Supply Chain Finance, Performance and Risk: How Do SMEs Adjust Their Buyer-Supplier Relationship for Competitiveness?
Feng Liu, Ming jie Fang, Kwangtae Park, Xuesheng Chen
Keywords:
supply chain finance, customer concentration, supplier performance, credit risk, SMEs
Abstract:
Supply chain finance (SCF) has attracted considerable attention being an innovative business
model that allows firms, especially small- and medium-sized enterprises (SMEs), to convert
illiquid assets into cash without incurring additional liabilities. However, its effects on SME
performance and risk have been insufficiently studied. The competitiveness of SMEs depends
on performance enhancement and risk mitigation. Thus, this study constructs a scaled-decile
rank transformation of account receivable turnover to gauge the degree to which a supplier
implements SCF, thereby examining the relationship between SCF, performance, and risk. We
collect data on 4,679 SMEs from the Chinese manufacturing sector. Thereafter, hierarchical
linear regression, a complex form of multiple linear regression analysis, is employed to test the
hypotheses. The results indicate that an SME’s SCF adoption positively impacts its performance
but negatively impacts its risk. To further explore cross-sectional variability, we investigated
the buyer-supplier relationship’s moderating role. Results show that an increase in customer
concentration strengthens both the positive effects of SCF on performance and the negative
effects of SCF on risk. Overall, our study contributes to the literature on the interface of operations
and finance in supply chains by exploring the multiple facets of SCF adoption and highlighting
the moderating role of buyer-supplier relationship in SCF and SME competitiveness. Finally, we
provide managerial implications for SMEs and financial service providers by validating the value
of SCF implementation and the buyer-supplier relationship management in forging competitive
advantages.
Fulltext download:
 Supply Chain Finance, Performance and Risk: How Do SMEs Adjust Their Buyer-Supplier Relationship for Competitiveness? [PDF file] [Filesize: 1.35 MB]
 10.7441/joc.2021.04.05
Liu, F., Fang, M., Park, K, & Chen, X (2021). Supply Chain Finance, Performance and Risk: How Do
SMEs Adjust Their Buyer-Supplier Relationship for Competitiveness? Journal of Competitiveness, 13(4),
78–95. https://doi.org/10.7441/joc.2021.04.05
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