Confidence and supply chain disruptions: Insights into managerial decision‐making from the perspective of policy

This conceptual paper aims to shed light on the nature and determinants of managerial behaviour when affected by supply chain disruptions. It aims to argue that the managerial decision‐making process is an important component in determining the eventual long‐term impact of a supply chain disruption.

The paper introduces a continuous simulation model that is based on a Bayesian robot decision‐maker. Using the system dynamics approach, it illustrates the process of evaluating competing hypotheses of functional vs dysfunctional supply chain design in a disruption scenario. Model validity is assessed by means of a case study based on secondary data.

The model provides insight into the drivers of decision‐maker confidence dynamics that are used when evaluating the competing hypotheses. Furthermore, it identifies the psychological distortions that make actual managerial inference processes different from the Bayesian robot and incorporate these adjustments into the system dynamics model. Several propositions about the nature and determinants of decision‐maker confidence are stated.

For policy makers, the paper clarifies the important moderating role of confidence in the realisation of wider implications of supply chain disruptions, especially from the perspective of industrial development, and trade and transport facilitation.

The research enhances understanding of the wider implications of supply chain disruptions, contributing to behavioural research in logistics and supply chain management.