The transfer of risk taking along the supply chain

Manh Cuong Nguyen; Viet Anh Dang; Tri Tri Nguyen

doi:https://doi.org/10.1007/s11156-023-01186-9

The transfer of risk taking along the supply chain

Manh Cuong Nguyen, Viet Anh Dang, Tri Tri Nguyen

Research output: Contribution to journal › Article › peer-review

Abstract

We show that suppliers’ risk taking is positively influenced by that of their major customers. This result is consistent with the notion that when major customers take more risk to enhance their bargaining power and rent extraction ability, suppliers may respond by also engaging in more risk taking to improve their bargaining positions. Further cross-sectional analysis shows that the transfer of risk taking along the supply chain becomes stronger when suppliers and customers have more comparable bargaining power and when the former have greater risk-taking capacities. Our findings are robust to a series of tests addressing endogeneity concerns.

Original language	English
Pages (from-to)	1341–1378
Journal	Review of Quantitative Finance and Accounting
Volume	61
Issue number	2023
DOIs	https://doi.org/10.1007/s11156-023-01186-9
Publication status	Accepted/In press - 19 Jul 2023

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https://doi.org/10.1007/s11156-023-01186-9

Cite this

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title = "The transfer of risk taking along the supply chain",

abstract = "We show that suppliers{\textquoteright} risk taking is positively influenced by that of their major customers. This result is consistent with the notion that when major customers take more risk to enhance their bargaining power and rent extraction ability, suppliers may respond by also engaging in more risk taking to improve their bargaining positions. Further cross-sectional analysis shows that the transfer of risk taking along the supply chain becomes stronger when suppliers and customers have more comparable bargaining power and when the former have greater risk-taking capacities. Our findings are robust to a series of tests addressing endogeneity concerns.",

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AB - We show that suppliers’ risk taking is positively influenced by that of their major customers. This result is consistent with the notion that when major customers take more risk to enhance their bargaining power and rent extraction ability, suppliers may respond by also engaging in more risk taking to improve their bargaining positions. Further cross-sectional analysis shows that the transfer of risk taking along the supply chain becomes stronger when suppliers and customers have more comparable bargaining power and when the former have greater risk-taking capacities. Our findings are robust to a series of tests addressing endogeneity concerns.

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