Customers' annual report tone and suppliers' innovation decisions: evidence from China
European Journal of Innovation Management
ISSN: 1460-1060
Article publication date: 22 April 2022
Issue publication date: 23 November 2023
Abstract
Purpose
This paper examines whether and how customers' annual report tone affects suppliers' innovation decisions.
Design/methodology/approach
Using the data from disclosed information on top five customers and annual report tone by Chinese listed firms, this paper used a two-way fixed effect model and intermediary effect model tests to explore the impact of customers' annual report tone on suppliers' innovation decisions.
Findings
The results indicate that the more positive the tone of customer annual reports is, the higher the suppliers' technological innovation level. The customers' annual report tone affects suppliers' innovation decisions through alleviating financing constraints and reducing the bullwhip effect. In addition, the authors find that the worse the supplier's bargaining power and the higher the customer's media coverage, the more significant the impact of positive customer annual report tone on the level of corporate technological innovation.
Practical implications
For downstream customers, to improve the quality of their text information disclosure. For upstream suppliers, the tone of customers' annual reports has incremental information, so the attention to customers' text information should be strengthened. As far as the market is concerned, it is recommended that regulators should strictly require the quality of text information disclosure and introduce relevant penalty mechanisms better to regulate the quality of corporate text information disclosure.
Originality/value
To the best of the author's knowledge, this paper is the first to expand the research related to textual information from a supply chain innovation perspective. The textual information can provide incremental information, and spillover effects may occur among supply chains, affecting suppliers' innovation decisions. And it clarifies the specific mechanism by which the supply chain tone spillover effect affects corporate innovation, enriching the relevant research on supply chain influence mechanisms.
Keywords
Acknowledgements
Funding: This research was supported by the Key Project of National Social Science Foundation of China (No. 20AGL016).
Citation
Xin, Y., Zeng, X. and Luo, Z. (2023), "Customers' annual report tone and suppliers' innovation decisions: evidence from China", European Journal of Innovation Management, Vol. 26 No. 6, pp. 1570-1602. https://doi.org/10.1108/EJIM-12-2021-0585
Publisher
:Emerald Publishing Limited
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