Supply Chain Resilience: Evidence from Indian Firms
We characterize what features make supply chains more resilient. Using new data on the universe of firm-to-firm transactions from an Indian state, we identify firms with larger supplier risk following the Covid-19 lockdowns. Using an event-study design we find firms with suppliers in strict-lockdown districts experienced 4.5pp higher separation rates (a 15% increase relative to baseline). We study which characteristics increase supply-chain resilience. Firms that buy more complex products, with fewer available suppliers, are less likely to break links. We explore how firms change post-shock supplier composition. Firms with higher supplier risk form new links with larger and better-connected suppliers.
We thank Andrei Levchenko and Penny Goldberg for insightful suggestions and Claire Conzelmann for outstanding research assistance. We also thank seminar participants at the Richmond Fed, St Louis Fed and the NBER Trade Policy in the 21st Century conference for helpful comments. The views expressed are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Board of Governors. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.