Abstract
Purpose
This study empirically investigates how supply chain finance (SCF) initiatives together with different firm capabilities and resources (i.e. information technology (IT) capability, operational slack and political connections) affect the financial risk of service providers.
Design/methodology/approach
This study collects secondary longitudinal data to test for a direct impact of SCF initiatives on service providers' financial risk. It further investigates the moderating effects of the service provider's IT capability, operational slack and political connections. Additional tests and analytical strategies are performed to ensure the robustness of the results.
Findings
The findings indicate that SCF initiatives help service providers mitigate financial risk. The risk reduction is greater for service providers with higher IT capability, operational slack and political connections, but the last factor applies only to multinational corporations, not domestic companies.
Research limitations/implications
The data used in this research is limited to SCF service providers publicly listed in the United States, which may restrict the generalisability of the findings. Nonetheless, the research urges scholars to focus more on the financial risk implications of SCF in different market contexts.
Practical implications
This study encourages service providers to embrace the power of SCF initiatives for mitigating financial risk and allows them to evaluate their SCF investments in light of different firm capabilities and resources.
Originality/value
This is the first study investigating the impacts of SCF initiatives and various firm capabilities and resources on service providers' financial risk. The empirical findings provide important implications for future research and practices.
This study empirically investigates how supply chain finance (SCF) initiatives together with different firm capabilities and resources (i.e. information technology (IT) capability, operational slack and political connections) affect the financial risk of service providers.
Design/methodology/approach
This study collects secondary longitudinal data to test for a direct impact of SCF initiatives on service providers' financial risk. It further investigates the moderating effects of the service provider's IT capability, operational slack and political connections. Additional tests and analytical strategies are performed to ensure the robustness of the results.
Findings
The findings indicate that SCF initiatives help service providers mitigate financial risk. The risk reduction is greater for service providers with higher IT capability, operational slack and political connections, but the last factor applies only to multinational corporations, not domestic companies.
Research limitations/implications
The data used in this research is limited to SCF service providers publicly listed in the United States, which may restrict the generalisability of the findings. Nonetheless, the research urges scholars to focus more on the financial risk implications of SCF in different market contexts.
Practical implications
This study encourages service providers to embrace the power of SCF initiatives for mitigating financial risk and allows them to evaluate their SCF investments in light of different firm capabilities and resources.
Originality/value
This is the first study investigating the impacts of SCF initiatives and various firm capabilities and resources on service providers' financial risk. The empirical findings provide important implications for future research and practices.
| Original language | English |
|---|---|
| Pages (from-to) | 383-409 |
| Journal | International Journal of Operations & Production Management |
| Volume | 41 |
| Issue number | 4 |
| Early online date | 6 Apr 2021 |
| DOIs | |
| Publication status | Published - 1 Jun 2021 |
Bibliographical note
Funding Information:The authors thank the Guest Editors and two anonymous reviewers for their insightful comments and useful suggestions, which help improve the quality of this paper. Lam acknowledges the Leverhulme Trust's support through the Leverhulme Research Fellowship (RF-2020-474). Zhan acknowledges the support of the British Academy through the BA/Leverhulme Small Research Grant (SRG20\200985).
Publisher Copyright:
© 2021, Emerald Publishing Limited.
Keywords
- Financial risk
- IT capability
- Operational slack
- Political connection
- Supply chain finance
ASJC Scopus subject areas
- General Decision Sciences
- Strategy and Management
- Management of Technology and Innovation