The influence of short-term managerial myopia on supply chain concentration: The moderating role of long-term incentives for the supervisory board

Miao Hu, Shenyang Jiang, Dian Song and Qianqian Han

Transportation Research Part E: Logistics and Transportation Review, 2024, vol. 188, issue C

Abstract: Managerial myopia refers to the tendency of managers to focus on short-term goals and neglect long-term value creation. Supply chain concentration, on the other hand, refers to the degree of concentration of customers and suppliers within a firm’s supply chain network. Our study examines the potential impact of short-term managerial myopia on supply chain concentration, specifically focusing on customer and supplier concentration, within the framework of upper echelons theory. Additionally, we explore the moderating role of long-term incentives for the supervisory board in this relationship. Using a panel dataset of 3,356 Chinese listed firms spanning from 2010 to 2021, we apply a two-way fixed effect model to examine the relationship between short-term managerial myopia and supply chain concentration. Our study reveals a significant positive relationship between short-term managerial myopia and customer concentration (and supplier concentration). Moreover, we find that long-term incentives for the supervisory board moderate the effects of short-term managerial myopia on supply chain concentration, highlighting their role in balancing short-term and long-term decision-making. To ensure the validity of our results, we conducted robustness checks and performed an endogeneity analysis. We contribute to the field of supply chain concentration by emphasizing the importance of managerial characteristics, specifically short-term managerial myopia, in supply chain decision-making. Additionally, our research contributes to the corporate governance literature by highlighting that long-term incentives for the supervisory board serve as an effective strategy for mitigating the influences of short-term managerial myopia on supply chain management.

Keywords: Supply chain concentration; Managerial myopia; Customer concentration; Supplier concentration; Long-term incentives; Supervisory board (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1016/j.tre.2024.103610

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