Are Monopoly Supply Chains More Resilient?: Empirical Evidence from an International Survey of Defense Supply Chains

• In Event: Environmental Resilience and Sustainability in the Face of Threat and Risk

Abstract

This paper examines the resilience of supply chains that underpin the defense industrial base (DIB), a sector formally designated by federal policymakers as a cornerstone of the nation’s critical infrastructure. We surveyed domestic and international firms involved in the supply chains of critical materials such as small arms munitions and eight DIB-critical metals, several of which are classified as strategic or rare. We collected data on resilience tactics (e.g., input substitution, resource isolation) employed by firms in response to disruptions and assessed the economic avoided losses that would have occurred in the absence of these tactics using a unique survey methodology. Through firm and tactic-level analyses, we evaluate the cost-effectiveness of resilience tactics and compare the severity of supply chain disruptions. Building on the supply chain resilience literature, this paper takes a novel approach to explore how firm size influences resilience and traces the pathways through which input substitutability affects firm resilience. We use Structural Equation Models (SEM) to estimate both the direct and indirect effects of having a larger pool of input suppliers on the magnitude of losses a firm can avoid by leveraging resilience tactics. Specifically, we trace the pathway from the size of the supplier pool through the expected duration of the disruption, and ultimately to the firm’s resilience outcome. The findings show that access to a larger pool of potential suppliers is associated with longer disruption durations, which in turn allows firms to avoid greater losses, particularly when operating under cost-plus supply contracts. 

Authors

• Yiseon Choi, The Ohio State University
  Presenting Author

• Ruhaimatu Abudu, North Dakota State University - Fargo, ND
  Non-Presenting Co-Author

• Noah Dormady, The Ohio State University
  Non-Presenting Co-Author