The Relationship between Distance and Risk Perception in Multi-Tier Supply Chain: The Psychological Typhoon Eye Effect

Abstract

Previous research has shown that an individual’s proximity to the epicenter can influence their perception and response to risk. However, this aspect has been largely overlooked in the supply chain risk literature. This paper aims to fill this gap by investigating the impact of distance on the perception and response to supply chain disruption risk. An online survey was conducted with 1055 managers working within the supply chain of ZTE, a Chinese multinational company providing integrated communications and information solutions. The survey aimed to examine how their distance from the disruption epicenter (i.e., ZTE) affected their risk perception and subsequent managerial responses. The findings indicate that those closer to the epicenter perceive a lower risk of disruption compared to those farther away, resulting in a reduced likelihood of taking management action. This phenomenon is referred to as the “psychological typhoon eye” (PTE) effect in supply chain disruption risk. Further analysis revealed that risk information quality mediated the relationship between distance and risk perception, while an individual’s job position level moderated the relationship between risk information quality and disruption risk perception. To mitigate the PTE effect in the multi-tier supply chain, the focal firm must prioritize high-quality information synchronization, extending beyond single-company initiatives.