Paper ID
2556
Paper Type
short
Description
A plethora of anecdotes have demonstrated that the negative impact of a crisis spreads to supply chain partners. This paper attempts to investigate why and when firms pay for the wrongdoing of their supply chain partners, especially the external information mechanism (WOM) that governs the spillover effect. Based on a merged, multi-sources, and longitudinal dataset from Capital IQ and Sina Microblog, we apply PVAR model to capture the dynamic interactions between WOM attributes (volume/valence) and abnormal return of the supply chain partners. Our results revealed that spillover effect occurs under certain conditions: 1) when the extent of asymmetry information of supply chain partners is high; 2) when firms are unable to deny responsibility for the crisis; 3) when credibility of WOM increases; 4) when the strength of tie between supply chain partners and crisis-stricken firms is strong. Our findings have theoretical implications on researches about supply chain management, crisis spillover, and information-finance interface. We also provide practical guidance for investors and supply chain managers.
Recommended Citation
Wang, Xiaolun; Zhang, Cheng; and Xue, Ling, "Investigating WOMs behind Crisis: Contingent Spillover Effect in Supply Chain Partnership" (2019). ICIS 2019 Proceedings. 11.
https://aisel.aisnet.org/icis2019/general_topics/general_topics/11
Investigating WOMs behind Crisis: Contingent Spillover Effect in Supply Chain Partnership
A plethora of anecdotes have demonstrated that the negative impact of a crisis spreads to supply chain partners. This paper attempts to investigate why and when firms pay for the wrongdoing of their supply chain partners, especially the external information mechanism (WOM) that governs the spillover effect. Based on a merged, multi-sources, and longitudinal dataset from Capital IQ and Sina Microblog, we apply PVAR model to capture the dynamic interactions between WOM attributes (volume/valence) and abnormal return of the supply chain partners. Our results revealed that spillover effect occurs under certain conditions: 1) when the extent of asymmetry information of supply chain partners is high; 2) when firms are unable to deny responsibility for the crisis; 3) when credibility of WOM increases; 4) when the strength of tie between supply chain partners and crisis-stricken firms is strong. Our findings have theoretical implications on researches about supply chain management, crisis spillover, and information-finance interface. We also provide practical guidance for investors and supply chain managers.