Customer-supplier Relationships Research Articles

Directors with supply chain experience as heterogeneous network pipes: how does it affect M&A efficiency

PurposeThe link between interlocking directors and mergers and acquisitions (M&A) efficiency has been analyzed in an information asymmetry environment. Despite an abundance of evidence highlighting that interlocking directors do contribute to M&A efficiency in an acquirer-target binary relationship, the target is embedded in a complex network of supplier-customer relationships, which implies that the acquirer needs to consider the value of suppliers, distributors and retailers in the target’s supply chain in improving M&A efficiency. Through the lenses of acquirer-target multivariate relationships, this paper aims to examine how directors with supply chain experience (DSCs) act as heterogeneous network pipes to affect M&A efficiency.Design/methodology/approachUsing a sample of 311 A-share listed firms on the Shanghai and Shenzhen stock exchanges in China during 2011–2020, this paper investigates the relationship between DSCs and M&A efficiency by using ordinary least squares (OLS) regression.FindingsThrough empirical research, we verify a negative relationship between DSCs and M&A duration and an inverted U-shaped relationship between both DSCs and M&A performance, revealing the complexity of the relationship between experience and efficiency. Furthermore, drawing on upper echelon theory, the information value of DSCs will be greatly reduced when executives have overconfident psychological characteristics, which are mainly shown to negatively moderate the relationship between DSCs and M&A performance. We also conduct multiple robustness tests and supplemental analyses to illustrate the robustness and boundaries of our findings. Finally, DSCs are likely more important in environments among growth and mature firms as well as high-growth industries.Originality/valueWe break through the assumption that interlocking directors contribute to M&A efficiency in an acquirer-target binary relationship and examine the impact of DSCs on M&A efficiency based on micro-empirical evidence from the value of target-related upstream or downstream industries, which extends the connotation of interlocking directors and enriches the study related to factors influencing M&A efficiency.

Impact of Social Media Usage on Supplier-Customer Relationship Management: Case on Manufacturing and Service SMEs

Digital products have placed as a competitive advantage for business actors both individuals, companies, and industries recently. Social media such as Facebook, Instagram, YouTube, which are accessible from various communication media such as smartphones, tablets, or laptops have become inseparable media from user's handholds in order to share information, offer products and services, and make friends. In an effort to establish good relationships between companies and suppliers (Supplier Relationship Management/SRM) and between companies and consumers (Customer Relationship Management/CRM), hence optimizing the use of social media for companies becomes very important, no exception for small and medium-sized enterprises (SMEs). This study aims to examine the role of social media to assist SMEs in establishing good relationships with their suppliers and customers. There are around 200-250 manufacturing and service SMEs domiciled in Central Java province were involved. The data collection method was carried out through surveys guided by questionnaires and interviews with SME owners. Quantitative data analysis was conducted using Structural Equation Modelling. It is hoped that the resulting findings will prove the significant role of social media in helping SMEs to establish good relationships with suppliers (SRM) and customers (CRM), and it is believed to be useful both theoretically and practically.

Supplier concentration and the speed of capital structure adjustment

Using a large sample of A-share Chinese firms from 2012 to 2019, we show a positive relationship between supplier concentration and leverage adjustment speed. This positive relationship is unidirectional and primarily concentrated among over-leveraged firms rather than among under-leveraged ones. Moreover, the effect of supplier concentration is more pronounced in firms with greater bargaining power over suppliers. A plausible channel is the monitoring role imposed by suppliers, which mitigates the firm’s agency conflicts by reducing (1) information asymmetry between informed managers and uninformed market participants and (2) management opportunism and slacking. Further, we show that firms with higher supplier concentrations are more active in the security market due to having lower agency costs. Our findings demonstrate the crucial role of customer–supplier relationships in a firm’s capital structure dynamics.

The ambiguous impact of supplier involvement in product development on supplier relationship resilience and company performance

PurposeI aimed to obtain a deeper insight into the link between supplier involvement in product development (SIPD), supplier relationship resilience and company performance.Design/methodology/approachTo collect data, a survey among 500 Polish manufacturing companies was conducted. I used quantitative methods (structural equation modeling) to test several research hypotheses referring to a single supplier–customer relationship. Thanks to the use of multi-construct measurement of SIPD and supplier relationship resilience, the study provides detailed research results on the topic.FindingsCollaborative practices implemented during SIPD increase procurement flexibility and decrease redundancy in the relationship with the involved supplier. Communication during SIPD increases supplier flexibility and procurement flexibility. Increased supplier flexibility and increased procurement flexibility in the relationship with the involved supplier as well as collaborative practices during SIPD positively impact company performance. I confirmed the indirect effect between communication during SIPD and company performance when the mediators are supplier flexibility and procurement flexibility. Decreased redundancy in relationship with involved supplier does not impact company performance.Practical implicationsSupply chain managers need to rethink SIPD practice to effectively ensure supply chain resilience (SCRES), especially in the face of the contemporary global crisis and black swans affecting the supplier base. My article provides important managerial insights into drivers of SCRES and company performance.Originality/valueTo the best of my knowledge, this research is among the first to conclude that SIPD does not have an unequivocally positive or direct impact on supplier relationship resilience. The research fills the gap by analyzing the impact of SIPD on two main SCRES elements. The study examines supplier relationship resilience, understood as flexibility and redundancy elements, in a single supplier–buyer relationship perspective. Thus, the presented considerations go beyond the traditional understanding of flexibility and redundancy in supplier relationship management, that is through the prism of double or multi sourcing and having back up-suppliers.

Inter-firm relationships and the special role of common banks

Using a novel dataset that combines information on customer-supplier trade relationships with information on firm-bank lending relationships, we show that common banks that lend to firms at both ends of a trade link grow and strengthen such trade relationships. To establish causality, we use bank mergers, which generate exogenous variations in the presence of common banks, and show that common bank relationships between customers and suppliers increase trade relationships by 49.6%. We find that the role of a common bank is greater when it is more informed and when supply chains suffer from larger information and holdup problems. We also document that suppliers with common banks face lower spillover risks from a distressed customer. Overall, our findings show the unique role of banks in driving inter-firm growth and investment by mitigating information and holdup problems, which arguably leads to greater economic growth.

Exploring the crossroads between digital servitization and sustainability from a business marketing perspective

AbstractIn this study, we explored the contingency effects of digital servitization enabled by Industry 4.0 technologies and sustainability from the perspective of business-to-business marketing relationships. Our in-depth analysis of an Italian company showed the extent to which digital servitization can improve customers’ sustainability profiles and could be a lever to address the servitization paradox. However, to capture this sustainability value, companies must transform their supplier–customer relationships. Customer relationship management emerged as a critical element in this sense, especially when highly innovative services were offered.

Do customers’ financial restatements affect how auditors respond to their suppliers? Evidence from China

PurposeThe purpose of this study is to explore the economic impact of financial restatements by major customers on the audit opinion of their suppliers, showing that non-financial information disclosure potentially helps auditors make better assessments.Design/methodology/approachUsing a sample of China’s listed firms from 2007 to 2021, the authors aim to find the relationship between customers’ financial restatements and their suppliers’ audit opinions. Heckman selection model, placebo tests and other robustness checks are used as well.FindingsThe findings reveal that customers’ financial restatements have a significant effect on the likelihood of suppliers receiving modified audit opinions. This relationship is pronounced when suppliers face a higher level of financial constraints, exhibit poorer accounting conservatism or receive more negative media coverage. Additionally, this effect occurs through increased business risk and information risk, which heightens auditors’ perceived audit risk. Moreover, the study highlights the influence of switching costs, auditor expertise and restatement severity on this relationship.Practical implicationsRisks originating from customers can spread along the supply chain, emphasizing the necessity for auditors to give heightened attention to both the audited firms and their customer information. Moreover, regulators should carefully consider the important impact of customer information disclosures to maximize the protection of the interests of external information users.Originality/valueThis study not only confirms the crucial role of customer information disclosures in annual reports for stakeholders and auditors but also contributes to the existing literature on customer–supplier relationships.

Blockchain and earnings management: Evidence from the supply chain

We investigate whether corporate adoption of blockchain technology is associated with a change in firms' financial reporting behavior. On one hand, the features of blockchain technology (immutability, decentralized consensus, and real-time data sharing) can enhance data integrity, suggesting corporate blockchain adoptions may reduce earnings management. However, despite fast growth in blockchain adoptions, it remains unclear whether improved financial reporting quality or reduced accounting manipulation is a motivating factor in firms' blockchain adoption as firms vary in how they implement this new technology. On the other hand, the hype and/or increased expectations associated with blockchain adoptions, as well as the market's misperception that blockchain adoption could increase data integrity, may incentivize and provide opportunity for firms to upwardly manage earnings. We conduct our tests in the setting of the supply chain, as prior work establishes that shocks to one firm can impact linked firms through customer-supplier relationships. Our empirical evidence supports the latter prediction, as we find robust evidence that supplier firms' earnings management increases after their customers adopt blockchain. This result holds with numerous robustness tests. We provide direct evidence consistent with hype/increased expectations and reduced monitoring of supplier firms. Our findings suggest unintended consequences of blockchain adoption on financial reporting.

The Effects of Terrorist Attacks on Supplier–Customer Relationships

We examine the causal effects of nearby terrorist attacks on supplier–customer relationships. We find that for supplier firms located near terrorist attacks, the probability of relationship termination with their major customers increases by 2.9 percentage points within two years following the attacks. The major customers’ intensified perceptions of supply chain risk largely drive the relationship termination. Further analyses show that major customers tend to switch to suppliers with lower terrorism risks after they end their relationships with the suppliers near attacks. This study provides new insights into the consequences of terrorism by extending the focus to the response of a key stakeholder group (i.e., trade partners) instead of the attack-afflicted firms per se.

Structural capital and relational capital: examining the direct and moderating role of cognitive capital in customer-supplier relationships

Structural capital and relational capital: examining the direct and moderating role of cognitive capital in customer-supplier relationships

Green links: corporate networks and environmental performance

Abstract We investigate the propagation of environmental performance among competitors and in customer–supplier relationships. We find a significant causal effect among competitors, while the propagation from customers to suppliers and vice versa appears insignificant or does not survive identification tests. The effect is stronger among firms in highly concentrated competitor networks and toward firms with less market and bargaining power than their competitors. We also find significantly stronger propagation of environmental performance among competitors engaged in joint research and development activity. These results show that the propagation stems from both competitive pressure and technological spillover. Importantly, we find that propagation is strong when the competitor improves its environmental performance and when the firm’s own environmental performance is poor initially, alleviating concerns that improvements in performance are concentrated among firms, which are already green. Overall, network effects among competing firms are a significant force shaping environmental performance, and a force mostly for good.

A configurational approach to understanding relationship characteristics in differing levels of servitization

In their transition from product-based to value-based offerings, B2B suppliers progress through different levels of servitization. These levels are characterized by the type of offering sold (products, services, bundles, or solutions) and the nature of business interaction (transactional vs. relational). This study sheds light on which configurations of customer-supplier relationship characteristics are associated with specific levels of servitization. Emerging from the theories-in-use concept, the authors build a conceptual framework entailing such characteristics and levels of servitization. To empirically investigate this framework, a survey with 182 industrial salespeople is analyzed using fuzzy-set qualitative comparative analysis (fsQCA). The authors identify equifinal relationship configurations of ‘trust and dependence’, ‘communication’, ‘supplier competence’, ‘customer predispositions’, and ‘price sensitivity’ for 11 different servitization levels. This research extends academia's understanding of servitization by contextualizing when and how different types of offerings are sold. Suppliers can use these insights to better identify the appropriate offering type and business interaction approach for the context in which they are operating.

Bound by ancestors: Immigration, credit frictions, and global supply chain formation

This paper shows that the ancestry composition shaped by century-long immigration to the US can explain the current structure of global supply chains. Using an instrumental variable strategy combined with a novel dataset that links firm-to-firm global supply chains with their location information and historical migration data, we find that the co-ethnic networks have a positive causal impact on global supply chain relationships between foreign countries and US counties. The positive impact not only exists in supplier–customer relationships but also extends to strategic partnerships and trade in services. The positive impact is stronger in counties in which a larger number of firms are credit constrained, and such a stronger effect becomes even more pronounced when foreign firms are located in countries with weak contract enforcement. The results suggest that co-ethnic networks serve as social collateral to overcome credit constraints and facilitate global supply chain formation.

Supplier-customer relationships for sustainability-led innovation in the textile industry

PurposeThis paper aims to investigate sustainability-led innovation, focusing on the interplay between product and process innovation for sustainability goals and the underlying supplier–customer relationships. Thus, the paper delves into sustainability-led innovation and how it affects supplier–customer relationships, and vice versa, thus providing a twofold perspective.Design/methodology/approachThe textile industry is the empirical context of this study, which is exploratory research based on in-depth, semi-structured interviews with entrepreneurs, managers and experts in the textile industry.FindingsIn the textile industry, sustainability-led product innovation concerns mainly product durability and performance, product recyclability and the use of waste for new product development. Process innovation deals with circular economy, traceability and water and chemical use minimization. The paper also shows how sustainability-led innovation is implemented in more technical terms and regarding supplier–customer relationships.Originality/valueThe paper adopts an original perspective on how processes take place in the relationships between suppliers and customers, where there is no dominance of one actor, but innovation emerges from interdependence and interaction. Such perspective allows to provide an in-depth analysis of the supplier–customer relationships and underlying dynamics that affect sustainability-led innovation; moreover, the authors study how such innovation impacts supplier–customer relationships and the underlying relational dynamics. The value of the paper also stands in delivering a real representation of the innovation processes grounded in the textile industry.

Customer concentration and corporate financialization: Evidence from non-financial firms in China

This study investigates the potential impact of customer concentration on corporate financialization using a sample of Chinese non-financial listed firms. The findings reveal a positive correlation between customer concentration and a supplier’s level of financialization. Customer concentration can drive corporate financialization by amplifying the operating risks suppliers face, diminishing their operational efficiency, and weakening external oversight from other stakeholders. Furthermore, supplementary research indicates that the previously mentioned positive influence diminishes when suppliers are state-owned, have pronounced financing constraints, operate within less competitive industries or regions characterized by higher levels of financial marketization, and/or encounter elevated economic policy uncertainty. The implications of our findings extend to enriching the existing body of literature concerning customer-supplier relationships. Moreover, our study offers valuable insights for future investigations into the governance mechanisms underlying corporate financialization.

Drivers of contract renewal over time: a framework of analysis in B2B services

ABSTRACT Despite the wealth of research into Business-to-Business customer relationships, there are a number of gaps in the literature, where most studies have used cross-sectional research designs. In this study, we explored customer relationships over a three-year period, using data from a large Fortune 100 industrial services provider. Our longitudinal research design compared the drivers of customer satisfaction and contract renewal decisions over time, and provides a holistic framework for viewing customer relationship drivers and their effects at an aggregate level. While some drivers were quite stable, others changed significantly between quarters. The main implications of this study are that firms should closely manage their supplier–customer relationships by tracking the drivers over time to enable service responsiveness to changing customer needs. From a theoretical perspective, the data also indicate that researchers should be cautious in drawing concrete conclusions from cross-sectional studies, as many drivers are dynamic over time. Future researchers are encouraged to develop more longitudinal research designs.

Customer–supplier relationships and non-linear financial policy response

We investigate whether changes in the capital structure of major customers play an important role in determining the firm’s financial policy. Following (Leary and Roberts, 2014) and using average customer idiosyncratic equity return shocks, we find that a firm’s leverage ratio is negatively and nonlinearly affected by the leverage ratio of its major customers. This “customer effect” occurs only when the idiosyncratic equity shock to the customer firms is negative. Consistent with the prediction of the modified pecking order theory that firms are more concerned about excessively high leverage ratios than excessively low leverage ratios, supplier firms tend to significantly reduce their long-term debt in response to increases in the leverage ratios of their major customers but are insensitive to the inverse change. Finally, consistent with the stakeholder theory and the dynamic trade-off theory, we find that this capital structure correlation is more pronounced for firms producing specialized or unique products, firms with lower profitability, firms with weaker operational capabilities, firms that take more risks, firms whose customers operate in more competitive industries, and firms whose customers are more financially vulnerable. Our results contribute to identifying the dynamics and determinants of corporate capital structures.

System Management and Improvement of Payment Planning Processes in Production Engineering

Abstract The aim of this paper was to propose an innovative solution for the management and payment planning processes in manufacturing enterprises with the support of an in-house SAP system in accounting and administration of services in order to streamline enterprise processes. The methods used were analysis of internal environment, observation method, analysis of written documents, analysis of microenvironment of manufacturing enterprises, SWOT analysis, internal data from the SAP system, process structural analysis and process map. The results obtained, in conjunction with application of scientific research methods, contributed to development of an application that reduces risk of negative reputation of manufacturing enterprises and promotes business partnerships in supplier-customer relationships where late payment of obligations occurred due to an out-dated management and payment planning processes. The new application is a potential solution reducing risks of payment of obligations in processes of managing and planning payments for SMEs.

How business usage center members' self-concepts affect their perceptions and assessments in organizational usage processes

In business-to-business settings, purchasing dominantly takes place within customer-supplier relationships. Therefore, from a supplier perspective, it is important to understand what drives customers' rebuy decisions. Here, the value in use that individual representatives of a customer organization, based on the achievement of their individual and collective goals, experience in their usage processes has an important impact on the firm's loyalty. However, only little is known about how the various users in a customer firm, the members of a business usage center (BUC), perceive value in use and how these perceptions are influenced by their interactions. In two studies with 18 interviewees using the repertory grid technique in combination with means-end chaining, this paper investigates how actors' self-concepts influence their attributed reasons for actions of other BUC members and in turn the perceptions of their behaviors. Eleven attributed reasons for action are elicited that are grouped into four clusters covering competence profile, emotional profile, job requirements, and personal motivation. The findings of this study complement existing research that mainly uses hierarchical positions and organizational roles to explain individual assessments and decision-making specifically related to business buying behavior. Based on these insights, theoretical as well as managerial implications are discussed and avenues for further research are presented.

Suppliers’ decision on green innovation: A response to customers’ environmental regulation

This study examines whether customers’ environmental regulation (ER) affects suppliers’ green innovation. Relying on a unique dataset of customer–supplier relationships among listed firms in China, we demonstrate that suppliers’ green innovation increases in response to intensified ER pressure faced by customers. This finding holds even when considering alternative proxies of green innovation and ER, and an alternative sample. We also demonstrate that the impact of customers’ ER on suppliers’ green innovation is positively correlated with customers’ bargaining power. Our results contribute to the growing research on the crucial role of the supply chain in firms’ decision making processes.