Managing supply chain risk through inter-organisational justice

Purpose - This study examines the impact of inter-organisational justice (i.e. distributive, procedural and interactional) in the buyer–supplier relationship on supply risk and, in turn, on a firm’s marketing and financial performance. Design/methodology/approach - A structured survey was administered both online and in-person to Jordan-based manufacturing companies. The 137 responses received were analysed using partial least structural equation modelling. Findings - The study found that while establishing both procedural and interactional justice in the relationship has a negative impact on supply risk, promoting distributive justice, surprisingly, has no impact. Moreover, supply risk was found to be detrimental to the firm’s marketing and financial performance. Research limitations/implications - This study considers only the direct role of inter-organisational justice in reducing supply risk. Future research could enhance our understanding of this role by exploring the underlying mechanisms and conditions that could govern it. Practical implications - Managers can alleviate supply risk by ensuring procedural and interactional justice in the relationship through involving suppliers in the decision-making processes, consistently adhering to established procedures and communicating transparent and ample information. Social implications - Addressing supply risk can help in maintaining community resilience and economic stability. Originality/value - The study highlights inter-organisational justice as a new approach to mitigating supply risk. Moreover, by examining how supply risk can affect a firm’s marketing performance, it also highlights a new implication of supply risk. Furthermore, by exclusively examining the impact of supply risk on a firm’s financial performance, the study provides a more nuanced interpretation of the effect of supply risk and how it can be reduced.