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Supply Chain Structure, Product Recalls, and Firm Performance: Empirically Investigating Recall Drivers and Recall Financial Performance Relationships
Author(s) -
Steven Adams B.
Publication year - 2015
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/deci.12135
Subject(s) - product (mathematics) , recall , marketing , deci , citation , supply chain , product category , advertising , business , economics , psychology , computer science , political science , library science , mathematics , law , geometry , autonomy , cognitive psychology
This dissertation links globalization, sourcing strategies and structure, and product quality and firm performance in global supply chain management. Globalization, both in sourcing and markets, has been a popular business strategy within the last two decades. At the same time, product recalls are, according to both media and research sources, on the rise (Hora, Bapuji, & Roth, 2011). Attempts have consequently been made to link the two. In fact, according to Marucheck, Greis, Mena, & Cai, (2011), the most globalized industries make the most recalls. The dissertation investigates the association between globalization of sourcing and sales and product quality and safety as assessed through product recalls in two essays. Specifically, in the first essay, the research looks at a firm’s sourcing practices and global market reach and how they relate to a firm’s product quality and safety glitches that result in recalls. In this essay, we first look at firm level sourcing behavior (make or buy, buy inshore or offshore, concentrated or diversified supply base, and concentrated or diversified international supply base) and how each of these factors relate to product recalls. Referencing agency theory, contract manufacturing either inshore or offshore may lead to lower quality performance. Having many suppliers and across many countries may make a supply chain very complex. From the transactions cost economics, supply chain complexity is considered to have an effect on supply chain coordination costs and consequently supply chain performance as measured by product conformance. In the second essay, the research takes broad look at the recall–performance relationship. Intuitively, one would believe that, given the associated costs of recalls and closer scrutiny by media, consumers, and government, recalls should be on the decline. However, anecdotal evidence points to the contrary. For instance, Mattel/Fisher Price made over 13 different recalls affecting millions of products between 2008 and 2011, subsequent to the infamous 2007 recalls that affected millions of toys for similar reasons.i Toyota up to the end of 2012, made around