Abstract
Supply base geographical complexity has important implications for supply chain risk and performance, but less is known about its relationship with product quality risks. Drawing on the transaction cost economics and social network theory, we argue that supply base geographical complexity increases monitoring and coordination challenges, thus leading to higher product quality risks. However, vertical integration and high network centrality can mitigate this impact by facilitating trust and information sharing. We test our hypotheses using Chinese automobile industry data collected from multiple sources and find that supply base geographical complexity is positively related to automobile quality risks, but this relationship is weakened by the network centrality asymmetry between a buyer and its suppliers. This study extends our understanding of the antecedents of product quality risks and the interaction of supply network structural characteristics.
Published Version
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