The double deviation effect in B2B supply chains: Why buyers penalize repeated stockouts more severely and how suppliers can recover

Abstract

This study reveals an overlooked yet important phenomenon in B2B supply chain relationships: the double deviation effect, whereby buyers impose drastically higher penalties—2.3 times greater—on suppliers for recurring stockouts than for one-off occurrences. While previous research has been predominantly focused on service recovery in B2C contexts, this study delineates the distinctive ways that industrial buyers assess supplier failure, going beyond operational performance to include process uncertainty and attribution processes. Employing a mixed-methods approach, we combined controlled experiments with 150 B2B procurement professionals with an in-depth case study of Toyota's supplier recovery system following the 2022 semiconductor crisis. According to our findings, buyers are 37% less likely to renew contracts after repeated stockouts, even when monetary impacts are the same as for isolated occurrences. This response is due to a shift in attribution, in which ongoing disruptions are perceived as indicative of systemic supplier vulnerability and not indicative of external hardships. These findings counter dominant supply chain risk management approaches, demonstrating that reactive recovery measures—like expedited shipping and monetary compensation—fail to rectify the deteriorating trust in institutions. In contrast, proactive interventions, like real-time monitoring dashboards of inventory and collaborative risk assessment platforms, have the potential to lower the magnitude of penalties by 24%. The research adds to the discipline through the introduction of double deviation penalty as a behavioral operations phenomenon, bringing attribution theory and supply chain governance together. The research offers empirical facts in the way of large-scale experiments and Fortune 50 supply chain validation, as well as suggesting a three-phase resilience framework specifically developed for high-value contracts. This research transforms stockouts into reputation-building opportunities for trust, defining supply chain resilience and allowing managers to engineer trust-sustaining systems for long-term partnerships.