Toward A Theory Of Supply Chain Entrepreneurial Embeddedness In Disrupted And Normal States

Abstract

The daunting effects of COVID‐19 have motivated large firms to rethink supply chain designs and practices. As a potential contribution to such change, we introduce the concept of supply chain entrepreneurial embeddedness (SCEE), which we define as the degree to which a large firm integrates small entrepreneurial business capabilities (e.g., creativity, ingenuity, resourcefulness, rapid decision‐making, and swift execution) within its supply chain. We theorize that SCEE can be realized via at least three mechanisms—acquiring (i.e., purchasing one or more small entrepreneurial firms), allying (i.e., building cooperative alliances with such firms), and assimilating (i.e., mimicking how such firms behave). We suggest that SCEE is valuable under normal conditions, but its value increases under duress. Grounded in the concepts of structural inertia, requisite variety, mutualism, and real options, our core premise is that SCEE enables large firms to better navigate multiple and multidirectional concurrent changes in supply and demand, which in turn enhances firm performance. We contextualize this core premise by theorizing that greater end‐user proximity (wherein SCEE is located close to the final customer) and service centricity (wherein competition is primarily based on the service dimension of product–service bundles) enhance SCEE’s positive effects.