Effects of customer unionization on supplier relationships and supplier value

Hyemin Kim

Journal of Empirical Finance, 2024, vol. 78, issue C

Abstract: This study examines whether suppliers modify trading strategies upon their customers’ unionization. The study demonstrates that when customers unionize, suppliers experience negative stock returns and rely less on the unionized customers for sales. Results are robust for alternatively using a regression discontinuity design. Suppliers reduce their exposure to unionized customers due to the demand uncertainty arising from potential labor disruptions, the customers’ reduced competitiveness in the product market, and customers’ potential shifting of unionization costs to suppliers. Furthermore, suppliers with unionized customers mitigate risks by seeking new customers and diversifying their customer concentration.

Keywords: Transaction cost; Labor union; Supplier; Trading relationship (search for similar items in EconPapers)
JEL-codes: G30 J53 L14 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:78:y:2024:i:c:s0927539824000501

DOI: 10.1016/j.jempfin.2024.101515

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