Total views : 165
The Structure of Supplier Network and Firm’s Performance: The Case of Korean Manufacturing Industries
Objectives: The purpose of this paper is to investigate the relationship between the structure of supplier network and firm’s performance in Korean manufacturing industries. Methods/Statistical Analysis: The standard method of network analysis as well as the regressionanalysis wasapplied to a unique dataset that contains information on buyer and supplier linkages for more than 20,000 incorporated manufacturing firms. Findings: Firstly, the characteristics of the network structure is different for industries; both hierarchy and openness are relatively high in metal and metal products, both are relatively low in textile and apparel, hierarchy is high but openness is low in automobile and electronic devices, hierarchy is low but openness is high in food and beverage. Secondly, both the productivity, measured by total factor productivity, and the profitability, measured by the operating income to sales, of the firms involved in the supplier network are higher than those of the firms not involved, and increase sequentially as the order numbers of tier of the firm increase in supply chain. Thirdly, the sales concentration ratio, representing for the openness of the network, has a significant positive effect on the productivity, and no significant effect on the operating income to sales. Improvements/Applications: One of the most important policy implications is that regulations against the inter-firm transaction should take different forms according to the transactional characteristics of the industries.
Hierarchy, Openness, Productivity, Profitability, Supplier Network.
- Han BJ, Seok KD, Yeob OK. An Empirical Analysis on the Performance Differentials of Subcontracted Small Firms in Motor Vehicle Industries. Journal of the Korean Economy. 2009; 24:57–82.
- Pyo HJ. The Effect of Buyer’s Opportunistic Behavior on the Supplier’s R and D Expenditure in the Supplier Relations. Review of Social and Economics Studies. 2011;37(1):311–44.
- Kang S, Moon T. Impact of Organization Competence on Supply Chain Performacne through Supply Chain Collaboration. Indian Journal of Science and Technology. 2015; 8(12):1–10.
- Jaeheon J, Sang CJ. Structure and Characteristics of Transaction Network in Korean Non-Financial Industries. Indian Journal of Science and Technology. 2016; 9(26):1–11.
- Gofman M. Profitability, Trade Credit and Institutional Structure of Production. Wisconsin School of Business. Working Paper.2011.
- Pyo HJ. Hierarchical Inter-firm Transaction Network and Managerial Performance of Firm. Monthly Labor Review.2015; 125:39–53.
- Asanuma B. Manufacturer-Supplier Relationships in Japan and the Concept of Relation-Specific Skill. Journal of the Japanese and International Economies. 1989; 3(1):1–30.
- Costello M. Mitigating Incentive Conflicts in Inter-firm Relationships: Evidence from long-term supply contracts. Journal of Accounting and Economics. 2013;56(1):19–39.
- Tirole J. The Theory of Industrial Organization. MIT Press: Cambridge. MA, 1988.
- Aoki M, Okuno-Fujiwara M. Comparative Institutional Analysis: A New Approach to Economic System. University of Tokyo Press: Tokyo, 1996.
- Klein B, Crawford R, Alchian A. Vertical Integration, Appropriable Rents, and the Competitive Contracting Process. Journal of Law and Economics. 1978; 21(2):297–326.
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution 3.0 License.