When is the Supplier’s Message “Loud and Clear”? Mixed Signals from supplier-Induced Disruptions and the Response

Following supplier-induced disruptions, suppliers may undertake recovery actions in hopes of reducing damage to the focal exchange with buyers. While research shows that the absence of suppliers’ recovery actions almost always leads to a deteriorated relationship, it is less clear if—or more likely when—the presence of suppliers’ recovery actions restores a relationship. Accordingly, we examine a specific set of suppliers’ recovery actions in light of important considerations—that is, disruption severity, suppliers’ dependence, and buyers’ supply chain risk uncertainty. Through the lens of signaling theory, we frame supplier-induced disruptions as negative signals from suppliers (signalers) to buyers (receivers) and suppliers’ recovery actions as positive signals. We theorize that these mixed signals unfold in different buyers’ perceptions due to the aforementioned contextual considerations. Using the critical incident technique to capture disruption events, we find that the messages of suppliers conveyed through their recovery actions may or may not be “loud and clear,” depending on the context. In doing so, our results reveal substantive guidance for suppliers’ use of recovery actions to combat the negative perception of supplier-induced disruptions. Likewise, the results are also promising for buying companies seeking to develop (i.e., improve) supplier performance.