Into the unknown? Explaining management nonresponse after a supply-base disruption

Abstract

The world is witnessing more supply-base disruptions, where multiple suppliers of a buying firm simultaneously experience disturbed operations. Compared to single-supplier disruptions, supply-base disruptions create a more uncertain situation for a purchasing manager, yet they can also reveal improvement opportunities. Hence, it is theoretically and practically valuable to understand why a purchasing manager might not be willing to explore these opportunities. Adopting a sensemaking perspective, we investigate how two dimensions of supply-base disruption severity, breadth and depth, influence managers' perception of disruption severity and post-recovery action (i.e., suggesting supply-base restructuring ideas). We conducted multiple scenario-based experiments with practitioners and triangulated the experimental results with interviews, finding that both breadth and depth have diminishing, positive effects on perceived severity. Interestingly, depth is less influential than breadth. These findings reveal the circumstances under which the severity of a complex, disruptive situation could be misestimated. Our results also show that supply-base structural complexity (a cue of the task environment) amplifies the positive effect of perceived severity on a manager's inclination to walk into the unknown to propose supply-base restructuring ideas. These findings provide an explanation for management nonresponse after a supply-base disruption.