The industry effect and the decision to integrate vertically in a crisis context

Grau, Alfredo Juan Grau; Reig, Araceli

doi:10.1080/1351847x.2019.1628795

Cited by 3 publications

(2 citation statements)

References 35 publications

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“…Second, participation in shorter supply chains, characterized by more localized procurement and sales, and lower dependance on intermediaries and third-party logistics, is a safer option in case of shocks, unless the firm is sufficiently large to by-pass intermediaries and, possibly, own or secure timely and reliable access to transport and logistics. Third, in line with the findings of Yuan et al (2022), andGrau andReig (2019), informal agreements and formal contracts with suppliers and customers may contribute to stabilizing the procurement and distribution of the goods when normal market functions are affected. Finally, the adoption of ICT, besides reducing transaction costs, can contribute to mitigating challenges posed by restrictions on mobility, as experienced during the COVID-19 pandemic.…”

Section: Discussionmentioning

confidence: 63%

COVID-19 disruptions and pivoting in SMEs in the hidden middle of Kenya’s potato and fish value chains

Naziri

Belton

Loison³

et al. 2023

IFAM

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Small and medium enterprises (SMEs) in Kenya were severely affected by the COVID-19 pandemic and restrictions put in place to contain it. This study assesses the impact of these restrictions on the midstream of the potato and fish value chains, with a focus on traders and processors, and investigates the short- and longer-term responses and ‘pivoting’ strategies deployed by these firms. Longitudinal data were collected from 937 respondents with three recall periods: (1) the pre-pandemic situation (2019); (2) the period of strictest restrictions, necessitating immediate adaptations by firms (2020); and (3) a period of anticipated recovery with longer-term business adaptation strategies (2021). Firms in both value chains reported a dramatic drop in turnover in 2020. Potato SMEs partially recovered in 2021, but fish SMEs reported further declines in turnover. In the face of restrictions, SMEs shifted toward more localized procurement and sales, shorter supply chains (often by-passing intermediaries and increasing use of contracts), use of smaller vehicles, and toward the adoption of information and communication technology (ICT) to search for and engage with business partners. Smaller firms and the biggest of businesses were more resilient and less subject to large fluctuations in business turnover, suggesting an inverted U-shape relationship between firm size and impact. Firms located close to production areas and selling primarily within their own county were also less affected. We provide recommendations for increasing business resilience to shocks based on these findings.

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Section: Discussionmentioning

confidence: 63%

COVID-19 disruptions and pivoting in SMEs in the hidden middle of Kenya’s potato and fish value chains

Naziri

Belton

Loison³

et al. 2023

IFAM

View full text Add to dashboard Cite

show abstract

“…In addition, Chaddad & Modelli (2013) indicate that business strategy reinforces the returns. Value chain integration is one such strategy (Grau & Reig, 2019). Bhuyan (2002) found poultry slaughtering and processing companies that presented a higher-than-average forward vertical integration index had a lower return than the industry average.…”

Section: Introductionmentioning

confidence: 99%

Vertical and Horizontal Integration in the Profitability of Malaysian Broiler Firms

Tey

Arsil

2021

Trop. Anim. Sci. J.

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Vertical integration has been widely promoted for offering production, transaction, and market benefits in the poultry industry. These benefits must be translated into profitability-a proxy of competitive advantage. This study aimed to identify the financial effect underlying the degree of backward, forward, and horizontal integration, alongside the financial strength and management capability of broiler firms. We used random-effects general least squares to analyze a panel dataset of broiler firms that publicly listed in Kuala Lumpur Stock Exchange Malaysia for the 2006-2018 period. Support is found for the hypothesis that forward integration enhanced profitability. In comparison, the operating margin had a greater influence on broiler firms' financial performance. Notwithstanding value chain development, the relative findings suggest that efficiency remains a priority in a commodity-based broiler market. It is thus recommended that management capability be emphasized.

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The financial and operational impacts of European SMEs’ use of trade credit as a substitute for bank credit

Wang

Han

Huang

et al. 2021

The European Journal of Finance

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We study the impacts of the use of trade credit on SME financial performance and operational distress in a sample of 74,036 SMEs across 19 EU countries between 2006 to 2015. Under the premise that trade credit acts as a substitute for bank credit, our results show that supplying trade credit improves profitability, but we show little evidence that such an investment is more profitable for bank credit richer SMEs, although such firms did redistribute more bank fund through trade credit to their customers. For receivers, we show that the use of trade credit finance alleviates operational distress, especially for those SMEs facing liquidity constraints, such as those which have less access to bank credit or under credit tightened periods. This distress reduction effect is also reflected in their profitability indicators. However, the longer the average collection period and credit period, the less effective the trade credit effects respectively on improving SME profitability and reducing operational distress.

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The industry effect and the decision to integrate vertically in a crisis context

Cited by 3 publications

References 35 publications

COVID-19 disruptions and pivoting in SMEs in the hidden middle of Kenya’s potato and fish value chains

COVID-19 disruptions and pivoting in SMEs in the hidden middle of Kenya’s potato and fish value chains

Vertical and Horizontal Integration in the Profitability of Malaysian Broiler Firms

The financial and operational impacts of European SMEs’ use of trade credit as a substitute for bank credit

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