The diverse impact of heterogeneous customer characteristics on supply chain finance: Empirical evidence from Chinese factoring

Abstract

Supply chain finance (SCF) has become increasingly crucial for improving the operational efficiency of an entire supply chain. The existing literature has mainly focused on how customers persuade suppliers to adopt SCF in reverse factoring rapidly. However, the determinants that contribute to the successful implementation of supplier-initiated factoring have been largely unexplored. This study draws upon resource dependence theory to investigate the determinants of factoring from the perspective of heterogeneous customer characteristics. Using unique accounts receivable factoring data manually collected from 1929 listed Chinese firms between 2010 and 2019, we found that (1) customer concentration restrains suppliers’ factoring, while customer stability promotes it; (2) supplier market power mitigates the negative impact of customer concentration and strengthens the positive influence of customer stability; (3) customer financial constraints exacerbate the negative impact of customer concentration and weaken the positive effects of customer stability. This study contributes to SCF literature by providing insights into the relationship between customer characteristics and factoring. In summary, our findings enhance the understanding of co-operation and competition of SCF for both academics and practitioners.