Supply Chain Relationships and Performance: An Empirical Examination
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There is a large body of empirical research that suggests that collaborative supply chain (SC) relationships lead to improved firm and SC performance. However, most of the empirical evidence is based upon survey or case studies. There is a lack of empirical examination of SC relationships and performance using large scale secondary data. In this dissertation we attempt to fill this research gap by providing empirical evidence on the association between SC relationships and performance based upon large scale archival SC data. In the following three essays of the dissertation, we study three important aspects of SC relationships that have direct impacts on firm and SC performance. The first essay examines the association between supplier and buyer performance in dyadic SC relationships. We find that a supplier’s long-term profitability will decrease if she collaborates with a high performing buyer, but she can sustain such profitability more persistently in the long run. Likewise, a buyer’s long-term profitability will decline if he partners with a high performing supplier, but such profitability becomes less persistent in the long run. We also find that buyers tend to have greater influence on the chain-level performance than suppliers in dyadic SCs. Our empirical results imply that a firm needs to take into account its partner’s performance effects on the level and persistence of its long-term performance when selecting a SC partner. In the second essay, we investigate the effects of a buyer’s supplier-base concentration on his long-term performance in dyadic SC relationships. Our empirical findings indicate that buyers with a more concentrated supplier-base tend to have lower and less persistent profitability in the long run. We further explore the impacts of supplier-base concentration on buyer’s several operating outcomes. Our results suggest that although a buyer focusing on operational and other functional performance tends to select a more concentrated supplier-base, such a supplier-base selection strategy also introduces a higher risk to the buyer’s profitability due to his lack of flexibility in dealing with uncertain business events. Finally, in the third essay we investigate the impacts of a firm’s financial restatements on its SC partner’s future performance. Our empirical results reveal that a firm’s future profitability will decrease when its major SC partner has a financial restatement. We also find that a major restating buyer has greater and more lagged influence on his supplier’s profitability than a major restating supplier’s effect on her buyer’s profitability. In summary, this dissertation contributes to the empirical supply chain management literature by examining SC relationships and performance based upon large scale secondary data. The three essays of the dissertation provide empirical evidence in understanding (1) the association between supplier and buyer performance and implications for SC partner selections; (2) the effects of supplier-base concentration on a buyer’s future performance, and (3) the impacts of a firm’s financial restatement risk on its SC partner’s performance.