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Can Supplier Concentration Improve Corporate Risk Taking? Moderating Effects of Digital Transformation

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  • Yuanxi Yang

    (School of Business, Hong Kong Baptist University, Hong Kong)

  • Jingxian Guo

    (School of Management, Shandong University of Technology, Zibo 255012, China)

Abstract

The competitive and cooperative relationships between suppliers and enterprises have important implications for enterprise strategy and operational decisions. Using data from listed manufacturing companies in China from 2007 to 2020, this paper empirically examines the impact of supplier concentration on corporate risk taking and its underlying mechanism. The results support the cooperative view of industrial organizations in a supply chain, which states that the higher the supplier concentration, the greater the level of corporate risk taking. The results are robust to various measures of the supplier concentration (Supply), sample selectivity bias, and endogeneity tests. This paper also shows that digital transformation has a moderating effect on supplier concentration and corporate risk taking. The supplier concentration can significantly increase risk taking in companies that have implemented digital transformation, while the effect is not significant in companies that have not implemented digital transformation. The conclusions drawn from this study provide practical guidance on industrial organization relationship coordination and digital transformation, suggesting that the implementation of digital transformation can help a firm to establish and consolidate a good relationship with suppliers and improve operational efficiency.

Suggested Citation

  • Yuanxi Yang & Jingxian Guo, 2022. "Can Supplier Concentration Improve Corporate Risk Taking? Moderating Effects of Digital Transformation," Sustainability, MDPI, vol. 14(18), pages 1-15, September.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:18:p:11664-:d:917133
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    References listed on IDEAS

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    Cited by:

    1. Chai Bin Feng & Muhammad Usman Khurram & Raheel Safdar & Sultan Sikandar Mirza & Amjad Iqbal, 2023. "Corporate strategic responses, supplier concentration and sustainable growth of chinese listed firms," Operations Management Research, Springer, vol. 16(3), pages 1413-1427, September.
    2. Zheng, Deyuan & Song, Hang & Zhao, Chunguang & Liu, Yujiao & Zhao, Wenhao, 2024. "Is it possible for semiconductor companies to reduce carbon emissions through digital transformation? Evidence from China," International Journal of Production Economics, Elsevier, vol. 272(C).

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