Supply chain concentration and corporate OFDI risk-taking

Peng Cheng (), Dai Xuansi (), Fan Tingli () and Chen Yuansheng ()
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Peng Cheng: Sichuan International Studies University
Dai Xuansi: Sichuan International Studies University
Fan Tingli: Sichuan International Studies University
Chen Yuansheng: Sichuan International Studies University

Risk Management, 2025, vol. 27, issue 2, No 3, 37 pages

Abstract: Abstract In the context of the increasingly volatile, uncertain, complex, and ambiguous international market environment, it is imperative to address the pressing issue of how to enhance multinational enterprises’ risk-taking in outward foreign direct investment (OFDI). Drawing on data from listed Chinese companies from 2012 to 2022 and relying on MOA theory, this study conducts an analysis of the influence of supplier and customer concentration on corporate risk-taking in OFDI from the perspectives of motivation and ability. Empirical results reveal that higher supplier concentration inhibits corporate OFDI risk-taking, while higher customer concentration enhances. Mechanism testing found that supplier concentration mainly reduces OFDI risk-taking by increasing the absorption of redundancy, while customer concentration will increase business complexity and reduce absorbed redundancy. Additionally, executive compensation incentives and financing constraints moderate these effects, with executive compensation showing a U-shaped moderating effect and financing constraints having a negative moderating effect. Further analysis indicates the heterogeneous impact of economic institutional distance and environmental uncertainty on the concentration of suppliers (customers) on corporate risk-taking. Our research findings contribute to the integration of MOA theory into the field of multinational enterprises’ OFDI, enriching the relevant theories on supply chain management and corporate OFDI, and providing important decision-making references for multinational corporations and governments.

Keywords: Supplier concentration; Customer concentration; MOA theory; OFDI; Risk-taking (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1057/s41283-025-00161-z

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