A Study On The Impact Of Supply Chain Concentration On Firms’ Innovation Performance

Innovation is a constant topic in enterprise development and an important reality for China’s economic development.With the release of Made in China 2025(National Action Programme)and the 14 th Five-Year Plan,the country attaches great importance to the quality of the economy and points the finger at the innovation capacity of enterprises.In this context,it is urgent for Chinese enterprises to innovate and serve the economy.However,the first question to be addressed is where innovation comes from.This paper combs through previous research on innovation factors and finds that most scholars have focused on the impact of macro factors such as economics,policies,laws and markets,and micro factors such as organisational governance,nature of property rights and managerial traits on innovation performance,while fewer scholars have noticed that the supply chain in which the firm itself is located is also an important driver of innovation.Firms upstream and downstream of the supply chain can provide heterogeneous resources to the core firms to help them innovate,and can also influence firms’ innovation inputs through their bargaining power.Therefore,it is worth studying how firms can use the supply chain to achieve innovation.In order to meet these practical needs and fill the theoretical gap,this paper selects the relationship between supply chain and innovation performance as the research question,trying to clarify the relationship and explore the way of influence.Previous research in this area has mainly used theoretical derivation and questionnaire surveys to demonstrate the positive impact of supply chain cooperation and customer participation in innovation on firms’ innovation performance,but the research has been conducted from the perspective of suppliers or customers alone,and the impact mechanisms have not been explored in depth.This paper uses concentration as a proxy for supplier resource heterogeneity and customer bargaining power,and examines the impact of upstream and downstream supply chains on firms’ innovation performance,and uses patent application IPC numbers to calculate firms’ own level of technological diversification as a proxy for their internal absorptive capacity,in an attempt to explore what mechanisms are conducive to the impact of supply chains on innovation performance from within firms.This paper explores what mechanisms are conducive to the impact of the supply chain on innovation performance from within the firm.In the end,this paper expands the breadth of research on supply chains and corporate innovation,explores the internal influencing mechanisms,and provides a pathway for companies to use supply chains to better serve innovation in practice.This study uses data on A-share listed companies from 2007 to 2020,and selects an unbalanced panel of 3660 companies from 2007 to 2019 as the sample.Firstly,the results of the data analysis show that supplier concentration and customer concentration are negatively related to firms’ innovation performance,indicating that the higher the concentration of suppliers,the less heterogeneous resources they bring and the less beneficial for firms to learn from them to innovate,while the higher the concentration of customers,with their large bargaining power,firms have to invest more in relationship-specific investments,thus tying up capital,reducing R&D investment and inhibiting innovation.inhibiting innovation.Further sub-sample analysis found that the negative relationship was more pronounced in manufacturing across all industries,with the inhibiting effect of customer concentration more pronounced in state-owned enterprises and supplier concentration more pronounced in non-state-owned enterprises by nature of ownership.Secondly,an analysis of the moderating effect of technological diversification and CEO tenure shows that the firm’s own technological diversification is effective in reducing the inhibiting effect of supplier concentration,i.e.the stronger the firm’s own absorptive capacity,the more innovation it can generate from the heterogeneous resources provided by more suppliers.CEO tenure also inhibits the negative effect of customer concentration on innovation performance in manufacturing,confirming that tenure,an executive characteristic,will influence the role of external customer relationships on innovation performance under the top echelon theory.This paper expands the research on supply chain and enterprise innovation in terms of theory,perspective and mechanism,and plays a role in complementing and exploring how supply chain affects enterprise innovation.Finally,this paper proposes the following recommendations from the research findings,combined with the real situation:(1)enterprises should build good supply chain partnerships;(2)enterprises should focus on knowledge accumulation and expand their own learning capacity;(3)enterprises should improve internal governance mechanisms and focus on cultivating beneficial and effective top management;(4)the government should improve the financial market,serve enterprises’ financing needs,guide industrial clustering and Focus on supply chain knowledge spillover to promote innovation.