Managing firm risk through supply chain dependence: an SME perspective
Journal of Business & Industrial Marketing
ISSN: 0885-8624
Article publication date: 9 May 2020
Issue publication date: 23 November 2021
Abstract
Purpose
The purpose of this study is to conduct an empirical investigation into the impact of supply chain dependence (including customer dependence and supplier dependence) on credit risk through the lens of social network theory (SNT) by focusing on how to manage firm risk using supply chain relationships in the context of Chinese small and medium-sized enterprises (SMEs).
Design/methodology/approach
Using data from public databases, this study selects a unique sample from a Chinese SME board and uses an ordered logistic regression model to investigate the relationship between the dependence on major customers or suppliers and both credit risk and credit rating. It is found that the results are robust to the use of different empirical methods.
Findings
The main findings of this study are that a firm’s dependence on major customers is positively related to its credit risk but negatively related to its credit rating, while a firm’s dependence on major suppliers is positively related to its credit risk but negatively related to its credit rating.
Originality/value
To broaden the understanding of industrial marketing and purchasing, this study contributes to research on supply chain relationship management and risk management by focusing on SMEs’ dependence on major customers and suppliers and empirically examining the influence of this dependence on both credit risk and credit rating in an emerging market.
Keywords
Acknowledgements
The authors acknowledge the help of Professor Jaehwan Kim, Professor Shufeng (Simon) Xiao and Professor Jian Xu regarding insights and feedback provided on earlier versions of the article. They also express thanks to Guest Editor, Dr Fawaz Baddar ALHussan and all anonymous referees for their valuable comments. This work is supported by Korea University Business School Research Grant.
Citation
Liu, F. and Park, K. (2021), "Managing firm risk through supply chain dependence: an SME perspective", Journal of Business & Industrial Marketing, Vol. 36 No. 12, pp. 2231-2242. https://doi.org/10.1108/JBIM-05-2019-0229
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited