Major customer network structure and supplier trade credit
International Journal of Operations & Production Management
ISSN: 0144-3577
Article publication date: 23 June 2021
Issue publication date: 14 September 2021
Abstract
Purpose
This study investigates how a firm's structural embeddedness, the structural position in a supply network that consists of major customers, influences the acquisition of supplier trade credit. Specifically, this study examines how network interconnectedness, network integration and network independence of a firm affect its ability to acquire supplier trade credit.
Design/methodology/approach
This study utilizes financial data from Compustat to build a longitudinal dataset of manufacturing firms from 1998 to 2013. Customer segment disclosure data are used to construct firm-level network variables. A fixed effect regression approach is used for estimation.
Findings
The study results show that network interconnectedness is negatively associated with supplier trade credit, while network integration is positively associated with supplier trade credit. Network independence does not influence the extent of supplier trade credit. The post hoc analysis shows that the effects of the hypothesized factors vary under different product categories and credit ratings.
Originality/value
This study broadens the supply chain finance literature by showing how a firm's embedded network structural position can influence its ability to obtain supplier trade credit.
Keywords
Acknowledgements
The authors thank the Editor, Associate Editor, and four anonymous reviewers for their valuable feedback and comments. This research is supported by the Ministry of Science and Technology of Taiwan (108-2410-H-110-056-).
Citation
Jhang, S.-S.(S)., Su, H.-C. and Kao, T.-W.(D). (2021), "Major customer network structure and supplier trade credit", International Journal of Operations & Production Management, Vol. 41 No. 8, pp. 1318-1349. https://doi.org/10.1108/IJOPM-05-2020-0278
Publisher
:Emerald Publishing Limited
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