The Impact of Supply Chains on Firm-Level Productivity

Juan Camilo Serpa () and Harish Krishnan ()
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Juan Camilo Serpa: Desautels Faculty of Management, McGill University, Montreal, Quebec H3A 1G5, Canada
Harish Krishnan: Sauder School of Business, University of British Columbia, Vancouver, British Columbia V6T 1Z2, Canada

Management Science, 2018, vol. 64, issue 2, 511-532

Abstract: Firms in a vertical relationship are likely to affect each other’s productivity. Exactly how does productivity spill over across this type of relationship (i.e., through which mechanisms)? Additionally, how does the relative importance of these mechanisms depend on the structure of the supply chain? To answer these questions, we decompose the channels of upstream productivity spillovers—from customers to suppliers—by developing a structural econometric model on a sample of approximately 22,500 supply chain dyads. We find that the “endogenous channel” (i.e., the effect of the customer’s own productivity on the supplier’s productivity) is by far the most important source of spillovers. This is especially true if (i) the supplier has a concentrated customer base, (ii) the supplier and the customer have similar operational characteristics, and (iii) the relationship has medium maturity. In the converse scenarios, we find, it is more important to have a partner with a portfolio of favorable “contextual” characteristics (high inventory turnover, financial liquidity, and asset turnover) than to have a productive partner. The online appendix is available at https://doi.org/10.1287/mnsc.2016.2632 . This paper was accepted by Serguei Netessine, operations management.

Keywords: supply chain management; econometrics; network analysis; spillover effects (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (17)

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