Exploring the response and performance of the aviation supply chain and ecosystem in time of crisis

Xu, Mao 2023. Exploring the response and performance of the aviation supply chain and ecosystem in time of crisis. PhD Thesis, Cardiff University. Item availability restricted.

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Abstract

Given the driving forces of competitive advantage, business entities in the supply chain are closely interconnected. The modern supply chain is exposed to various risks, including, but not limited to, natural disasters, financial disruptions, and political instability. Since a multitude of supply chain entities has interacting, conflicting goals and behaviours, the crisis or disruption in a supply chain has the potential to spill over to the supply, production, and distribution networks. To date, supply chain crises have attracted interest from both researchers and industrialists. This thesis aims to explore the response and performance of the aviation supply chain and ecosystem in time of crisis. This thesis leverages the case of two Boeing 737 Max aviation crashes, namely the Lion Air crash in 2018 and the Ethiopian Airlines crash in 2019. Based on the efficient market hypothesis (EMH), this thesis employs a short-term event study methodology to empirically estimate the stock market reaction associated with Boeing 737 Max aviation disasters (Study 1) and subsequent disaster-related events (Study 2). Numerous OSCM literature empirically studies the financial impact of crisis events on the supply chain. However, limited research analyses the economic effects on multi-tier supply chain partners and broader business entities. Hence, Study 1 provides empirical evidence on the impact of two Boeing 737 Max aviation crashes on the economic effects of the focal company, Boeing, multi-tier supply chain partners, and other business actors within the aviation ecosystem. The results show that supply chain partners and other business entities had positive reactions to the Lion Air disaster in addition to Boeing and Airbus. The Ethiopian Airlines crash led to significantly greater negative impacts on Boeing’s supply chain and aviation ecosystem than the Lion Air crash. Additionally, current research in OSCM rarely analyses the effect of trending crisis events on stock returns in a manner that accounts for further events and their transmission effects. Thus, Based on Study 1, Study 2 goes one step further to identify several disaster-related events following the Boeing aviation disasters over a longer timeline to study whether the subsequent events affect Boeing and have a contagion or competitive impact on Boeing’s supply chain partners and major competitors. Various types of subsequent events reveal different financial consequences and transmission effects. This thesis takes advantage of the supply chain quality events occurring in the global context, enriching the OSCM literature on the financial impacts of notable external events. Drawing on signalling theory, this thesis adds to the OSCM literature on estimating how the economic iii effects of focal firm crises propagate through the multi-tier supply chain. This thesis also sheds light on the transmission effects on broader business actors within the business ecosystem. Moreover, this thesis demonstrates that the full extent of the transmission effects becomes more visible by considering subsequent events over a longer timeline, advancing the understanding of transmission effects. Furthermore, the thesis provides insightful implications for the focal firm and its supply chain partners to consider mechanisms and strategies to prevent or mitigate the effects of such quality incidents. Documenting the financial outcomes of such a crisis can also motivate aviation regulators and aviation industry groups with the resources and capabilities to be sensitive to risks and reduce such disasters and other safety accidents. Keywords: aviation disasters, supply chain quality events, supply chain and ecosystem, stock market reaction, event study, signalling theory, contagion effect, competitive effect.

Item Type:	Thesis (PhD)
Date Type:	Completion
Status:	Unpublished
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > H Social Sciences (General)
Uncontrolled Keywords:	aviation disasters, supply chain and ecosystem, stock market reaction, event study, signalling theory, and transmission effects.
Date of First Compliant Deposit:	8 February 2024
Last Modified:	08 Feb 2024 10:13
URI:	https://orca.cardiff.ac.uk/id/eprint/166169

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