Managerial Perception of Supply Chain Quality Risk: Risk Analysis and Decision Analysis

Due to increased supply chain complexity, ensuring the quality of supply materials or products from upstream suppliers has become a challenge for firms. A great deal has been written on possible solutions and strategies to deal with supply chain quality risk (SCQR) in recent years. However, the manager’s decision-making process in relation to SCQR has not been fully researched. To close this gap, the aims of this study were to scrutinise managers’ perceptions of SCQR, as well as the antecedents of and decision-making related to perceived SCQR.
The relevant literature was comprehensively reviewed in order to build a foundation for the conceptualisation of perceived SCQR. This study proposed that the managerial perception of SCQR was a multi-dimensional concept with four representations. A rigorous scale development process was adopted to develop a set of reliable instruments to measure perceived SCQR. With a sample of 316 Chinese manufacturers, the validity and reliability of the measurement scales for the representations of SCQR perception were assessed.
Based on the risky-decision making model, a theoretical framework of the managerial decision-making process in relation to perceived SCQR was proposed. Furthermore, the agency theory and resource dependence theory were drawn on to identify factors related to the supply chain relationship and supply chain quality barriers that might have effects on three of the representations of SCQR. Based on the resource dependence theory, it was found that buyer and supplier dependence affect the representations of SCQR differently. The empirical results indicate that the inability to test and inability to trace are significant drivers of the perception of SCQR. The representation of SCQR impact on the intention of adopting two oriented quality management practices was also examined. The result reveals that when managers face increasing SCQR, they tend to be conservative in applying the quality management practices.