The push effect of risks on supply chain performance: service-oriented firms

Abstract

Purpose The purpose of this paper is to examine the push effect of risk on supply chain (SC) performance, a new concept in the SC risk body of literature, at service-oriented firms. Design/methodology/approach Two models were compared: first, contains relationships between risks that show the mechanism of the push effect, i.e. the theoretical model. The other, only exists in direct effects of risks on SC performance, i.e. the competitive model. Findings Test results proved that the mechanism of the push effect can increase the degree of impact of each and all risks on outputs. By the push effect, risks can explain up to 65 percent variance of SC performance compared with 52 percent of the model without push effect. Moreover, the research found two kinds of the push effect: positive – increasing the impact of “pushed” factors on outputs and vice versa for negative. Research limitations/implications The mechanism of the push influence will be broken if mutual interaction among risks was minimized. Practitioners and managers can apply the resultant model as a “road map” in their context to achieve this purpose. Originality/value Vargo and Lusch (2008) argued that service-oriented firms will be a new trend since the modern-day industry tends to more focus on customer demand. SC management gradually shifted toward demand chain management that organizations will not make and sell units of output but producing customized services to customers (Walters, 2008). This transformation has led to the emergence of new risks, the impact of risk on the SC also varies and the mismatch of the current risk mitigation strategies (Lusch et al., 2007). Dealing with these changes is the purpose of this research.