Do network capabilities improve corporate financial performance? Evidence from financial supply chains
International Journal of Operations & Production Management
ISSN: 0144-3577
Article publication date: 12 March 2021
Issue publication date: 1 June 2021
Abstract
Purpose
The purpose of this study is to bridge the gap in the literature on supply chain finance (SCF) by exploring the relationship between network capabilities and corporate financial performance (CFP) in financial supply chains (FSCs).
Design/methodology/approach
The authors collect panel data and adopt regression analysis to analyse the joint investment activities among 1359 manufacturing firms and 289 financial service providers in China to explore how network capabilities, both network power and network centrality, improve CFP in the FSCs.
Findings
Under the FSCs environments, network centrality (i.e. eigenvector centrality, closeness centrality and betweenness centrality) raises CFP (ROA, ROE and Tobin's Q) and network power (node degree, clustering coefficient) also improves CFP. However, node strength from the network power stream has a negative effect on Tobin's Q, indicating that when the partner of a firm has an extremely strong influence in FSCs; this weakens the bargaining ability and flexibility of the focal firm, thus reducing its long-term financial performance.
Practical implications
The joint investment activities among supply chain partners and financial service providers help managers understand the advanced financing solutions generated by internal and external network organisations as well as be aware of network capabilities' impact on CFP in FSCs.
Originality/value
This study answers the call for more empirical research on SCF to provide a broader sample to examine financial supply chain management. This is one of the earliest studies to shed light on a new perspective – how network capabilities improve CFP in the FSCs.
Keywords
Acknowledgements
The authors gratefully acknowledge financial support from the National Natural Science Foundation of China (71991460, 71902159, 71671056), the Humanity and Social Science Foundation of Ministry of Education of China (18YJC790149, 19YJA790035, 20YJA630024) and the Key Research and Development Program of Anhui Province (202004a05020020).
Citation
Wang, L., Yan, J., Chen, X. and Xu, Q. (2021), "Do network capabilities improve corporate financial performance? Evidence from financial supply chains", International Journal of Operations & Production Management, Vol. 41 No. 4, pp. 336-358. https://doi.org/10.1108/IJOPM-07-2020-0484
Publisher
:Emerald Publishing Limited
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