Centrality of the Supply Chain Network

As the supply chain information becomes more readily accessible, researchers are paying increasing attention to information flows and interactions between suppliers and customers. Shocks to a supplier not only impact its immediate customers but also generate ripple effects on the whole economy through the supply chain network. This chapter strives to define the relative importance, or centrality, of a supplier in the whole supply chain network and understand how the most central suppliers interact with the aggregate economy. Analysis shows that supplier-central companies tend to be more volatile, and their stock performance tends to precede the movements of the aggregate market.