Supply chain network and information sharing effects of SMEs’ credit quality on firm performance

Abstract

Purpose The purpose of this paper is to examine how a supply chain (SC) network helps small and medium enterprises (SMEs) to obtain liquidity and working capital for enhancing their performance while developing the relationships among SC members through information sharing. Moreover, this study also investigates whether a strong tie or bridge tie improves the availability of SMEs’ credit and performance. Design/methodology/approach Using a survey approach, data were collected from textile SMEs, located in Pakistan. Structural equation modeling and hierarchical regression model were run to validate the proposed model and the relationships. Findings Findings highlighted that strong tie and bridge tie of SMEs positively and significantly enhance the credit quality and SMEs’ performance. Furthermore, information sharing significantly moderates the relationship between SC network ties and SMEs’ credit quality. Credit quality significantly explains the indirect (mediation) association between the strong tie and the firm performance. Practical implications This study will help the SMEs’ entrepreneurs and SC executives to strengthen the liquidity position of SME and improve SMEs’ performance by developing the bridge ties. SMEs should share more information in their SC network while performing business transactions so that financers or lenders can easily access their operational capabilities and individual characteristics to offer them quality credit such as supply chain finance (SCF). Originality/value SMEs always face the issue of risk-free financing which adversely affects the firm performance. This study covered the hidden gap in SCM and SMEs’ financing literature by identifying the crucial role of SCF as quality credit in the development of SMEs. Moreover, SMEs can get benefits (e.g. quality credit=SCF) for better embedding in an SC network through information sharing.

Supply chain management constraints in Tanzanian small and medium enterprises

“…A sample size of 15 literature studies was viewed to be adequate in terms of providing the data for the statistical analysis. As noted by previous researchers (Mashenene and Rumanyika, 2014;Mohammed et al, 2013;Ali et al, 2019), a sample size of no less than 12 items of literature is sufficient to extract the variables for analysis.…”

“…Eckstein et al (2014) suggests that SCM helps firms to adopt agility, which in return positively affects both costs as well as operational performance. Ali et al (2019) found that SCM positively and significantly helps SMEs to obtain liquidity, working capital and to improve member relationships. Notwithstanding the benefits of SCM in organisations, various studies have documented the impediments that stand in the way of successful SCM implementation.…”

Do network capabilities improve corporate financial performance? Evidence from financial supply chains

“…Although previous research on SCF has discussed how network structural characteristics affect CFP, (e.g. Carnovale et al (2019) consider EC and network density, and Ali et al (2019) consider strong ties and bridge ties in supply chain networks), our research is the first to expand the analysis into FSCs, an important branch of SCF. Moreover, compared with previous SCF studies based on the network organisation, such as Seiler et al (2020), our research offers a broader view of the SCF network organisation by detailed evidencing that network structural characteristics affect CFP based on both network centrality (EC, CL, and BC) and network power (ND, NS, and CC).…”

An Optimal Two-level Supply Chain Model for Small and Medium-sized Enterprises with a rework for New Products and Price-Dependent Demand

“…[53] integrates supply and demand across companies." [59] discovered that SCM undoubtedly and significantly promotes SMEs to achieve liquidity, working capital and to improve member connections. Notwithstanding the advantages of SCM in institutions, numerous investigations have documented the difficulties that attain in the way of successful SCM implementation.…”