City Research Online

Abstract

Purpose – The Russia-Ukraine war (RUW) has disrupted the operations of global supply chains, highlighting the need to enhance resilience against large-scale disruptions. Building on the dual nature of supply base complexity (SBC), this study examines the extent to which the war has impacted automotive firms and explores how horizontal and vertical SBC differently moderates its negative effects.

Design/methodology/approach – This study conducts an event study to estimate the abnormal stock returns of 837 automotive firms headquartered in 41 countries following the RUW. This is followed by regression modeling to estimate the moderating effect of SBC. Further, a panel regression with fixed effects is used to estimate the effect propagated from automotive firms to their suppliers and customers in other industries.

Findings – Overall, we find that automotive firms experienced a 6.16% (4.73%) reduction in mean (median) market value following the outbreak of the war, with this effect propagating to their customers and, to a lesser extent, their suppliers. The study further reveals that the negative impact is exacerbated for firms with high horizontal SBC but alleviated for those with high vertical complexity.

Originality/value – This study provides evidence of the negative financial impact of the RUW and contributes to the supply chain literature on large-scale exogenous disruptive events. It further expands the boundary conditions of SBC by demonstrating that SBC can serve both as a cost burden and as a source of resilience in times of crisis, depending on whether its structure is more horizontally focused or vertically oriented.

Publication Type:	Article
Additional Information:	Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at Link to the terms of the CC BY 4.0 licence.
Publisher Keywords:	Russia-Ukraine war, supply base complexity, automotive industry, financial impact, propagation effects
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Departments:	Bayes Business School Bayes Business School > Faculty of Management
SWORD Depositor:	Symplectic Administrator

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