The Productivity–Operational Resilience Trade‐Off in Agri‐Input Supply Chains: Evidence From China's Nitrogen Fertilizer Industry

ABSTRACT Resilient agri‐input manufacturing is essential for stable food production, yet efficiency‐oriented investments may weaken resilience when key inputs become scarce. We examine this trade‐off in China's nitrogen fertilizer industry using a policy‐driven upstream shock, the 2008 coal mine consolidation campaign, which inadvertently tightened the supply of anthracite lump coal, an input required by coal‐gasification fertilizer plants. Using panel data on 843 firms (2001–2013), we build a probability‐based operational resilience score (0–1) from capacity‐utilization trajectories, defined as the probability of maintaining utilization above a viable long‐run equilibrium. Difference‐in‐differences estimates show that, after 2008, coal‐based producers suffered an average resilience decline of about 10 percentage points relative to non‐coal counterparts. The score is predictive, with a one‐standard‐deviation increase at the sample mean associated with about a 12‐percentage‐point lower probability of exit over the next 5 years. We further document a nonlinear, inverted U‐shaped relationship between total factor productivity (TFP) and resilience. Moderate‐productivity firms are most resilient, whereas both low‐ and high‐TFP firms suffer larger losses. This pattern is consistent with high productivity resting on dedicated assets and leaner buffers that limit adjustment when input availability changes sharply. State ownership is associated with roughly 5‐percentage‐point smaller losses, and vertical integration with upstream coal firms shows a weaker, directionally similar association. Overall, upstream regulation can transmit unanticipated risks into agri‐input supply chains, and flexibility and relational access to critical inputs complement efficiency in sustaining operational resilience in agri‐input manufacturing.