What question did this study set out to answer?

To examine whether operational slack, business diversification, geographic diversification, and vertical relatedness mitigate or exacerbate stock market reactions to supply chain disruptions.

September 11, 2008Journal of Operations Management

The effect of operational slack, diversification, and vertical relatedness on the stock market reaction to supply chain disruptions

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Authors

KHKevin B. HendricksWestern University VSVinod R. SinghalGeorgia Institute of Technology

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Implication

Empirical study reveals operational slack and vertical relatedness mitigate stock market drops during supply chain disruptions, suggesting specific supply chain design strategies.

Key Points

To examine whether operational slack, business diversification, geographic diversification, and vertical relatedness mitigate or exacerbate stock market reactions to supply chain disruptions.
Analyzed an empirical sample of 307 supply chain disruption announcements by publicly traded firms from 1987 to 1998.
Evaluated short-term stock market reactions relative to measures of operational slack, business diversification, geographic diversification, and vertical relatedness.
Firms possessing higher operational slack and greater vertical relatedness experienced significantly less negative stock market reactions following disruptions.
Geographic diversification was associated with more severe negative stock market drops, whereas business diversification had no statistically significant effect.

Cite This Study

Hendricks et al. (2008) studied this question.

synapsesocial.com/papers/6a7da4904776ec6335186fba https://doi.org/10.1016/j.jom.2008.09.001

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Implication

Empirical study reveals operational slack and vertical relatedness mitigate stock market drops during supply chain disruptions, suggesting specific supply chain design strategies.

The effect of operational slack, diversification, and vertical relatedness on the stock market reaction to supply chain disruptions

Discussion

Member takes

Implication

Key Points

Cite This Study

The effect of operational slack, diversification, and vertical relatedness on the stock market reaction to supply chain disruptions

Discussion

Member takes

Implication

Key Points

Cite This Study

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