Does supply chain concentration improve sustainability performance: the role of operational slack and information transparency

Abstract

PurposeDespite the increasing interest in the role of supply chain concentration (SCC) in improving performance, its influence on firms' sustainability performance remains unexplored, as do the underlying mechanisms of this relationship. Drawing on resource dependence theory, the authors investigate the relationship between SCC and manufacturing firms' sustainability performance and the moderating roles of operational slack and information transparency.Design/methodology/approachThe authors use secondary data from 3,581 manufacturing firms listed on the Shanghai and Shenzhen A-share stock markets from 2006 to 2020 to conduct an empirical analysis using panel data regression models.FindingsManufacturing firms' SCC is negatively related to sustainability performance until it reaches a certain point, where SCC positively affects sustainability performance, presenting a U-shaped relationship. In addition, operational slack represented by a quick ratio moderates the relationship between SCC and sustainability performance by flattening the curve. Operational slack represented by receivable turnover ratio moderates the relationship between SCC and sustainability performance by steepening the curve and shifting the turning point left. Information transparency strengthens the effect of SCC on the sustainability performance by steepening the curve.Originality/valueThis investigation provides a comprehensive view of the SCC– sustainability performance relationship.