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The role of supplier collaboration and risk management capabilities in managing product complexity

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Abstract

This research presents a theoretical framework to investigate how firms with limited resource maintain and improve their performance facing the problems incurred by product complexity. It considers operational level supplier collaboration as firms’ strategy to reduce the negative impact of product complexity. It also examines the mediating role of risk management capabilities between supplier collaboration and firms’ performance. Survey data was collected from 264 U.S. manufacturing firms to test the hypothesized relationships in the proposed model using Structure Equation Modeling methodology. The findings indicate that product complexity motivates firms to collaborate with their suppliers. Supplier collaboration at operational level enables firms to achieve better performance through improving firms’ risk management capabilities toward normal risks, internal processing risks, and extraordinary risks with limited resource investment. This research contributes to risk management literature through conceptualizing the concept of risk management capabilities and empirically testing its role as a mediating factor between supplier collaboration and firms’ performance. The findings of this research also provide useful insights about how to handle product complexity through basic level collaboration with suppliers.

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Funding

This research was supported by National Natural Science Foundation of China under Grant NSFC (71872051, 71472049, 71531005, 71629001, 91746302).

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Authors and Affiliations

  1. School of Management, Shanghai University, 333 Nanchen Road, Shanghai, 200444, China

    Shuting Li

  2. School of Management, Fudan University, 670 Guoshun Road, Shanghai, 200433, China

    Xiangfeng Chen

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  1. Shuting Li
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  2. Xiangfeng Chen
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Correspondence to Xiangfeng Chen.

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Li, S., Chen, X. The role of supplier collaboration and risk management capabilities in managing product complexity. Oper Manag Res 12, 146–158 (2019). https://doi.org/10.1007/s12063-019-00144-w

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