Impact of policy environment on supply chain risk and its consequences: An empirical examination

The main purpose of this paper is to develop a conceptual model of risk management in the supply chain context, emphasizing the importance of government policy environment. By use of structure equation model approach, this paper empirically explores supply chain risk sources which include supply risk and demand risk, and their influences on firm performance in the supply chain, with government policy environment as an antecedent. Based on a sample of 194 managers of firms in China, the research findings show that (1) both supply risk and demand risk could be reduced by favorable government policy environment;(2) demand risk can directly negatively influence firm performance, while supply risk has no direct effect on firm performance; (3) favorable government policy environment is an important antecedent, which indirectly improve firm performance by influencing supply risk and demand risk. Implications and contributions are also discussed in this study.