Buying Products from Whom You Know: Personal Connections and Information Asymmetry in Supply Chain Relationships

Chen, Ting; Levy, Hagit; Martin, Xiumin; Shalev, Ron

doi:10.2139/ssrn.3010000

Cited by 4 publications

(3 citation statements)

References 35 publications

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“…industry trends, competition and innovations) can help a supplier to be more responsive in serving its customer needs. ECE's knowledge of industry trends can also help a supplier capture business opportunities, develop new customers and help protect against potential disruptions or risks that can arise from the customer's industry, such as regulatory changes, industry shocks and economic crises (Johnson et al, 2004;Sun and Fang, 2015;Chen et al, 2020). Because knowledge resides within individuals (Grant, 1996), the appointment of ECE allows a supplier to secure the knowledge, preventing competitors from accessing or imitating such resources.…”

Section: Executives With Customer Experience Presence and Firm Performancementioning

confidence: 99%

“…Indeed, a board member's customer knowledge and experience can help the supplier improve its firm performance and can give the supplier firm some advantages to form trading relationships with new customers (Dass et al, 2014;Bommaraju et al, 2019;Chen et al, 2020). Further, directors' and executives' personal connections with customers can help the customer-supplier partnership survive industry downturns (Sun and Fang, 2015).…”

Section: Introductionmentioning

confidence: 99%

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Executives with customer experience and firm performance in the B2B context

Feng

Sun

Fang

et al. 2021

EJM

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Purpose This paper aims to examine the presence of an executive with customer experience (ECE) in a supplier firm’s top management team (TMT). The role of ECE presence remains understudied in the marketing literature. This study attempts to examine the relationship between ECE presence and firm performance. Design/methodology/approach This paper draws on the resource-based view of the firm and adopts a panel firm fixed effects estimator to test the proposed hypotheses. The empirical analysis uses a sample of 1,974 firm-year observations with 489 unique supplier firms. Selection-induced endogeneity is mitigated through the Heckman procedure. Findings ECE presence improves firm performance. Additionally, firms benefit less from ECE presence if a board member with customer experience (BCE) is also present, if a chief executive officer commands a higher pay slice (compared to other executives), and if a TMT is more functionally diversified. However, ECE presence is particularly beneficial if the overall economy is in contraction. Comparing the functional positions held by ECEs reveals that ECE in the marketing function (as a chief marketing officer) offers the largest benefit to an average supplier firm. ECE presence is also associated with other firm outcomes (e.g. bankruptcy odds, innovation and customer orientation). Research limitations/implications This study makes four contributions to the literature. First, this research contributes to existing studies that investigate marketing expertise in the upper corporate pyramid. Second, the study contributes to the burgeoning body of work across business disciplines that attempt to understand the impact of CxOs on firm performance. Third, the study contributes to the vast literature on customer orientation indirectly. Finally, this paper contributes to the broader literature studying the influence of board and TMT characteristics. Practical implications The findings are of particular importance to business-to-business firms. This paper shows that suppliers can benefit significantly from managers with customer experience. Four contingency factors moderate the relationship between ECE presence and firm performance. Among the various functional positions held by an ECE, the findings suggest that hiring an ECE for the marketing functional area is the most beneficial. ECE stands out as a better option for a company than BCE to improve firm performance. ECE presence is also associated with bankruptcy odds, innovation and customer orientation. Originality/value This paper provides the first empirical evidence regarding how ECE affects firm performance and also extends prior research on the value of human capital in TMT.

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Section: Executives With Customer Experience Presence and Firm Performancementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Executives with customer experience and firm performance in the B2B context

Feng

Sun

Fang

et al. 2021

EJM

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“…Following Cohen et al 2010, Guan et al (2016), and Gu et al 2019, we classify two executives as having a school tie if they have attended the same university for either undergraduate or graduate degrees, without requiring them to attend the university for the same period, the same campus or the same major. Alumni represents one of the two alternative measures: (1) An indicator variable for the presence of school ties (Alumni1), defined as equal to 1 if the firm and its suppliers are connected by at least one school tie during a year, and zero otherwise; (2) School-tie connections measured as a continuous variable (Alumni2), which equals the total number of school ties that the firm has with its suppliers (T. Chen et al, 2017). When a firm corresponds to more than one supplier in a year, in our main tests we weight each supplier's data with the supplier's sales to the firm and then aggregate supplier data for each firmyear.…”

Section: Model Specificationmentioning

confidence: 99%

Top executives’ school-tie connections and management forecast disclosure

Luo

2020

China Journal of Accounting Studies

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This paper investigates whether top executives' dependence on social connections has an impact on the information environment of listed companies. Specifically, this paper explores the role of school ties between firms' and suppliers' top executives on management earnings forecasts, an important channel of public information disclosure. We find a negative relation between a firm's school ties with its suppliers and the likelihood/frequency to issue management forecasts, indicating that top executives' school ties in a way substitute management forecasts and become the information channel along the supply chain. Further, we find the association is stronger when the firm faces higher proprietary cost or operational uncertainty, but the association becomes weaker when suppliers have bargaining advantage over the firm. Finally, we find the decrease in management forecast disclosure driven by school-tie connections weakens the access of firm-specific information for external information users, which may put individual investors in a more vulnerable position.

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Friends along supply chain and relationship-specific investments

Luo

2018

Rev Quant Finan Acc

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Buying Products from Whom You Know: Personal Connections and Information Asymmetry in Supply Chain Relationships

Cited by 4 publications

References 35 publications

Executives with customer experience and firm performance in the B2B context

Executives with customer experience and firm performance in the B2B context

Top executives’ school-tie connections and management forecast disclosure

Friends along supply chain and relationship-specific investments

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