Exogenous risk analysis in global supplier networks: Conceptualization and field research findings

Abstract

Country risks are macro level risks. As exogenous risks, these ripple down from country to company level, embodied in strategy, relationships, collaboration, operations, and cultural patterns. This chapter examines the process of risks as they transit with a domino effect from macro level to company level. We consider the misalignment to be at the heart of such risk rippling. Alignment (or misalignment) between the two partners, operating from two different countries, represents the underpinnings of risk spills and shifts (which we refer as risk debasement) in the overall workings of a supply network.

The chapter is based on several considerations. First, we establish the literature and theory pertaining to this topic. Second, we examine the observations that are gathered through field study of suppliers in Turkey and Italy involved in a globally created complex product – the U.S. Joint Strike Fighter (F-35). We then delve into the discussion of consequent hazards when the risk issues are not resolved.