An empirical analysis of suppliers' trade-off behaviour in adopting digital supply chain financing solutions

Abstract

Purpose

Reverse factoring (RF)–a form of supply chain finance (SCF)–is widely recognised as a win-win for both buyers and suppliers. Still, there is evidence that suppliers are often hesitant to join RF programmes initiated by their buyers. This study advances our understanding of how suppliers assess the importance of various attributes of a buyer's offer to join RF and discusses the role of programme configuration and digital technology in overcoming impediments to RF adoption.

Design/methodology/approach

Using a choice-based conjoint experimental design validated by experts, we isolate and manipulate the main attributes of a RF programme offer. This enables us to estimate the attributes' importance and to examine suppliers' trade-off behaviour. The authors complement the experimental study with content analysis of respondents' comments.

Findings

This study reveals the importance of behavioural considerations in RF adoption. The main findings are (1) suppliers are willing to reject offers that they perceive to be unfair even if these offers benefit them financially, (2) suppliers are willing to trade-off their financial benefit for non-financial reasons–most notably attributes that relate to trustworthiness of the buyer–and (3) suppliers expect technologies to increase transparency and reduce variability in trade processes.

Research limitations/implications

Non-financial attributes that influence supplier perception need to be considered in the programme configuration. Technologies that reduce information asymmetry, increase trust and transparency, increase the speed of execution and reduce process inefficiencies will have a positive impact on RF offer acceptance.

Originality/value

This research opens new lines of inquiry on the role of digital technologies in influencing behavioural operations management specifically suppliers' adoption of digital SCF solutions.

Citation

Banerjee, A., Lücker, F. and Ries, J.M. (2021), "An empirical analysis of suppliers' trade-off behaviour in adopting digital supply chain financing solutions", International Journal of Operations & Production Management, Vol. 41 No. 4, pp. 313-335. https://doi.org/10.1108/IJOPM-07-2020-0495