The Impact of Supply Chain Partnership on Firm Performance: an Empirical Study Based on Listed Manufacturing Companies in China

Panxin Zhou

doi:10.54691/bcpbm.v14i.124

Abstract

Today, Supply Chain Management (SCM) is regarded as an essential strategic factor, which has a great deal of influence on earning competitiveness in global business environment. There are conflicts among all members of the SCM. In order to maximize the total profit of the SCM, negotiation among all members is necessary. For enterprise in the supply chain, the supply chain partnership has become a significant factor affecting firm performance. In this paper, I examine the impact of cooperation between enterprise and its supply chain partners. Specifically, I collect survey data from Chinese manufacturing firms about their relations with partners and use regression analysis to test hypotheses about the associations between firm performance and supply chain partnership. My results support that superior supplier partnership has a positive impact on reducing transaction costs and improving financial and market performance. In additional test, I establish a series of models with interactive terms. The results of additional test indicate that the impact is enhanced if the competition of each sub industry of the manufacturing industry is different. Above all, I put forward the following suggestions. Enterprise managers could establish an evaluation mechanism of suppliers and retailers, which select high-quality cooperative partners and reduce low-quality transaction costs for enterprises. When participating in business operation, shareholders could comprehensively understand the business conditions of various supply partners and choose reliable supply chain partners for investment. Also, the government can guide the realization of resource sharing and information exchange among supply chain enterprises, which is beneficial to create a more competitive supply chain to promote economic development.

Highlights

The 21st century economic landscape is characterized by the development of a New Economic Order (NEO) of globalization (Tanada et al, 1997)
Based on relevant data of China manufacturing industry from 2014 to 2020, this paper uses regression analysis to explore the impact between enterprises and supply chain partnership
Superior supply chain partnership enhances the overall advantage of enterprises in the market

Summary

Introduction

The 21st century economic landscape is characterized by the development of a New Economic Order (NEO) of globalization (Tanada et al, 1997). Hauser (2003) suggested that enterprises should place a high priority on developing adequate supply chain management strategies to improve financial performance and to achieve competitive advantage considering today’s increasingly complex environment of business. As global competition increases, manufacturing companies should be more involved in how their suppliers and customers conduct business (Arawati, 2021). Chain management (SCM) can be seen as the active management and effective coordination of supply chain activities to leverage strategic positioning by increasing customer value and achieving a competitive advantage. SCM is needed for various reasons: improving operations, better outsourcing, increasing profits, enhancing customer satisfaction, generating quality outcomes, tackling competitive pressures, increasing globalization, increasing importance of E-commerce, and growing complexity of supply chain. The objective of SCM is to incorporate activities across and within organizations for providing the customer value SCM assists the business organization to compete in the dynamic international market (Mamun Habib, 2014)

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