Financial Spillover Effects in Supply Chains: Do Customers and Suppliers Really Benefit?

Erik Hofmann and Yannick Sertori
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Erik Hofmann: Institute of Supply Chain Management, University of St. Gallen, 9000 St. Gallen, Switzerland
Yannick Sertori: Institute of Supply Chain Management, University of St. Gallen, 9000 St. Gallen, Switzerland

Logistics, 2020, vol. 4, issue 1, 1-27

Abstract: Studies have shown that leading supply chain companies are associated with significantly higher company financial ratios than competitors. In contrast, little research has focused on the financial performance of the affiliated suppliers and customers of such supply chain leader (SCL) companies. Thus, the central purpose of this paper is to determine, from a financial perspective, whether suppliers and customers benefit or lose by participating in a SCL network (so called “financial spillover effects”). Companies that were ranked in the Gartner Supply Chain Top 25 were selected as SCLs. For each selected firm, the five largest suppliers and customers were identified and compared with a control sample from the same industry. In order to elaborate on existing insights into the (financial) outcome of supply chain relationships, we applied an explorative approach with abductive reasoning, while comparing the secondary data for 224 SCL supplier (56 firms) and 168 SCL customer (42 firms) firm-years with 1940 (485 firms) and 1544 (386 firms) control firm-years, respectively. The following insights are made: First, the superior financial performance of SCLs was confirmed. Second, the financial performance of suppliers and customers showed superior liquidity and activity ratios but inferior profitability ratios. Third, suppliers showed much more significant results than customers.

Keywords: financial performance; supply chain excellence; supply chain relationship; supply chain finance; liquidity redistribution; profitability waiver; Wilcoxon signed rank test (search for similar items in EconPapers)
JEL-codes: L8 L80 L81 L86 L87 L9 L90 L91 L92 L93 L98 L99 M1 M10 M11 M16 M19 R4 R40 R41 R49 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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