Concentrated supply chain membership and financial performance: Chain- and firm-level perspectives
Danny Lanier Jr.,
William F. Wempe,
Zach G. Zacharia,
Danny Lanier Jr.
Joseph I. Lubin School of Accounting, Whitman School of Management, Syracuse University, United States
Search for more papers by this authorWilliam F. Wempe
Accounting Department, M.J. Neeley School of Business, Texas Christian University, TCU PO Box 298530, Fort Worth, TX 76129, United States
Search for more papers by this authorZach G. Zacharia
Department of Management, College of Business and Economics, Lehigh University, United States
Search for more papers by this authorDanny Lanier Jr.,
William F. Wempe,
Zach G. Zacharia,
Danny Lanier Jr.
Joseph I. Lubin School of Accounting, Whitman School of Management, Syracuse University, United States
Search for more papers by this authorWilliam F. Wempe
Accounting Department, M.J. Neeley School of Business, Texas Christian University, TCU PO Box 298530, Fort Worth, TX 76129, United States
Search for more papers by this authorZach G. Zacharia
Department of Management, College of Business and Economics, Lehigh University, United States
Search for more papers by this authorCorresponding author. Tel.: +1 817 257 7614; fax: +1 817 257 7227.
Abstract
This study reports evidence that concentrated 3-firm supply chains achieve superior financial performance, and that supply chains’ financial performance varies systematically with measures of chain concentration and chain duration. Results from firm-level analyses suggest that the profitability benefits of supply chain relationships are captured predominantly by downstream chain members, whereas cash cycle benefits are realized throughout the supply chain. Firm-level tests also reveal that chain members’ financial performance varies systematically with measures of downstream bargaining power, downstream relationship duration, and degree of supply consolidation. The study's chain- and firm-level analyses employ data extracted from sample firms’ publicly available financial reports, including their major customer disclosures under Statement of Financial Accounting Standards Nos. 131 (1997) and 14 (1976).
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