Content area
Full Text
Introduction
Global supply chains are a source of competitive advantage. Global configurations of firms provide access to cheap labor and raw materials, better financing opportunities, larger product markets, arbitrage opportunities, and additional inducements offered by host governments to attract foreign capital ([3] AlHashim, 1980; [55] Kogut and Kulatilaka, 1994). However, coupled with these benefits that entice firms to go global are the uncertainties and consequent risks that managers face in global supply chains. As [11] Barry (2004) argues, "An enterprise may have lowest over-all costs in a stable world environment, but may also have the highest level of risk - if any one of the multiple gating factors kink up an elongated global supply chain!"
There is wide acknowledgement in the literature of the risks and uncertainties in global supply chains. Although risk management in multinational enterprises has been examined ([8] Baird and Thomas, 1985; [9] Baird and Thomas, 1991; [19] Carter and Vickery, 1989; [39] Ghoshal, 1987; [54] Kogut, 1985; [57] Lessard and Lightstone, 1986; [65] Miller, 1992), risk management was relegated to the background until recently when several researchers ([11] Barry, 2004; [20] Cavinato, 2004; [26] Christopher and Lee, 2004; [41] Giunipero and Eltantawy, 2004; [53] Jüttner, 2005; [61] Manuj and Mentzer, 2008; [71] Norrman and Jansson, 2004; [78] Spekman and Davis, 2004; [95] Zsidisin, 2003a; [98] Zsidisin et al. , 2004) revived an interest in risk management, particularly in global supply chains. [25] Chopra and Sodhi (2004) contend that most companies develop plans to protect against recurrent low-impact risks in their supply chains. Many, however, ignore high-impact, low-likelihood risks. By understanding the variety and interconnectedness of supply chain risks, managers can tailor balanced, effective risk-reduction strategies for their companies. [44] Hauser (2003) suggests that in today's increasingly complex environment, risk adjusted supply chain management can translate into improved financial performance and competitive advantage. In sum, understanding global supply chain risk management is important and a top priority for both academics and practitioners.
An initial review of the literature on risk management in supply chains led to the identification of three major gaps. First, no definition exists that adequately takes into account the unique dimensions of risk and risk management in a global supply chain. Rather, there are a multitude of definitions and...