Negative default dependence in supplier networks


Wagner, Stephan M. ; Bode, Christoph ; Koziol, Philipp



DOI: https://doi.org/10.1016/j.ijpe.2009.11.013
URL: http://www.sciencedirect.com/science/article/pii/S...
Additional URL: https://www.researchgate.net/publication/227420882...
Document Type: Article
Year of publication: 2011
The title of a journal, publication series: International Journal of Production Economics
Volume: 134
Issue number: 2
Page range: 398-406
Place of publication: Amsterdam [u.a.]
Publishing house: Elsevier
ISSN: 0925-5273
Publication language: English
Institution: Business School > Stiftungslehrstuhl für Procurement (Bode 2014-)
Subject: 650 Management
Keywords (English): Supplier default ; Supplier network ; Default dependence ; Negative default correlation ; Copula function ; Dependence measure ; Monte Carlo simulation
Abstract: The financial defaults of suppliers in a supplier network are significant risks and causes of uncertainty for buying firms. Hitherto, it has been largely neglected that default probabilities of suppliers in supplier networks are not independent of each other. We aim to overcome this shortcoming by studying negative supplier default dependencies: situations where a surviving supplier may benefit from the default of another supplier, resulting in a lower default probability. We use empirical data from the automotive supplier industry and copula functions, a method of representing joint distribution functions with particular marginals, to capture the default dependency between automotive suppliers and simulate various scenarios with negative default dependency. We also conduct a comparative static analysis illustrating the significant impact of negative default dependence. Our findings should spur managers to analyze their supplier networks with respect to default dependencies, and to take this phenomenon into consideration when making sourcing decisions.

Dieser Datensatz wurde nicht während einer Tätigkeit an der Universität Mannheim veröffentlicht, dies ist eine Externe Publikation.




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Wagner, Stephan M. ; Bode, Christoph ORCID: 0000-0001-5006-5804 ; Koziol, Philipp (2011) Negative default dependence in supplier networks. International Journal of Production Economics Amsterdam [u.a.] 134 2 398-406 [Article]


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