Customer-Base Concentration, Profitability, and the Relationship Life Cycle

• 成果类型: Article
• 署名作者: Irvine, Paul J.; Park, Shawn Saeyeul; Yildizhan, Celim
• 署名单位: Texas Christian University; University System of Georgia; University of Georgia
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-51246
• 发表日期: 2016
• 页码: 883-906
• 关键词: buyer concentration; Demand uncertainty; FINANCIAL RATIOS; VALUE CREATION; performance; integration; prediction

摘要

Using a recently expanded dataset on supplier-customer links, we introduce a dynamic relationship life-cycle hypothesis. We hypothesize that the relation between customer-base concentration and profitability is significantly negative in the early years of the relationship, but becomes positive as the relationship matures. The key driver of this dynamic is the customer-specific investments that the relationship entails. These investments result in larger fixed costs, greater operating leverage, and a higher probability of losses early in the relationship, but can significantly benefit the firm as the relationship matures. Although many of these money-losing firms in early-stage relationships were not studied in Patatoukas (2012), we find a market reaction to increases in customer concentration similar to that in his paper. This result provides powerful confirmatory evidence of the value of customer concentration. We document one of the intangible benefits of customer concentration, technology sharing, and show how this benefit increases as the relationship matures.