Keep concentrated and carry on: redesigning supply chain concentration in the face of COVID-19

ABSTRACT

The global COVID-19 outbreak has led to significant challenges for supply chain management, while insights on how to configure the supply chain network to respond to this crisis are limited. Therefore, the present research extends the understanding of supply chain resilience by investigating whether supply chain concentration has influenced the shock of COVID-19 on firm performance. This study assesses four sub-dimensions of supply chain concentration: supplier, customer, product, and region. Based on a large-scale sample of Chinese listed manufacturing firms, we employed a difference-in-difference approach to investigate whether supply chain concentration ameliorated or exacerbated the shock of COVID-19. The results indicate that treatment groups (firms with lower supplier, customer, product, and region concentration) have experienced a considerably more significant performance deterioration than control firms. Overall, this study paves the way for future research and offers vital insights into the redesign of supply chains in response to COVID-19 and similar crises.

KEYWORDS:

• Supply chain concentration
• supply chain resilience
• COVID-19
• difference-in-differences
• China

Acknowledgements

We gratefully acknowledge insightful suggestions from the Editorin-Chief, Prof. Ming K. Lim and the anonymous reviewers, which substantively improved this article.

Data availability statement

The data that support the findings of this study are available from the corresponding author, [MF], upon reasonable request.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 We thank an anonymous reviewer for suggesting this.

2 We thank an anonymous reviewer for raising this point.

Additional information

Funding

This work was supported by Humanities and Social Sciences Foundation of the Ministry of Education of China (Grant No. 21YJC630076); Shandong Provincial Natural Science Foundation, China (Grant No. ZR2019MG008).