Supply Chain Disruptions and Retail & Wholesale Inventory Dynamics: An Empirical Investigation

ABSTRACT Effective inventory management is critical for retail and wholesale (R&W) firms. Yet, little is understood regarding R&W firm‐level inventory dynamics during supply chain disruptions. Such dynamics have implications for transportation providers tasked with hauling these goods. This research integrates the shock response framework with organizational theories regarding firms' motivations to reduce uncertainty to explore how macro‐level supply chain disruptions affect the level and conditional variance of R&W inventories. We assemble a panel dataset combining firm‐level data from public R&W firms with Census Bureau data on logistics constraints and estimate mixed effect location scale models. Results corroborate our theoretical predictions.