English, Article edition: Supplier default dependencies: Empirical evidence from the automotive industry Wagner, Stephan M.; Bode, Christoph; Koziol, Philipp

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Bookmark: http://trove.nla.gov.au/version/10756
Physical Description
  • article
Language
  • English

Edition details

Title
  • Supplier default dependencies: Empirical evidence from the automotive industry
Author
  • Wagner, Stephan M.
  • Bode, Christoph
  • Koziol, Philipp
Physical Description
  • article
Notes
  • Common ways to mitigate the detrimental consequences of supplier bankruptcies are to install redundancy and to pursue a multiple-sourcing strategy. This is based on the assumption that the adverse event of one supplier going out of business is largely independent from the default of other suppliers. However, this implicit assumption does not hold in all cases. This study - based on empirical data from automotive suppliers - reveals that default dependencies among suppliers do often exist and can have significant consequences. We use copula functions, a method of representing joint distribution functions with particular marginals, to capture the default dependence between automotive suppliers and to simulate various default dependence scenarios. We also conduct a comparative static analysis illustrating the significant impact of default correlation in a supplier portfolio. Our findings should spur managers to analyze their supplier portfolios with respect to default dependencies, and to take this phenomenon into consideration when making sourcing decisions.
  • Supply chain management Supplier default Sourcing strategy Supplier portfolio Default dependence Copulas
  • RePEc:eee:ejores:v:199:y:2009:i:1:p:150-161
Language
  • English
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