Supplier selection in the aftermath of a supply disruption and guilt: Once bitten, twice (not so) shy

Abstract

The supply management literature assumes that supplier selection is devoid of emotions and unaffected by the history and experience associated with a previously-selected supplier. In this paper, we relax these assumptions. Specifically, we consider the following sourcing opportunity: a sourcing professional had (alternatively, had not) recommended a critical-component supplier that originated an avoidable (alternatively, unavoidable) supply disruption (aka, the “disrupted supplier”). In the aftermath of this supply disruption, the sourcing professional is asked to recommend a supplier for a new-to-beoutsourced critical component (i.e., one unrelated to the component whose flow was interrupted), taking into consideration the influence of guilt as an emotional reaction to the supply disruption. Analyses of data from 286 sourcing professionals participating in a scenario-based, roleplaying experiment reveal that sourcing professionals experience higher levels of guilt when (a) they (versus their predecessor) had been responsible for selecting a disrupted supplier and (b) they deem the supply disruption to be controllable (versus uncontrollable) by the disrupted supplier. Guilt-laden sourcing professionals are then more likely to recommend a riskier albeit more advantageous supplier for a new-to-be-outsourced critical component. Our results provide the first evidence that prior supplier selection decisions gone awry influence future supplier selection decisions through the emotion of guilt. Moreover, they demonstrate that supply disruptions in one context have carryover effects on future sourcing decisions in unrelated contexts—an insight that is absent from the literature on supply disruptions.