Regulatory Volatility in Digital Supply Chains: An Information Systems Analytics Study of Decision-Maker Risk Perceptions and Sustainability-Related Outcomes
Question. How do manufacturing supply chain decision-makers perceive regulatory-volatility risks — labor, environmental, customs, ownership, military-logistics, and distribution — and do those perceptions predict whether a supply chain engagement succeeds or fails?
Finding. Analysing 1,988 anonymized decision-maker records from a multinational logistics firm, the study finds that the six risks do not form a single "regulatory volatility" construct, and that the sustainability-motivated risks (labor and environmental) were rated lowest of all — a median labor severity of 0 and environmental severity of 1 on a 0–5 scale — even during a period of record forced-labor enforcement. A logistic regression separated success from failure perfectly in-sample, but only because two near-duplicate items leaked the outcome.
Why it matters. The perception gap exposes firms to "sustainability leakage": sudden enforcement pushes them to exit suppliers rather than remediate. For anyone building AI decision support from organizational records, the perfect-accuracy result is a concrete warning about label leakage. The authors recommend multidimensional (not composite) risk dashboards and provenance-aware data governance for supply chain analytics.