The Central European Review of Economics and Management

Title and contents

Johannes Platje — 2024-09-28

The role of personal relationships during supply chain disruptions

Cees J. GELDERMAN — 2024-09-28

Aim: Research on supply chain disruptions is most commonly conducted on the inter-organizational level of analysis. Although personal relationships in business-to-business relationships are generally considered important, the role of personal relationships during supply chain disruptions has been neglected in extant literature. Our study aims to fill this void by focusing on the role of personal relationships from the buyer perspective.

Design / Research methods: An embedded case study was conducted at manufacturer ASML on the role of personal relationships during seven supply chain disruptions. ASML is the world’s leading supplier of machines for the semiconductor industry. The unit of analysis is a supply chain disruption due to a delay or interruption in supply caused by the supplier or a sub-supplier. A total of seven sub-cases were examined.

Conclusions / findings: We found that personal relationships facilitate communication, the building of trust, flexibility, mutual understanding and anticipating behaviors. The results indicate that personal relationships indeed can play an important role in advancing supplier performance and addressing supply chain disruptions.

Originality / value of the article: The lack of research into the role of personal relationships in handling supply chain disruptions is a notable omission and points to a gap in the current body of knowledge. This study contributes to current understandings and knowledge by being one of the first studies to specifically investigate the role of personal relationships in a context of supply chain disruptions.

Implications of the research (if applicable): The results of this study have important implications for practice. The recommendation for management is to make employees aware and train them to invest in personal relationships which lays the foundation for successful collaboration also on the inter firm level. Trust and communication can be reinforced by regular face-to-face meetings, team-building activities with counterparts and communication training for better personal skills. Regular communication and maintaining relationships in stable times can help to increase supply chain resilience.

Limitations of the research: A limitation of this research is its focus on describing the role of personal relationships during different supply chain disruptions within a single focus organization. Another limitation of our study is the focus on supply chain disruptions that were successfully resolved. Further research could address these issues.

JEL: L63, M5

Devaluation, goods price variation and trade flows

David UMORU — 2024-09-28

Aim: The study evaluated the impact of devaluation and goods price variation on trade flows in a sample of 47 countries consisting of developing and developed nations from 1990 to 2023.

Design/Research methods: The estimation techniques adopted in this work are the Panel Structural VAR (PSVAR), GARCH, and panel non-linear ARDL (PNARDL) methods. Unlike other traditional estimation techniques, the Panel SVAR, GARCH, and NARDL produce enhanced results. The Panel SVAR model with variance decomposition and the relevant impulse response functions were estimated to check for the interaction between variables, and also, it captures the contemporaneous effect of the changes in variables. As a result, the NARDL method was used to determine the short and long-run asymmetries. The volatility that is present in the data set was also successfully captured by Panel-GARCH/GJR-GARCH model estimation for both developing and developed countries with trade flow as the dependent variable.

Conclusion/findings: The results established that both the positive and negative devaluation shocks positively but insignificantly impacted trade flows in developing countries. Goods price variability had significant positive effects on trade flows. A 1% rise in the positive shock to price variation resulted in a 0.29% rise in trade flows while a similar percentage decrease in goods price variability resulted in 0.01% rise in trade flows respectively. With the panel-GARCH results, the magnitude of the impact of devaluation on trade is near zero even though it was a positive effect. There was a convergence in the results concerning goods price variation since both the GARCH (1,1) and the GJR GARCH reported a positive impact of devaluation on trade flow. Nevertheless, we obtained a divergence in the results concerning goods price variation because, while in the GARCH (1.1), goods price variation had a positive impact on trade flow, using the GJR-GARCH, it had a negative impact. The condition of this indeterminate outcome may be attributed to the onset of globalization which has eroded some of the trade restrictions that the developing countries have used over the years to protect their infant industries. Also, while the GARCH (1,1) reported symmetric shock to trade flows, the GJR-GARCH reported asymmetric shocks. The good news is that these shocks are not permanent in developing economies. For the developed countries, the findings indicated a positive impact of devaluation on trade flow. This could be because the developed countries are mainly export-oriented as such, and a slight reduction in the exchange rate generated a significant positive impact on their trade flow. Whereas, only 34% disequilibrium error in trade flows of developing countries was corrected in the long-term period, 54% disequilibrium in trade of developed economies was restored in the long run when the destabilizing effect on trade flow occurred as a result of devaluation and price variations in developed economies.

Originality/value of the article: The research contributed to the empirical literature on currency devaluation, goods price variation and trade flows between trading partners. In particular, the research established that the impact of goods price variation on trade flow was insignificant in developed economies compared to the significant effect of price variation on trade in developing nations and this was attributed to high inflation rate in these countries. There is a negative outcome for the impact of devaluation on trade flow in developing countries. There is a substantial positive nexus between exchange rate devaluation and trade flow. Perhaps, the developed countries should have planned devaluation to achieve a further improvement in their trade flow position given their strong production and industrial base.

Policy implications of the research: based on the researching findings and the contributions of the study to current knowledge on the subject of currency devaluation and variation in the prices of goods and their established effects on the volume of trade in different countries, the well-managed inflation rate and exchange rate policies of the developed economies have made it almost impossible for them to experience variations in their prices of imports and exports. Policymakers in these countries are therefore advised to hold on to their current policies of non-volatility in their exchange rate as well as their inflation rates. In contrast, the monetary policy managers of the developing countries should complement policies of exchange rate devaluation with other economic enabling indices such as substantial improvement in the competitiveness of their industrial projects, a dynamic and vibrant economic environment where the inflation rate is at a very low level, as well as improvement of the level of productivity. In addition, policymakers in developing countries should ensure they implement policies that are anti-price racketeering by producers by making sure to keep their interest rates low and stable.

JEL: F31, F13, F14

Learning from Failures: employing fault tree analysis and reliability block diagram to investigate the two deadliest peacetime marine disasters

Nadar SHAH — 2024-09-28

Aim: This study aims to investigate the root causes of the MS Estonia and Doña Paz maritime disasters and to derive interdisciplinary lessons that can enhance the safety and reliability of maritime operations.

Design/Research methods: The study takes a case study approach and adopts Labib & Read’s (2013) framework for learning from failures. This study addresses the following questions: a) What technical factors contributed to the MS Estonia and Doña Paz maritime disasters? b) What human and organizational factors played a role in these maritime disasters? c) How do the reliability and vulnerability of individual components influence the overall safety and failure risk of MS Estonia and Doña Paz? To answer these questions, Fault Tree Analysis (FTA) and Reliability Block Diagram (RBD) techniques are employed. These methods are used to identify a range of technical, organizational, and human factors that contributed to these accidents and to assess the reliability and vulnerability of individual components affecting the safety and failure risk of the vessels.

Conclusions/findings: The analysis revealed that multiple factors, including technical failures, human errors, and organizational shortcomings, contributed to the disasters. The study found that the emergency response and search and rescue systems were particularly vulnerable, where a failure in any component could lead to system-wide failure. Based on these findings, evidence-based recommendations were proposed to enhance safety management practices, regulations, and oversight in the maritime industry.

Originality/value of the article: This study underscores the importance of a systemic approach to learning from failures. It highlights the necessity of addressing technical, human, and organizational factors in maritime safety and provides a framework for future research and improvements in safety management practices. The findings offer valuable insights for maritime organizations aiming to enhance their safety protocols and prevent future disasters.

JEL: L92, D81, O33, C63, M48

Rail or plane: a pilot study on Dutch tourists’ price sensitivity as a function of travel time

Matthijs BIJVOETS — 2024-09-28

Aim: As part of its climate and sustainability policies, the European Union actively fosters the transition from air to rail travel, for example by improving the international railway infrastructure, liberalizing the European railway market and introducing an international booking system for train travel. On the demand side, price is a crucial factor. This pilot study examines the effect of train ticket prices on holiday travel mode choice.

Design/methods: In a stated preference survey targeting holiday trips from Amsterdam to eight of Europe’s most popular city destinations, participants in the Netherlands were asked to choose between train and plane, given scenarios for price and travel time.

Conclusion / findings: The results point to a significant correlation between price sensitivity and travel time, with price sensitivity being lowest for short and long trips and highest for medium-range trips.

Originality / value of the article: The findings can inform pricing strategies of railway companies and the design of fiscal measures (taxes, subsidies) to strengthen the competitive position of European rail versus aviation.

JEL: L92, L93, D12, R41, Q58