Organizational Communication and Individual Behavior: Implications for Supply Chain Risk Management

Abstract

Risk is a significant issue for supply chain managers. Not only must they contend with multiple dimensions of risk in decision‐making, they must reconcile decision‐making with broader organizational interests. This study examines the influence of organizational communication regarding supply chain risk on individual decision‐making strategies and the perceptions of risk. A multi‐stage experimental design is applied, in which decision‐makers make decisions across three dimensions of risk and adjust their risk‐taking behavior after being presented with organizational communication regarding supply chain risk levels. The relationship between organizational communication and the perceptions of supply chain risk is then explored after decision‐makers are allowed to adjust their supply chain strategies. The results suggest that decision‐makers adapt sourcing strategies in response to organizational communication regarding supply chain risk. Specifically, they make riskier decisions when the organization communicates improvements in supply chain risk levels. However, when given specific instructions to reduce risk, they do not adjust their supply chain strategies.