Catastrophic supply chain disruptions and supply network changes: a study of the 2011 Japanese earthquake

Abstract

PurposeCatastrophic supply chain disruptions can significantly damage the operational and financial performance of firms. While a growing body of literature on supply network structures has studied what influences supply networks' vulnerability to supply chain disruptions and capability to recover from them, it remains unclear how supply network structures change after major supply chain disruptions. We aim to provide an understanding of how these changes occur.Design/methodology/approachUsing a natural experiment approach and supply network data from Factset, this study investigates how firms' supply network structures change after experiencing the catastrophic supply chain disruptions caused by the 2011 Tohoku earthquake and tsunami in Japan. We capture post-earthquake supply network changes using the measures of degree centrality and ego network density.FindingsThe results of the analysis suggest that compared to unaffected firms, the affected firms experience changes in their supply network structures tending toward lower complexity measured by in-degree centrality, out-degree centrality and ego network density.Originality/valueThis study contributes to social network theory and the complex adaptive supply network literature by providing empirical evidence of structural changes in supply networks after catastrophic supply chain disruptions. A managerial contribution is made by providing a reflection on why these changes might be occurring and alert firms to the challenges of managing complexity in their supply networks.