Customer degree centrality and supplier performance: the moderating role of resource dependence

Abstract

This study builds on social network and resource dependence perspectives and examines whether the central position occupied by a customer firm affects supplier financial performance. The research setting for this study is the manufacturing and service industries. To test proposed hypotheses, we collect data from the Compustat segment customer database and use pooled ordinary least squares regression in our main analysis. Our findings show that customer degree centrality enhances supplier performance. We found that the positive effect of customer degree centrality on supplier performance is more pronounced when there is a high level of resource dependence between a customer and its supplier. This study extends the social network theory and the resource dependence theory by delineating how customer degree centrality is related with supplier performance. Our finding contributes to a better understanding of the contingency view of the relationship between a central position and performance that is not always straightforward.