Industry Studies Assocation Working Paper Series

The growing interdependence of firms across the globe with seeming rise in the incidence of both intentional and unintentional security events (terrorism, food contamination, etc.), has exposed, and often contributed to, the vulnerabilities of many firms and their supply chain partners. It is increasingly imperative that the firms be prepared to be able to protect and defend themseleves against such security threats. With this paper we attempt to understand this preparedness, which we consider an ex ante construct, specifically for the firms in the food industry, and find a way to measure it. The highlights of this paper are (1) the unique dataset on firms in the food supply chain across U.S. detailing their security practices, (2) a novel approach to analyzing this dataset using Latent Trait Analysis that allows us to uncover the underlying strength and weakness of firms in their security practices and (3) analysis with which we are able to relate firms’ security practices with firm characteristics, such as market area, supply chain scope and firm size. Our preliminary analyses reveal some interesting results on what firms do and how firm characteristics bring about differences in firms’ security preparedness, ex ante. We find four distinct latent factors for explaining different facets of security preparedness, two of which are supply chain collaboration and physical security preparedness. We then also analyze the influence of firm and respondent demographics on each of the dimensions of preparedness. Firm size, supply chain scope, market area and tax status of the firm are some of the variables that emerge as as important characteristics that impact security preparedness in supply chains.