The Impact Of Supply Chain Concentration On Financial Performance Of Manufacturing Enterprises

The report of the 20 th National Congress of the Communist Party of China made it clear that China should "strive to enhance the resilience and security of the industrial supply chain".Maintaining the stability of the supply chain of industrial chains and making efforts to build an independent,reliable and secure supply chain are not only powerful measures to promote domestic economic recovery,but also an important guarantee to promote the development of the world economy.As a microscopic subject of the supply chain,the structural characteristics of the supply chain play an important role in the survival and development of the enterprise.As an important indicator to measure the quality of business operation,financial performance is closely related to the profitability,operational capacity,solvency and risk resistance of enterprises.Continuous improvement of corporate financial performance is a challenge for every enterprise and a relentless pursuit for all enterprises.However,in this fast-changing era,each enterprise can no longer cope with the risks brought by the uncertainty of the market environment and social demand in a comfortable manner.To occupy a place in this increasingly competitive market,companies need not only strong development and production capabilities,but also an efficient and agile supply chain.A well-managed,high-quality supply chain can give a company a unique competitive advantage.In addition,innovation is considered by many scholars to be an important source of competitive advantage and an important force for sustained economic growth,as well as an important driver of value creation in an increasingly complex and rapidly changing environment.To a certain extent,the quality of innovation reflects the firm’s unique innovation and technological capabilities,which gives the firm a technology-based first-mover advantage and plays an important role in the firm’s financial performance.Therefore,it is important to explore the mechanism of the role of supply chain concentration on corporate financial performance and the role played by innovation quality in it.Based on the above background,this paper will take supply chain concentration and innovation quality as the entry point to study the financial performance of enterprises and explore the following questions:(1)What is the mechanism of the role of upstream supplier concentration and downstream customer concentration on the financial performance of enterprises?(2)Does the quality of innovation play a mediating role in the influence of customer concentration and supplier concentration on the financial performance of enterprises?To investigate the above questions,this paper proposes the following hypotheses from the literature on supply chain concentration,corporate financial performance,and corporate innovation quality,taking into account the current reality:(1)The higher the customer concentration,the lower the corporate financial performance;(2)The higher the supplier concentration,the lower the corporate financial performance;(3)The innovation quality plays a part in mediating the influence of customer concentration on corporate financial performance;(4)The innovation quality plays a part in mediating the influence of customer concentration on corporate financial performance.Innovation quality plays a partially mediating role in the effect of supplier concentration on firms’ financial performance.Meanwhile,in order to verify the above hypotheses,this paper uses the relevant data of a total of 529 manufacturing enterprises in four industries,namely,general equipment manufacturing,special equipment manufacturing,automobile manufacturing,and pharmaceutical manufacturing,collected manually as research samples,and uses structural equation modeling to test the relationship mechanisms of customer concentration,supplier concentration,innovation quality,and enterprise financial performance,and applies We also used the Bootstrapping method to analyze the mediating mechanism of innovation quality.The empirical results show that(1)Both customer concentration and supplier concentration have a significant negative effect on a firm’s financial performance.(2)Innovation quality plays a partly mediating role in the effects of customer concentration and supplier concentration on financial performance,and customer concentration and supplier concentration can both directly inhibit firms’ financial performance and in turn inhibit the development of firms’ financial performance by reducing innovation quality.Based on the above findings,this paper draws the following insights: First,while maintaining close relationships with existing customers and suppliers,companies should actively develop and find new high-quality customers and suppliers,establish multiple sales and procurement channels,and moderately reduce customer concentration and supplier concentration.Secondly,enterprises need to maintain a certain sense of risk prevention,strengthen the relationship management with major suppliers,and prevent business risks caused by interruptions in the supply of raw materials.Thirdly,enterprises should invest more in innovation funds and talents within their actual capacity,and establish a good innovation culture to stimulate their innovation vitality and promote the transformation of innovation results,so as to improve the quality of innovation of enterprises.