Common institutional investors and supplier performance in supply chains

Yan Leung Stephen CHEUNG, In-Mu HAW, Bingbing HU, Morgan SWINK, Wenlan ZHANG

Research output: Contribution to journalArticles

Abstract

We investigate how common institutional investors (CIIs) in supply chains affect supplier performance. Social network theory suggests that buyer–supplier relationships are influenced by networks of ties in which they are embedded. While prior research has concentrated on networks of trade interactions, we instead examine the influences of networks through common investors. Utilizing a large sample of buyer–supplier relationships, we find that the presence of CIIs improves suppliers' operating and market performance, especially for suppliers with greater dependence on buyers. In addition, supplier performance increases with the common ownership stakes held by CIIs, but decreases with the asymmetric ownership stakes of CIIs across supply chain partners. We find that better financial collaboration between the partners appears to be a mechanism through which CIIs enhance supplier performance. Lastly, we find that the role of CIIs in strengthening supplier performance is distinct from that of direct equity links. Collectively, our findings highlight a novel role of indirect cross‐ownership in fostering supply chain collaboration and coordinating vertical relationships and, in turn, improving supplier performance. Copyright © 2020 Association for Supply Chain Management, Inc.
Original languageEnglish
JournalJournal of Operations Management
Early online dateApr 2020
DOIs
Publication statusE-pub ahead of print - Apr 2020

Citation

Cheung, Y.-L., Haw, I.-M., Hu, B., Swink, M., & Zhang, W. (2020). Common institutional investors and supplier performance in supply chains. Journal of Operations Management. Advance online publication. doi: 10.1002/joom.1089

Keywords

  • Asymmetric ownership stake
  • Buyer–supplier relationships
  • Common institutional investors (CIIs)
  • Common ownership stake
  • Supplier performance

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