Coerced integration: The effects of retailer supply chain technology mandates on supplier stock returns
International Journal of Physical Distribution & Logistics Management
ISSN: 0960-0035
Article publication date: 6 November 2009
Abstract
Purpose
Over the past decade, channels researchers have devoted considerable attention to a potential shift in the balance of power in retailer‐manufacturer relationships. At the same time, a burgeoning body of supply chain research, largely overlooked by marketing researchers, has emerged promoting the benefits of cooperation in technology‐enabled supply chain integration. This study aims to investigate the confluence of these streams. Specifically it aims to consider the effects of retailer supply chain technology mandates on supplier financial performance.
Design/methodology/approach
The design and method is a secondary data event analysis including cross‐sectional regression analysis.
Findings
The event analysis findings indicate suppliers affected by Wal‐Mart's 2003 RFID mandate experienced net gains in abnormal stock returns. Subsequent cross‐sectional regression analysis show abnormal returns were stronger for suppliers with greater cash flow and for more dependent suppliers.
Practical implications
Study results suggested firms with stronger cash flows are better able to absorb the unexpected costs of complying with the retailer mandate. Additionally, the findings indicate mandate‐associated positive abnormal returns were more pronounced for suppliers with a larger percentage of sales through the Wal‐Mart channel. This means that a dependent supplier that follow technology mandates by power retailers will potentially receive above average stock returns.
Originality/value
This paper is believed to be the first to address the impact of technology mandates in the supply chain.
Keywords
Citation
Deitz, G., Hansen, J. and Glenn Richey, R. (2009), "Coerced integration: The effects of retailer supply chain technology mandates on supplier stock returns", International Journal of Physical Distribution & Logistics Management, Vol. 39 No. 10, pp. 814-825. https://doi.org/10.1108/09600030911011423
Publisher
:Emerald Group Publishing Limited
Copyright © 2009, Emerald Group Publishing Limited