Do network capabilities improve corporate financial performance? Evidence from financial supply chains

Wang, L.; Yan, J.; Chen, X.; Xu, Q.

Abstract

Purpose: This study bridges 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). Methodology: We adopt panel data regression 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, betweenness centrality) raises CFP (ROA, ROE, 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 focal firm, thus reducing its long-term financial performance. Originality: This study answers the call for more empirical research on SCF to provide a broader sample set of financial supply chain management (FSCM) from joint investment activities. This is one of the earliest studies to shed light on a new perspective—how network capabilities improve CFP in the FSCs. Practical implications: The joint investment activities among industrial 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 CFP in FSCs.

Citation

Wang, L., Yan, J., Chen, X., & Xu, Q. (2021). Do network capabilities improve corporate financial performance? Evidence from financial supply chains. International Journal of Operations & Production Management, 41(4), 336-358. https://doi.org/10.1108/ijopm-07-2020-0484

• Journal Article Type: Article
• Acceptance Date: Jan 19, 2021
• Online Publication Date: Mar 12, 2021
• Publication Date: Jun 1, 2021
• Deposit Date: Jan 20, 2021
• Publicly Available Date: Jan 20, 2021
• Journal: International Journal of Operations and Production Management
• Print ISSN: 0144-3577
• Publisher: Emerald
• Peer Reviewed: Peer Reviewed
• Volume: 41
• Issue: 4
• Pages: 336-358
• DOI: https://doi.org/10.1108/ijopm-07-2020-0484
• Keywords: Supply chain finance solutions; Financial supply chain; Corporate financial performance; Network organisation; Investment activities
• Public URL: https://durham-repository.worktribe.com/output/1281290