Understanding econo-political risks: impact of sanctions on an automotive supply chain

Abstract

Purpose

The purpose of this paper is to introduce econo-political risks (EPRs) to supply chains (SCs). Based on case data from an automotive SC, this research identifies the mechanisms through which a subset of EPRs influences SC operations and outcomes.

Design/methodology/approach

An exploratory case study method is employed for theory development. Interviews with SC professionals of three case companies were the primary data source. Company documents, archival records, and direct observation provided further insights into how EPRs are perceived, how they impact a SC, how SC actors react to them, and what the overall performance results are.

Findings

The research identifies EPRs in terms of scope (flow of material, money, and knowledge) and time, and provides concrete examples, along with the channels through which their impact unfolds, and the responses available to SC actors. The authors find secondary impacts of EPRs through economic and regulatory channels to be significant, and bankruptcy, strategic reorientation, and single sourcing are common outcomes. By elaborating on the mechanisms through which sanctions impact upon SCs, and the feasible response trajectories, this research can assist SC actors with more effective management of EPRs.

Originality/value

This paper is novel for three reasons: first, it introduces EPRs to research into supply chain risk management (SCRM); second, it addresses SC risks in a developing country, a topic largely missing from the literature; and finally, this research focuses on post-event SC risks, whereas the bulk of SCRM literature focuses on the pre-event phase.

Citation

Davarzani, H., Zanjirani Farahani, R. and Rahmandad, H. (2015), "Understanding econo-political risks: impact of sanctions on an automotive supply chain", International Journal of Operations & Production Management, Vol. 35 No. 11, pp. 1567-1591. https://doi.org/10.1108/IJOPM-01-2013-0021