Supply Chain Shocks,Diversification Strategies and Enterprise Development Resilience:Evidence from China's Major Natural Disasters
Recent years have seen a gradual increase in supply chain disruptions.Major causes not only come from the supply chain ecosystem but also from external sources.The frequent occurrence of extreme natural disasters poses a serious threat to the security and stability of enterprise supply chains.Does the risk of natural disasters propagate vertically along the supply chain?Can the diversification of a company's supply chain mitigate risks and thereby enhance corporate resilience?Answering these questions carries important theoretical value and practical significance.This study first constructs a theoretical model to analyze how supply chain shocks affect firms'cross-regional procurement of intermediate inputs.It then empirically tests the mitigating effect of firms'diversification strategies on adverse supply chain shocks by examining disruptions caused by major natural disasters in suppliers'locations.This study finds that after suppliers are affected by disasters,firms experience a significant decline in sales revenue growth rates due to difficulties in obtaining sufficient intermediate inputs and disruptions to their cash flow based on commercial credit.Firms with diversified supply chains experience a smaller decline in sales revenue growth rates,indicating that diversification strategies are an effective means to cope with adverse supply chain shocks and enhance corporate resilience.Heterogeneity analysis indicates that the greater the extent of disaster impact on suppliers,the more adverse the effects on downstream customer firms,with the role of supply chain diversification becoming more pronounced.Non-state-owned enterprises,firms with low inventory of raw materials,and labor-intensive businesses are more in need of leveraging supply chain diversification to mitigate adverse risks.The marginal contributions of this study are as follows.First,it provides a novel perspective on examining firms'supply chain risk in the context of disruptions caused by natural disasters,complementing existing literature on the economics of such events.Second,it has made an important addition to understanding the positive effects of supply chain diversification.In addition to focusing on the availability of intermediate inputs,this study finds that stable access to commercial credit is a significant channel for supply chain diversification to enhance firm resilience.Finally,it provides new insights into China's economic resilience through the lens of supply chain diversification.Although China is frequently affected by natural disasters,it consistently demonstrates strong adaptability and post-disaster recovery capabilities.In contrast to previous studies that mainly concentrate on the post-disaster"relief"phase,this paper focuses on another critical phase of"prevention",offering strategic insights for companies to develop"disaster-adaptive"supply chains.
supply chain shocksnatural disastersdiversification of supply chainenterprise development resilience
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