ARTICLE IN PRESS
Journal of Purchasing & Supply Management 9 (2003) 217–224
A grounded definition of supply risk
George A. Zsidisin*
Department of Marketing and Supply Chain Management, The Eli Broad Graduate School of Management, Michigan State University,
N362 North Business Complex, East Lansing, MI 48824-1122, USA
Received 10 December 2001; received in revised form 11 December 2002; accepted 27 July 2003
Abstract
All purchasing organizations encounter supply risk, whether it is explicitly understood and assessed, or reactively managed. The
purpose of this paper is to provide a grounded definition of supply risk. Case study data from seven purchasing organizations
uncovered various definitions of supply risk. These definitions focus on the sources of supply risk, emanating from individual
supplier factors and market characteristics, and the outcomes of supply risk events, which involve the inability of purchasing firms to
meet customer requirements and threats to customer life and safety. Findings from this research provide practitioners and
academicians a starting point for understanding supply risk and insights as to how supply risk can negatively affect business
operations.
r 2003 Elsevier Ltd. All rights reserved.
Keywords: Supply risk; Grounded theory; Risk; Uncertainty
1. Introduction
Risk and uncertainty have been studied in numerous
business settings and have warranted significant investigation in corporate functions, such as managerial
decision making (March and Shapira, 1987; Shapira,
1995; Yates and Stone, 1992), strategy (Ruefli et al.,
1999; Sitkin and Pablo, 1992; Wiseman and Bromiley,
1991), operations (Newman et al., 1993; Pagell and
Krause, 1999), accounting (Ashton, 1998; Baucus et al.,
1993), finance (Chow and Denning, 1994; Ho and Pike,
1992) and distribution (Celly and Frazier, 1996; Lassar
and Kerr, 1996). Risk has been defined as ‘‘the extent
to which there is uncertainty about whether potentially
significant and/or disappointing outcomes of decisions
will be realized’’ (Sitkin and Pablo, 1992, p. 10).
Inherent in this definition are the dimensions of
outcome uncertainty, outcome expectations, and outcome
potential.
From transaction cost (Williamson, 1975) and agency
(Eisenhardt, 1989a) theory perspectives, outcome uncertainty is associated with the variability of outcomes,
lack of knowledge about the distribution of potential
*Tel.: +1-517-353-6381x269; fax: +1-517-432-1112.
E-mail address: [email protected] (G.A. Zsidisin).
1478-4092/$ - see front matter r 2003 Elsevier Ltd. All rights reserved.
doi:10.1016/j.pursup.2003.07.002
outcomes, and uncontrollability of outcome attainment.
According to prospect theory (Kahneman and Tversky,
1979), outcome expectations suggest that positive expected returns facilitate different decision framing and
decision-making behavior than negative expected outcomes. The third dimension of risk, outcome potential,
argues that individuals often overweight extreme outcomes, even if their likelihood of manifestation is
removed (Kahneman and Tversky, 1979; Sitkin and
Pablo, 1992).
Risk within a supply management context may be
viewed in a similar manner. For example, there can be
outcome uncertainty associated with whether a supplier
is able to make product design and specification changes
in a timely manner for new products (Bidault et al.,
1998). However, there is little understanding of what
risk means within a supply management context,
although a few scholars have begun to address the
issue. Harland et al. (2003), in their study of risk
assessment and management tools, adopt a definition of
input risk from Meulbrook (2000). In addition, Zsidisin
et al. (1999) provide a preliminary definition of supply
risk in their exploratory study of supply risk assessments
and contingency plans. However, a grounded definition
of supply risk has yet to emerge in the purchasing and
supply management literature. Therefore, the purpose of
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this paper is to provide the purchasing and supply
management field with a definition of supply risk in
order to guide and encourage future research on supply
risk and its management.
2. Definitions of risk
The concept of risk has been extensively studied in
various business contexts. Three notable studies providing insights to the meaning of risk are provided below.
2.1. Baird and Thomas
Baird and Thomas (1990) have defined risk from eight
different perspectives. Their arguments incorporate
views from finance, marketing, management, strategy,
and psychology. Table 1 presents the eight risk
definitions and a brief description of each. The first
three definitions—variability of returns, variance, and
market risk—focus on the organization’s financial
return. The last two definitions of risk as disaster and
as accounting risk measures relate to the risk of a
company going bankrupt. These definitions of risk
provide evidence that risk is a multi-dimensional
construct and differs according to business function.
2.2. Shapira (1995)
An often-cited definition of risk in the academic
literature is ‘‘the variance of the probability distribution
of outcomes’’ (March and Shapira, 1987, p. 1404;
Shapira, 1995, p. 43). However, Shapira (1995) found
that very few managers define risk in those terms.
Instead, managers identify (1) the downside of risk, (2)
its magnitude of possible losses, (3) the act of risk taking
involving the use of skills, judgment and control, and (4)
risk as a concept that cannot be captured with a single
number. A list of these four risk aspects and brief
definitions is also presented in Table 1. These findings
also suggest that the term ‘‘risk’’ can be perceived in
different ways, and no single definition of risk may be
appropriate in all circumstances.
2.3. Yates and Stone (1992)
Yates and Stone (1992) note that risk entails (1) the
elements of loss, (2) the significance of loss, and (3) the
uncertainty associated with loss. Within the elements of
loss are three additional factors. First, risk is not limited
to one specific loss that can occur. This is similar to the
variance of outcomes discussed by March and Shapira
(1987), with the exception that it focuses only on losses.
For example, a fire that destroys a supplier’s plant can
affect production for 1, 2 days, or even months. The
incident can result in various degrees of loss (outcomes)
for the supplier as well as the supplier’s customers.
Losses are also experienced in reference to an outcome.
What is important is not the loss itself, but the actual
outcome in comparison to an expected outcome.
Another facet of loss is multiplicity, in which losses
can transcend multiple categories such as financial,
performance, and time loss.
The second aspect of risk is the significance of loss. It
is often assumed by researchers and laypersons that the
more significant the potential losses in a situation, the
greater the implied risk. For example, there would be
greater perceived loss by a purchasing firm if a supplier’s
Table 1
Risk characteristics and definitions
Reference
Risk characteristics
Definition
Baird and Thomas (1990)
Variability of returns
Variance
Market risk
Risk as innovation
Firm performance evaluated in terms of return and growth criteria
Variability of the probability distribution of returns
The use of the capital asset pricing model to measure risk
Risk conditions equated with conditions characterized by newness,
uncertainty, and lack of information
Information scarcity as a key facet of uncertainty in terms of the
existence of important resources and commitment duration
Independence of action in venturing into the unknown
Strategies that could result in corporate disaster, bankruptcy or ruin
Accounting ratios related to risk of ruin, default or bankruptcy
Risk as lack of information
Risk as entrepreneurship
Risk as disaster
Accounting risk measures
Shapira (1995)
Downside of risk
Magnitude of possible losses
compared to its probabilities
Distinction between risk taking
and gambling
Risk as a multi-faceted construct
Risk being associated with a negative outcome
At least one possible outcome of an uncertain situation having a bad
outcome
Risk taking is associated with using skills, judgment, and control,
while gambling is not
Risk cannot be captured with a single number, since multiple facets
such as financial, technical, marketing, production and other risk
aspects exist
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219
Table 2
Supply risk definitions and characteristics
Reference
Risk characteristics
Definition
Harland et al. (2001)
Supply risk
Adversely affects inward flow of any type of resource to enable operations to take
place; also termed ‘input risk’
Zsidisin et al. (1999)
Supply risk
The transpiration of significant and/or disappointing failures with inbound goods
and service
Mitchell (1995)
Buyer demographics
The effects of factors such as age, professional organization membership, education,
and job experience on risk perceptions
Risk perceptions differ according to the job and position of the buyer
The greater the risk involved, the greater the propensity to group, buy and share the
risk involved
Intrinsic motivational factors exist, such as the need for certainty, self-confidence,
and the need to achieve, which affect individual risk perceptions
Perceived risk differs if it is considered a new buy, modified rebuy, or straight rebuy
Technical complexity and value of the item are positively correlated with the degree
of perceived risk
The extent of communication or state of the relationship between a buyer and
supplier influences the degree of perceived risk
The propensity to innovate, stability of the market structure, and growth rate affects
risk perceptions
The occurrence of performance risk is much higher among buyers in small
companies because of the firm’s limited ability to tolerate financially unfavorable
decision consequences
Risk taking is affected by the relationship between the company’s current position
and some critical reference points
Country of origin of the buyer affects an individual’s risk preference
Job function
Decision-making unit
Buyer’s personality
Buy-type
Product characteristics
Degree of customer/supplier
interaction
Characteristics of customer/
supplier markets
Company size
Organizational performance
Country
failure results in the chance of losing $10,000 of
customer business as compared with the chance a recall
will occur that would result in a loss of millions of
dollars in revenue.
The third risk element is uncertainty, where uncertainty is associated with the degree of confidence a
decision maker can develop probability and outcome
assessments of decisions (Mitchell, 1995; Luce and
Raiffa, 1957; Chiles and McMackin, 1996). Additional
facets of uncertainty involve a lack of understanding by
decision maker about the loss categories that exist, and
which losses can occur.
3. Prior definitions of supply risk
There are few definitions for risk within the context of
supply. Kraljic (1983) discusses risk in terms of supply
market complexity. Kraljic’s perspective of risk incorporates supply scarcity, the pace of technology and/or
materials substitution, entry barriers, logistics cost or
complexity, and monopoly or oligopoly conditions.
Other definitions of supply risk that do exist have
emerged from research studies focusing on supply risk
assessments and management. Harland et al. (2003)
define supply risk as one of 11 risk types. They adopt
Meulbrook’s (2000) definition of supply risk as ‘‘adversely affects inward flow of any type of resource to
enable operations to take place; also termed as ‘input
risk’.’’ (p. 308). In addition, Zsidisin, Panelli, and Upton
define supply risk as ‘‘the transpiration of significant
and/or disappointing failures with inbound goods and
service’’ (p. 187). This definition focuses on outcomes
and was proposed in an exploratory study of supply risk
assessments and contingency plans. Mitchell (1995) has
investigated risk within organizational buying behavior.
His literature search uncovered numerous factors that
potentially affect managerial risk perceptions of purchasing professionals. A summary of prior definitions
of supply risk and supply risk factors can be found in
Table 2.
The remainder of this paper will discuss the research
method implemented for creating a grounded definition
of supply risk. Next, the research findings, which
describe supply risk by its sources and outcomes, are
presented. Industry characteristics and differences are
then presented to illustrate how they affect organizations’ definitions of supply risk. Managerial implications
and conclusions are provided at the end of the paper.
4. Research method
The research process consisted of conducting case
studies with purchasing organizations involved in supply
risk management. The case studies were used to build a
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theory of supply risk using a grounded theory approach
(Eisenhardt, 1989b; Glaser and Strauss, 1967; Wacker,
1998), where ‘‘the researcher begins with an area of study
and allows the theory to emerge from the data’’ (Strauss
and Corbin, 1998, p. 12). Case study participants were
pre-screened through initial telephone, in-person, or
e-mail interviews. Organizations with established supply
risk assessment or risk management processes were
solicited for further study, even if no formal definition
of supply risk existed at their firms. The case studies were
conducted until the researcher reached a point of
information saturation, where many of the concepts of
supply risk discussed by the case study participants
became repetitious (Strauss and Corbin, 1998).
A case study research protocol was created prior to
data collection and refined after the pilot case study. All
of the case studies were conducted at the companies’
locations. In the few circumstances where in-person
interviews were not possible with certain individuals,
telephone interviews were conducted following the
guidelines proposed by Walton (1997).
The case study organizations consisted of a convenience sample of electronics and aerospace firms. Five
manufacturers in the electronics industry were selected
due to rapid technological development cycles and
dynamic customer demand changes (Fine, 1998). To
obtain insights as to whether supply risk and supply risk
management differ between industries, two firms in the
aerospace industry were also selected. Information
gathering techniques such as obtaining historical data
and documentation, and conducting anywhere from three
to six structured interviews with various professional
purchasing personnel and other key informants from
each firm, were implemented during the case studies.
Since one of the goals of the research was to
investigate how purchasing organizations define risk,
the purchasing function was the unit of analysis.
Purchasing professionals were asked how their organizations define supply risk. If a formal organizational
definition of supply risk did not exist, the researcher
asked how that individual defined supply risk from a
purchasing organization perspective.
Data generated in the case studies was subject to open
and axial coding analysis, as per the guidelines set by
Miles and Huberman (1984), Strauss and Corbin (1998),
and Yin (1994). Open coding breaks down case study data
in order to analyze, conceptualize, and develop categories
for the data. Axial coding is a technique that makes
connections among categories, groups issues during firstlevel coding, and summarizes the issues into themes.
5. Research findings
The research findings indicate that there are a variety
of ways to define supply risk. Two of the organizations,
Cell and Semi1, have formal organizational definitions
of supply risk. The five other organizations did not have
formal definitions of supply risk disseminated throughout their firms. However, each of the case study
participants had an explicit understanding of what
supply risk means within their position and organization. These definitions of supply risk were discussed in
terms of sources and outcomes, as discussed below.
5.1. Organizational definitions of supply risk
Cell defines supply risk as ‘‘the danger that events or
decisions will obstruct the company’s achievement of its
objectives.’’ The events and decisions include potential
direct losses as well as opportunity costs. This definition
of risk is disseminated and understood throughout the
organization. The purchasing and supply management
function at Cell has adopted this definition of risk in its
supply strategy to support overall corporate goals and
direction.
In contrast, Semi1 defines supply risk as ‘‘anything
that impedes the introduction of a new product, or any
event that could disrupt production.’’ This definition of
supply risk focuses on the introduction of new products.
By the time a product is considered mature, Semi1
believes that most supply risk characteristics have
already been identified.
5.2. Classification of supply risk
The majority of firms in this study do not currently
have formal definitions for supply risk. However, each
of the respondents from those firms had strong
conceptions of what supply risk means to their
organizations. Case study participants provided definitions of supply risk by its sources and outcomes. The
sources of supply risk were described in terms of
individual supplier failures and supplier market characteristics. Respondents conceptualized the outcomes of
supply risk by the inability to meet customer requirements and threats to customer life and safety. Table 3
provides an overview of the classifications and related
factors that the case study participants used to define
supply risk.
5.2.1. Sources of supply risk
According to the case studies, the sources of supply
risk tend to arise from individual supplier failures and
from market factors. The individual supplier failures
that define the scope of supply risk were the inability to
handle demand fluctuations, quality problems at supplier plants, and the inability to stay in pace with
technological changes. In addition, supply risk was
understood in terms of supplier market characteristics.
Market characteristics include sole sources (such as
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221
Table 3
Classification of supply risk definitions
Sources
Individual supplier failures
New product development problems
Delivery failures
Relationship issues
Supplier obligations to other customers
Quality problems
Price/cost increases
Inability to meet quantity demand
Technologically behind
Discontinuity of supply
Aero1
Comp1
Comp2
X
X
X
X
X
Threats to customer life and safety
Product liability and integrity
Quality failures result in loss of life
Aero2
Semi1
Semi2
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Market characteristics
Sole source/limited qualified sources
Market shortages
Commodity price increases
Geographic concentration of suppliers
Supplier patents
Outcomes
Inability to meet customer requirements
Unable to meet customer specifications
Subcontractor failures
Impedes new product introductions
Missed shipments
Negative effect on profit targets
Loss of customer business
Failure to meet customer demand
Cell
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
suppliers having a patent) and market capacity constraints.
5.2.1.1. Individual supplier failures. Five of the seven
firms noted individual supplier factors within their
definitions of supply risk. For example, a respondent
from Aero1 stated ‘‘Supply risk is when there are
suppliers that their failure would affect the ability for
our firm to make financial goals at the end of the year.’’
This definition of supply risk specifies supplier failures
as a cause of supply risk. However, the definition does
not provide any detail about what constitutes failure.
Two additional definitions of supply risk provide
more details regarding individual supplier failures. A
respondent from Comp1 believed, ‘‘Supply risk is the
inability to develop products on time and deliver those
products into manufacturing.’’ In addition, one Comp2
participant stated, ‘‘Supply risk is the uncertainty
associated with supplier activities, obligations, and in
general, supplier relationships. Supply risk boils down
to the three components of price (best deal), quantity,
and demand.’’ These definitions of supply risk indicate
X
X
X
that supply risk originates from individual supplier
failures, and these failures consist of issues such as
quality, delivery, relationships, and price.
5.2.1.2. Market characteristics. Several supply risk definitions focused on factors originating from market
characteristics instead of individual supplier failures.
For example, a respondent from Aero2 was concerned
with availability. This respondent noted, ‘‘Supply risk is
having a single or sole source supplier, without having a
proven or established second sourcey[which] occurs
when there are patents on [the] supplier end without a
backup.’’
There were two recent incidents related to market
characteristics that affected the perceptions of many
case study respondents. The first one involved the
tantalum capacitor shortage that occurred in 2000.
Several of the case study respondents noted that part of
the shortage was due to the rapid growth of the cellular
phone industry. Although most of the firms expected
greater demand for those capacitors, none of them
anticipated the extent that the cellular phone growth
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would have on their firm’s ability to acquire piece parts
such as tantalum capacitors. This incident was discussed
by many case study respondents in their perceptions of
what supply risk means to their organizations.
A second incident that several of the case study
respondents described in their definitions of supply risk
was the September 1999 earthquake in Taiwan. This
event had significant repercussions for many firms,
especially in preparation for forecasted sales of the
holidays. The earthquake disaster had detrimental
effects on many suppliers, which had subsequent ripple
effects throughout many supply chains.
5.2.2. Outcomes of supply risk
Supply risk was also defined in terms of negative
outcomes, specifically the inability to meet customer
requirements or threats to customer life and safety. All
the firms understood supply risk in terms of meeting
customer requirements, which can result in the loss of
customer business and detrimentally affect revenues and
profits. Threats to customer life and safety, on the other
hand, arise from issues with product integrity, durability, and reliability. If a product has a failure in the
field, such as a part on an aircraft, the ramification of
that failure can lead to consumer injury or even death.
5.2.2.1. Inability to meet customer requirements. All of
the organizations stated that supply risk results in the
inability of the purchasing firm to meet their customers’
requirements. For example, one respondent from Aero1
stated, ‘‘Supply risk is the failure to provide a seamless
flow of product to the customer that meets or exceeds
specification.’’ Another example of supply risk resulting
in the inability to meet customer requirements was
provided by a participant in Comp2, who stated,
‘‘Supply risk affects getting product out to market
(i.e. built by subcontractors). It is an event that disrupts
the delivery of products to the customer, or impedes
the production of new items to customers.’’
Since these firms perceive the effects of supply risk
from a supply chain perspective, the organizations are
defining supply risk in reference to meeting customer
demand. Specifically, the case study firms not only
looked at supply risk from the link between their firm
and supplier organizations, but also its effect on their
internal operations, on customer firms, and eventually
on the final consumer. To emphasize this point, one
respondent from Comp1 stated, ‘‘Supply risk is the
potential for a supply constraint on a subassembly or
component that affects the shipment of product.’’ In
addition, an Aero2 case study respondent viewed supply
risk as ‘‘ynot being able to satisfy customer demand. It
affects the longevity of our firm and jobs.’’ These
definitions of supply risk focus on the ability to meet
customer demand, and, eventually its impact on the
entire supply chain.
5.2.2.2. Threats to customer life and safety. Two of the
organizations also stated the effect of supply risk in
terms of customer life and safety. Both of these firms are
suppliers in the aerospace industry, where the ramifications of quality and reliability problems can have
devastating effects on consumers. For example, a case
study participant from Aero2 understood supply risk
to ‘‘consist of product liability and integrity where the
parts must meet requirements.’’
The final product manufactured by aerospace companies can have a direct impact on customer safety if
a failure occurs. Failure of the products manufactured
by electronics firms normally does not have life or death
ramifications for their customers. As noted by one
respondent from Aero2, ‘‘There are no service stations
at 33,000 ft.’’
6. Proposed definition of supply risk
The findings from this research provide evidence that,
similar to prior definitions of risk, purchasing organizations perceive supply risk as a multi-dimensional
construct (Hallikas et al., 2002; Shapira, 1995; Yates
and Stone, 1992). The scope of supply risk was defined
in terms of sources, either from individual supplier
failures or market factors, and outcomes, which include
the inability to meet customer requirements and threats
to customer life and safety. Therefore, a new definition
of supply risk is proposed below:
Supply risk is defined as the probability of an incident
associated with inbound supply from individual
supplier failures or the supply market occurring, in
which its outcomes result in the inability of the
purchasing firm to meet customer demand or cause
threats to customer life and safety.
Supply risk is a multi-faceted concept, since its scope
includes risk sources and outcomes. In addition, the
scope for understanding supply risk differs according to
industry. As the research indicated, aerospace firms are
more likely to understand supply risk in terms of threats
to customer life and safety. The finding that supply risk
is a multi-faceted concept that differs according to
industry is similar to prior studies investigating risk
definitions (Pablo, 1999).
7. Managerial implications
Understanding and managing risk is an important
issue of business and has been extensively studied in
many business disciplines. Even though there is a rich
stream of literature investigating risk, there has been
little research applied to the risk that exists with
inbound supply. In order to start closing the research
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gap in supply risk management, this research, through
the use of case studies, investigated how organizations
define supply risk.
The definitions of supply risk provided by case study
participants show that supply risk is a multi-dimensional
construct. The most widely held definition of supply risk
focuses on understanding how risk affects a purchasing
firm’s ability to meet its customers’ requirements.
However, the meaning of supply risk can differ
according to factors such as industry, source, and
outcome. This contributes to theory by providing
researchers with an empirically based definition for
supply risk and presenting insights into how those
definitions may change according to industry context.
In addition, having an empirically grounded definition of supply risk provides greater detail for understanding an overall supply network risk tool proposed
by Harland et al. (2003). The tool, which can be found
in Fig. 1, begins with mapping the supply network, then
involves identifying risk and its current location,
assessing that risk, managing the risk, forming a
collaborative supply network risk strategy, and, finally,
implementing a supply network risk strategy. One key
element missing within this tool is how organizations
define supply risk. Although Harland et al. (2003)
provide an initial definition of supply risk, that
definition had not been empirically validated and was
only one type of risk identified. This research provides a
grounded definition of supply risk, which can help
purchasing organizations understand the sources and
outcomes of supply risk for their firms.
The sources and outcomes of supply risk discovered
in this research are not mutually exclusive. In fact,
several of the risk characteristics may have a compounding effect. For example, the source of risk from the
September 1999 earthquake in Taiwan was that many
suppliers of passive components were located within the
same geographical location. From a supply side
perspective of several of the firms in this study, this
event manifested in market shortages for these components as well as significant commodity price increases. In
addition, the outcomes of this event resulted in the loss
of customer business, the failure to meet customer
demand, and negative effects on profit targets. The
managerial implications of this finding parallels the
research of Hallikas et al. (2002), who discovered
‘‘vicious circles’’ of supply network risk due to factors
such as pricing, forecasting, delivery performance, and
financial implications. Therefore, it is imperative for
supply management professionals to understand both
the sources as well as outcomes that incorporate supply
risk because the effects of detrimental supply events can
have ramifications throughout a firm’s supply chains or
networks. The insights for understanding what supply
risk means provides a starting point for managing that
risk.
223
Map supply
network
Implement
supply network
risk strategy
Identify risk and its
current location
Form collaborative supply
network risk strategy
Assess Risk
Manage Risk
Fig. 1. Supply network risk tool (Harland et al., 2003).
In defining supply risk, most of the research
participants went beyond viewing risk inherent in dyadic
interorganizational relationships with suppliers. This
was reflected in the findings that supply management
professionals understand the effects of risk on meeting
their customer requirements. In addition, several examples of supply risk provided by the research participants
involved supply failures from second and third tier
suppliers, such as the negative ramifications of the
Taiwan earthquake in 1999 and tantalum capacitor
shortage of 2000. This view of supply risk becomes a
cornerstone for understanding supply chain or supply
network risk, which would involve defining and studying
risk at numerous inter- and intra-organizational levels.
Future research would be necessary for providing
academicians and practitioners alike insight for defining,
and eventually assessing and managing, supply chain or
supply network risk. These studies can investigate risk in
additional industry areas as well, such as automotive,
telecommunication, and pharmaceutical firms, to determine if additional nuances for defining supply and
supply chain risk exist.
8. Conclusion
Risk exists in virtually all firms, and has been
extensively studied in various business contexts. However, a gap exists in studying risk within purchasing and
supply management. This study has investigated,
through the use of case study data, how risk is defined
within a supply management context. Supply risk was
perceived by purchasing organizations to incorporate its
sources and outcomes. In addition, industry differences
were found in the case study data, where suppliers in the
aerospace industry focus on the threats to customer life
and safety. From the case study data, an empirically
grounded definition of supply risk was provided.
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Theoretical and managerial implications were also
discussed. By establishing a grounded definition of
supply risk, purchasing professionals have a starting
point for creating strategies, which include assessing and
managing supply risk, to better meet customer firm and
consumer requirements.
Acknowledgements
The author wishes to acknowledge the Institute for
Supply Management for the doctoral grant that helped
fund the study described in this article, and Professor
Lisa M. Ellram for her contributions to this research.
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