Although risk management is widely regarded as an important topic within supply chain (SC) management, little research studies the contagious effect of risk factors along SC networks. By using stock price crashes as an indicator of risk factors, our study reveals that stock price crash risk can be transmitted from major customers to suppliers with a delay of up to two weeks. We show that the information opacity of suppliers is a factor that potentially contributes to the delayed crash contagion. We also find that the contagion effect becomes more pronounced as the importance of customers increases. Moreover, customer operational incidents have a more pronounced contagion effect on suppliers compared to customer financial incidents. Additionally, we find that suppliers tend to take strategic measures following the stock price crashes of their major customers, including diversifying their customer base, enhancing operational efficiency, and improving product quality. However, among these actions, only the improvement of operational efficiency effectively mitigates the adverse impact of customer stock price crashes on suppliers. Overall, our findings provide new insight into the distribution of risk factors across SC networks, highlighting the critical role of operational improvements in bolstering the resilience of firms to SC risks.
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