract=4036798 or http://dx.doi.org/10.2139/ssrn.4036798

Nuri Ersahin (Contact Author)

Southern Methodist University (SMU) - Finance Department ( email )

United States

Mariassunta Giannetti

Stockholm School of Economics ( email )

P.O. Box 6501
Sveavagen 65
SE-113 83 Stockholm
Sweden
+46 8 736 9607 (Phone)
+46 8 312 327 (Fax)

HOME PAGE: http://sites.google.com/site/mariassuntagiannetti/Home

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

Ruidi Huang

Southern Methodist University (SMU) - Finance Department ( email )

United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
895
Abstract Views
3,148
Rank
49,195
PlumX Metrics