Robustness and resilience of supply chains during the <scp>COVID</scp>‐19 pandemic

Abstract

Using a unique firm-level data set from Asia, this study examines what determined the robustness and resilience of supply chain links, that is, the ability of maintaining links and recovering disrupted links by substitution, respectively, when firms faced economic shocks due to the spread of the coronavirus disease (COVID-19). We find that a supply chain link was likely to be robust if the link was between a foreign-owned firm and a firm located in the foreign-owned firm's home country, implying that homophily on a certain dimension generates strong ties and thus supply chain robustness. We also find that firms with geographic diversity of customers and suppliers tended to increase their transaction volume with one partner while decreasing the volume with others. This evidence shows that firms with diversified customers and suppliers are resilient, mitigating the damage from supply chain disruption through the substitution of partners. Furthermore, the robustness and resilience of supply chains are found to have led to higher performance.