“However, how much a failure of one firm affects economies around the world depends on multiple factors, it’s not so simple that a disruption of a larger firm would always cause more losses. The structure of the international supply networks plays a role in this,” said Dr Matous.
Organisations deliver supply chain shocks like COVID-19 super-spreaders
“Similarly to COVID-19 “super-spreaders”, organisations that can facilitate the spread of supply chain shocks are not always the biggest ones nor necessarily the ones with the most supply chain connections,” said Dr Matous.
“We identified when supply chain clusters overlap with country boundaries but often they don’t and in such cases and industries, fast international contagion of shocks is possible,” he said.
The researchers also found that organisations that originate from a certain country, but register themselves elsewhere, are often less central to the supply chain network of the country in which they are registered, yet are more central in the global supply chain network due to their international roots.
For example, a Chinese packaging group that was registered in the United States was found not to be important to their supply chains but was important on a global scale.
Strength in numbers
The study found that structural clustering – known as community structures – of global supply chains are strongly influenced by the industries that organisations belong to.
“We identified industry sectors and countries which tend to form strong communities in terms of supply chains, and are therefore are less vulnerable to fluctuations in the global supply chain network, such as finance, insurance, real estate, transportation, construction, manufacturing,” said Dr Piraveenan.
HOW THE RESEARCH WORKED
Working alongside Professor Yasuyuki Todo from Waseda University, the researchers created a supply chain network that analysed 154, 862 organisations of ten countries, which were selected due to high representation in the dataset and regional economic importance. These countries including the United States, Russia, China, India, United Kingdom, France, Canada, Australia, Japan and Singapore.
