A Supply Chain Perspective on Product Safety Risk

This study investigates the relationship between supply chain complexity, operational efficiency, and product safety risk. We consider three different dimensions of supply chain complexity – horizontal, technological, and spatial complexity – and examine their effect on product safety risk, proxied by severe product recalls. We also examine the effect of operational efficiency in this context. Our analysis is based on regression modeling, using financial, supply chain, and recall data from the medical device industry. Our findings indicate that all three dimensions of supply chain complexity increase product safety risk and that operational efficiency reduces product safety risk. We also provide evidence that operational efficiency serves as a critical moderator for the relationship between supply chain complexity and product safety risk. Given the increasing frequency of high-profile recalls caused by product failures in upstream supply chains, our study makes a timely contribution to the operations management literature.