Behavioural Risks in Supply Networks

Risks within supply networks are currently an intensively discussed topic (e.g., Brindley 2004; Gaudenzi and Borghesi 2006). A variety of different types of risk have been investigated, e.g., inventory risks, delay, quality risks and even terrorist attack. However, the dimension of behavioural risk has been largely neglected in previous studies. Yet, the relevance and significance of this type of risk has significant implications in all supply chain contexts. This chapter presents the results of an explorative study conducted by the author who demonstrates that behavioural risks occur frequently and cause high losses, e.g., resulting from supply networks interruptions. These findings are supported by other studies, (e.g., Hendricks and Singhal, 2005) who showed that supply networks interruptions not only cause short-term losses but long-term underperformance from a stock-market perspective. The exploratory study also facilitated the identification of different behavioural risk types, (e.g., opportunistic behaviour or conflicts between partners), which represent the main theme of the chapter and are explored in depth subsequently. The remainder of this chapter is divided into four parts. Initially, the model is developed and explained. The details of the methodological approach employed are articulated followed by the presentation and analysis of the empirical results. The fourth section discusses the managerial and theoretical implications including the limitations of the present study.