Supply Chain Management Strategy and Capital Structure of Global Information and Communications Technology Companies

Insung Son and Sihyun Kim
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Insung Son: Entrepreneurship Research Institute, Gyeongsang National University, Jinju 52725, Korea
Sihyun Kim: Department of Logistics, Korea Maritime and Ocean University, Busan 49112, Korea

Sustainability, 2022, vol. 14, issue 3, 1-13

Abstract: Supply chain management (SCM) plays an important role in international work distribution mechanisms. This phenomenon has shifted to an SCM-to-SCM competition rather than corporate-to-corporate competition in the global market. Apple and Samsung Electronics are the two major global information and communications technology (ICT) companies, each choosing different SCM strategies to stabilize production while minimizing inventory and maintaining ongoing partnerships with suppliers. To analyze the relationship between strategic differences in SCM structure of the ICT companies and capital, while employing the generalized method of moments, this study analyzed partnerships with suppliers from a financial perspective for long-term growth and stable production. Results identified that the target debt ratio of Apple’s parts suppliers was 38%, which was slightly higher than that of US companies (33%). In the relationship between capital structure and SCM structures, the company’s debt ratio decreases if the strength of the strategic alliance and the strength of the horizontal integration of global parts suppliers are higher. Specifically, Apple’s parts suppliers with non-equity alliances, such as technological and R&D alliances, have reduced debt ratios more than companies with equity alliances. In the case of Samsung Electronics’ parts suppliers, primary vendors had a lower debt ratio than secondary vendors. These results indicates that if the strength of the vertical integration with the international strategic alliances is greater, they are more likely to adopt a lower debt ratio policy. Identifying the relationship between SCM strategic difference and capital structure, this study provides valuable insights for corporate sustainability.

Keywords: supply chain management; capital structure; sustainable partnership; corporate sustainability; information and communications technology industry (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
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