Supply chain security certification and operational performance: The role of upstream complexity

Xun Tong, Kee hung Lai, Chris K.Y. Lo, T. C.E. Cheng

Research output: Journal article publicationJournal articleAcademic researchpeer-review

3 Citations (Scopus)

Abstract

Supply chain security (SCS) incidents increasingly cause financial losses to manufacturing facilities and logistics service providers. Thus, supply chain security certification can have implications for production economics, particularly for importing firms who rely on a smooth logistics flow across country borders. However, it largely remains unknown regarding how such certification could influence a firm's operational performance. To this end, we empirically examine whether and how the adoption of Customs-Trade Partnership Against Terrorism (C-TPAT) certification, initiated by the U.S. Customs and Border Protection (CBP), could improve operational performance in adopter firms. This study draws upon signaling theory to empirically investigate the value of C-TPAT certification on U.S. publicly-traded importer firms' operational performance by analyzing the longitudinal data of properly-matched sample-control groups. The data come from multiple sources: public announcements of C-TPAT certification from the News Retrieval Service database, import data from lading records, and financial data from Standard & Poor's COMPUSTAT database. Employing a coarsened exact matching (CEM) method and a difference-in-difference (DID) analysis, we find that C-TPAT certified importers have better operational performance than that of non-certified importers. We also find that the level of upstream supply chain complexity (detail, dynamic, and spatial complexity) enhances the operational performance derived from C-TPAT certification. This study sheds light on the performance value of a management standard that is attributed to the non-process mechanism (not due to process improvements) enabled by the signaling effectiveness incorporating the upstream supply chain complexities. Our findings have important theoretical and practical implications for production economics and supply chain management studies.

Original languageEnglish
Article number108433
JournalInternational Journal of Production Economics
Volume247
DOIs
Publication statusPublished - May 2022

Keywords

  • Complexity
  • Importer firms
  • Operational performance
  • Signaling theory
  • Supply chain security

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

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