Supply base complexity in times of crisis: moderating the negative impact of the Russia–Ukraine war

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.