Supplier Internal Control Quality and the Duration of Customer-Supplier Relationships

Bauer, Andrew M.; Henderson, Darren; Lynch, Dan

doi:10.2139/ssrn.2754760

Cited by 3 publications

(5 citation statements)

References 11 publications

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“…A recent study by Bauer et al (2018) argues that supplier firm characteristics can affect the supplier's relationship with its major customers. Specifically, Bauer et al (2018) report that supplier internal control quality is associated with the length of their relations with supply chain partners. However, Bauer et al (2018) do not focus on a specific event or shock to the supplier's internal control environment.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

“…Specifically, Bauer et al (2018) report that supplier internal control quality is associated with the length of their relations with supply chain partners. However, Bauer et al (2018) do not focus on a specific event or shock to the supplier's internal control environment. a customer's production process may soon find the customer looking elsewhere for a dependable supplier.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

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Firm Unionization and Disruptions in Customer Relationships*

Chen

Judd

Pandit

2021

Contemporary Accting Res

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Relationships with major customers may be advantageous to suppliers due to economies of scale and reputational benefits. In this study, we investigate whether unionization leads to disruptions in a firm's relationships with its customers. Our goal is to provide insights regarding the impact unionization has on a firm's sales relationships with its major customers. We predict that major customers will shift purchases away from suppliers that unionize to avoid potential disruptions. Using a difference-in-differences research design, our results show a negative association between supplier unionization and sales to major customers. Our findings are robust to addressing endogeneity concerns through a propensity score matched analysis and regression discontinuity research design. In addition, we find that supplier firm performance declines subsequent to unionization. We also find that suppliers experience significant increases in their cost of goods sold and the number of employees after supplier unionization, suggestive of higher input prices driving the disruption with major customers. Finally, we provide evidence that higher switching costs mitigate the decline in sales to major customers. Overall, our findings suggest that employee unionization can adversely affect a firm's relationships with their major customers.

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Section: Hypothesis Developmentmentioning

confidence: 99%

Section: Hypothesis Developmentmentioning

confidence: 99%

Firm Unionization and Disruptions in Customer Relationships*

Chen

Judd

Pandit

2021

Contemporary Accting Res

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“…Some prior studies that use similar data choose to include only the largest customer to improve the independence among observations (Bauer et al. 2018, Johnstone et al. 2014).…”

Section: Resultsmentioning

confidence: 99%

“…In our main analyses we include all major customers identified in suppliers' financial disclosures to construct our sample. Some prior studies that use similar data choose to include only the largest customer to improve the independence among observations (Bauer et al 2018, Johnstone et al 2014. Including only the largest customer provides a more powerful setting to conduct our main tests, given that the largest customer is likely to have the most impact in terms of bargaining power and strategic fit on the supplier's performance.…”

Section: Cross-sectional Testsmentioning

confidence: 99%

Customer Bargaining Power, Strategic Fit, and Supplier Performance

Chang

Liu

Mashruwala

2022

Production and Operations Management

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P rior studies report mixed evidence on the impact of customers' bargaining power on supplier performance. We shed light on this mixed evidence by considering the moderating role of strategic fit. A strategically aligned supplier can provide long-term benefits to the customer. As a result, powerful customers may trade off the short-term benefits obtained through supplier concessions with the long-term benefits derived from strategic fit. Thus, strategic fit can mitigate the negative impact of customers' bargaining power on supplier performance. We use data on supplier-customer dyads identified using financial disclosures of firms' major customers to examine this research question. We find that a strategic fit between suppliers and their customers on three distinct dimensions (innovation, customer orientation, and efficiency) attenuates the negative association between customers' relative bargaining power and supplier performance. These findings are robust to several sensitivity tests.

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“…Appendix Table 10 provides a detailed definition of all variables used. We follow Bauer et al (2018), where applicable, in measuring control variables. Ai and Norton (2003) note that nonlinear fixed-effects models generate biased estimates for interaction terms.…”

Section: The Effect Of Personal Connections On Customers' Choice Of Suppliersmentioning

confidence: 99%

Buying products from whom you know: personal connections and information asymmetry in supply chain relationships

et al. 2021

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This study investigates the role personal connections play in a crucial element of the supply chain-supplier selection. We find that the likelihood that a potential supplier (hereafter, a vendor) is selected to be an actual supplier (hereafter, supplier) increases when personal connections between executives of the vendor and the customer exist. The magnitude of the effect varies predictably across management ranks and positions and is stronger when information asymmetries between a vendor and a customer are high. Conditioning on the existence of a supply-chain partnership, a departure of a personally connected executive prompts the termination of the supply-chain relationship more often than a departure of an unconnected executive. Additional analyses show personal connections are associated with less restrictive procurement contracts and with improved customer performance after the formation of a supply-chain relationship. Overall, our study highlights the role of personal connections in reducing information asymmetry and improving operating efficiency in the supply chain.

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Supplier Internal Control Quality and the Duration of Customer-Supplier Relationships

Cited by 3 publications

References 11 publications

Firm Unionization and Disruptions in Customer Relationships*

Firm Unionization and Disruptions in Customer Relationships*

Customer Bargaining Power, Strategic Fit, and Supplier Performance

Buying products from whom you know: personal connections and information asymmetry in supply chain relationships

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