Supply Risk Management and Firms' Competitive Advantage: moderating effect of Intellectual Capital and Risk Management Capability

Abstract

In today's dynamic business environment, supply chain disruptions and uncertainties were inevitable, posing significant challenges to firms aiming to maintain a competitive edge. Firms faced increasing risks from global supply chain complexities, geopolitical tensions, and unexpected events such as natural disasters and pandemics. This study addressed a critical knowledge gap by exploring the nuanced interplay between supply risk management (SRM) practices, a firm's competitive advantage, and the moderating influences of intellectual capital (IC) and risk management capability (RMC). Our research investigated these relationships through a survey of 284 Ghanaian SMEs and a comprehensive analysis. The results revealed that effective SRM practices significantly enhanced a firm's competitive advantage by enabling better risk identification, assessment, and mitigation strategies. However, contrary to conventional wisdom, the study found that high levels of intellectual capital could negatively moderate this relationship. This unexpected finding suggested that over-reliance on IC might introduce cognitive biases or resource allocation challenges that undermine SRM effectiveness, potentially leading firms to underestimate risks or misallocate resources. Conversely, the findings confirmed that robust RMC positively moderated the relationship between SRM and competitive advantage. Firms with strong risk management capabilities were better equipped to align their risk management practices with broader organizational strategies, enhancing their ability to respond to and recover from disruptions. This alignment allowed firms to maintain operational continuity and achieve strategic objectives, thereby reinforcing their competitive position in the market. This study contributes to the literature by providing a nuanced understanding of how SRM, IC, and RMC interacted to influence competitive advantage. It offered both theoretical insights into the complex dynamics of supply chain risk management and practical implications for organizations striving to optimize their supply chain strategies amidst a volatile business environment. By highlighting the critical roles of intellectual capital and risk management capability, the research underscored the need for a balanced approach that leverages both intellectual resources and robust risk management practices to sustain competitive advantage.

Keywords: supply risk management, firms’ competitive advantage, intellectual capital, risk management capability