Managing Financially Distressed Suppliers: An Exploratory Study

Denis Hübner · Stephan M. Wagner

46 citations0/0 files storedJournal of Supply Chain Management

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Quality and Supply Management Financial Distress and Bankruptcy Prediction Supply Chain Resilience and Risk Management

Abstract

The early anticipation and proactive management of financially distressed suppliers have become crucial for buying firms to protect themselves against supplier default risk. To this end, firms need to be able to read the early warning signals from suppliers that are running into financial distress, to take appropriate remedial actions, and to gather such experiences in repositories of organizational knowledge for future actions. The objective of this study is to explore how and why firms differ in these behaviors and capabilities. We use the organizational information‐processing perspective as a guiding theoretical framework and analyze qualitative data obtained from interviews conducted with 14 global case study manufacturing firms. By comparing these firms', behaviors in terms of scanning and interpreting warning signals, reacting to distressed or defaulting suppliers, and learning from such experiences, we are able to isolate several risk management archetypes and develop four sets of propositions that describe the occurrence of these archetypes.

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References

1977The Measurement of Observer Agreement for Categorical Data 1991Case Study Research: Design and Methods 1989Building Theories from Case Study Research 1968FINANCIAL RATIOS, DISCRIMINANT ANALYSIS AND THE PREDICTION OF CORPORATE BANKRUPTCY 1979The Social Psychology of Organizations.1997Organizational Learning: A Theory of Action Perspective 1986Organizational Information Requirements, Media Richness and Structural Design 1987Developing Buyer-Seller Relationships

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