Sustainability risk in supply bases: The role of complexity and coupling

• Published in: Transportation research. Part E, Logistics and transportation review Logistics and transportation review, 2021-01, Vol.145, p.102175, Article 102175
• Main Authors: Fan, Di, Lo, Chris K.Y., Zhou, Yi
• Format: Article
• Language: English
• Subjects: Health and safety; Operational disruption; Risk; Sustainable supply chain
• ISSN: 1366-5545; 1878-5794
• DOI: 10.1016/j.tre.2020.102175

•First study to prove that complexity and coupling in production could cause and moderate the impact of health, safety and environmental incidents in emerging market.•Complexity and coupling of operations affect the likelihood of health, safety and environment (HSE) incidents.•HSE incidents affect supply bases’ systematic and unsystematic risks Global supply chain managers assessing supplier risk from an HSE perspective. Health, safety, and environmental (HSE) issues are an emerging concern in sustainable supply chain management. Global brands sourcing from high-risk suppliers in emerging markets affect not only brand reputation but also production schedules and product quality. Based on 198 safety and 458 environmental incidents among 318 manufacturing firms in China, we found that incident firms have higher abnormal unsystematic and systematic risk than matched sustainable suppliers without HSE incidents. Reducing operational complexity and coupling can mitigate both likelihood and abnormal risks. The findings have implications for global supply chain managers assessing supplier risk from an HSE perspective.