Bridging and buffering: Strategies for mitigating supply risk and improving supply chain performance

The area of buyer-supplier risk management is increasingly drawing the attention of academicians and professionals. However, less focus has been given to identifying the right mitigation strategy (specifically, bridging and buffering) for firms having different strategic orientations (such as, prospector, defender and analyzer). To this end, we review the literature and present a theoretical model grounded in strategic choice theory that explores how firms operating in different business environments respond to buyer-supplier risk by adopting appropriate mitigation strategies. The relationship between buyer and supplier is influenced by motivating factors (for example, trust and dependence) as they are the key elements of social exchange theory. Based on a sample of 184 responses from a survey with Indian organizations, we validate the theoretical model and test the research hypotheses using structural equation modelling. Findings reveal that the decision of firms to adopt a particular mitigation strategy varies with the environment in which the firm operates and this decision is majorly influenced by motivating factors. Another interesting finding shows that these mitigation strategies help the firms in managing buyer-supplier risk and enhancing downstream supply chain performance.

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