The impacts of supply chain finance initiatives on firm risk: evidence from service providers listed in the US

Hugo K.S. Lam, Yuanzhu Zhan

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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.
Original languageEnglish
Pages (from-to)383-409
JournalInternational Journal of Operations & Production Management
Volume41
Issue number4
Early online date6 Apr 2021
DOIs
Publication statusPublished - 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

  • Decision Sciences(all)
  • Strategy and Management
  • Management of Technology and Innovation

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