Increasingly, creating and delivering value through complex supply chain networks involves substantial risks. However, strategy development under business risk conditions is not wellunderstood. This cross-country research examines how, under conditions of supply chain network risk, firms develop effective risk management practices. Using a literature review and survey research of managers from global firms; we present a research model, and empirically test the hypothesized relationships. The results show that under conditions of uncertainty, management decision-making is more likely to be cautious until visible forms of risks emerge, and prudent response mechanisms are put in place. This study identifies the crucial role of supply chain exploration and exploitation practices, and their influence in development of network risk management practices, leading to competitive financial outcomes.

Introduction

As firms expand their operations globally, they have to sustain their market successes despite supply chain risks. Complex global supply chain networks increase the possibility of a negative impact of potential supply chain disruptions on firm performance. Of particular concern is the role played by suppliers and how small failures at their end may magnify supply chain risk factors for the buyer firm (Kim, Wagner, & Colicchia, 2019; MacKenzie, Barker, & Santos, 2014). Although assuring a total risk-free supply chain is almost impossible, organizations still can develop a resilient supply chain network that recovers from shocks faster than competitors (Brandon-Jones, Squire, Autry, & Petersen, 2014; Hohenstein, Feisel, Hartmann, & Giunipero, 2015). Therefore, in recent years researchers have increasingly paid attention to how firms can develop supply chain risk resilience (Eckerd & Girth, 2017; Singh & Singh, 2019). In focus particularly has been the role of senior management in identifying risks in advance, and implementing the right responses at both firm and network levels (Wieland, 2013). However, despite vigorous research in risk management, much still remains unclear about how firms identify potential supply chain risk events, and consequently develop effective response mechanisms (Kilubi, 2016; Kurniawan, Zailani, Iranmanesh, & Rajagopal, 2017).