Natural disasters, PC supply chain and corporate performance

The purpose of this paper is to provide quantitative evidence of natural disasters’ (NDs) effect on corporate performance and studies the mechanisms through which the supply chain moderates and mediates the link.

Using two major NDs as quasi-experiment, namely the 2011 Japanese earthquake-tsunami (JET) and Thai flood (TF), and data over the period 2010Q1-2013Q4, effect of these events on end assemblers’ performance is studied, with a focus on the personal computer (PC) supply chain. The moderating influence of delivery and sourcing – as supply chain flexibility and agility – are examined through end assemblers’ and suppliers’ inventory. The suppliers’ mediating role is captured as disruption in obtaining PC components through their sales.

Only JET had any negative effect, further quantified as short-term and long-term. The TF instead portrays an insignificant but positive aftermath, which is construed as showing learning from experience and adaptability following JET. Inventory matters, but differently for the two events, and suppliers only exhibit a moderating influence on the assemblers’ disaster-performance link.

NDs, as catastrophic vulnerabilities, are distinct from other vulnerabilities in that they are hard to predict and have significant impact. Since little is known about the impact of NDs on firm performance and how supply chain mechanisms moderate or mediate their impact, they should be distinctly modelled and empirically studied from other vulnerabilities. This paper sheds light on supply chain resilience to such events with the role of dynamic capabilities.