Managing Supply Chain Disruption Recovery: The Role of Organizational Justice

Abstract

Abstract:Supply chain disruptions negatively impact the economy and individual organizations. However, as many companies recover from disruptions (COVID-19 being a recent example), less attention has been paid to how these events impact business-to-business (B2B) relationships characteristic of supply chains. Drawing on justice theory, we examine how the suppliers’ management of the recovery process affects behavioral reactions in the context of supply chain relationships. This study empirically examines the role that partners’ recovery process, honesty, effort, availability, and outcome fairness play in influencing satisfaction, future business volumes, and word-of-mouth. Using ordinary least squares (OLS) regression to test survey data, results indicate that how recovery processes are managed positively affects satisfaction, reduces the likelihood of future business loss, and affects the propensity to communicate negatively about a relationship partner. Unexpectedly, outcome fairness (distributive justice) has a significant positive impact on negative word-of-mouth, indicating that increased perceptions of distributive justice actually increase negative behavioral outcomes in certain settings. We conduct exploratory post hoc serial mediation analysis to further examine this finding and uncover a potential extension to the boundaries of a justice lens. These post hoc results, which generally confirm the OLS results, drive opportunity for better understanding of complaining behavior and navigating the tricky environment associated with managing B2B relationships in a post-disruption environment.