Buying products from whom you know: personal connections and information asymmetry in supply chain relationships

• 成果类型: Article
• 署名作者: Chen, Ting; Levy, Hagit; Martin, Xiumin; Shalev, Ron
• 署名单位: University of Massachusetts System; University of Massachusetts Boston; City University of New York (CUNY) System; Baruch College (CUNY); Washington University (WUSTL); University of Toronto; University of Toronto; University Toronto Scarborough
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-020-09578-1
• 发表日期: 2021
• 页码: 1492-1531
• 关键词: financial-reporting quality; analytic hierarchy process; integrated ahp; diversification; COMPETITION; decisions; selection; capacity; mergers; COSTS

摘要

This study investigates the role personal connections play in a crucial element of the supply chain-supplier selection. We find that the likelihood that a potential supplier (hereafter, a vendor) is selected to be an actual supplier (hereafter, supplier) increases when personal connections between executives of the vendor and the customer exist. The magnitude of the effect varies predictably across management ranks and positions and is stronger when information asymmetries between a vendor and a customer are high. Conditioning on the existence of a supply-chain partnership, a departure of a personally connected executive prompts the termination of the supply-chain relationship more often than a departure of an unconnected executive. Additional analyses show personal connections are associated with less restrictive procurement contracts and with improved customer performance after the formation of a supply-chain relationship. Overall, our study highlights the role of personal connections in reducing information asymmetry and improving operating efficiency in the supply chain.