Network working capital management, supply chain concentration, and corporate performance of focal companies

Abstract

Based on the logical chain of “network working capital management (hereinafter, NWCM) → supply chain concentration (hereinafter, SCC) → corporate performance”, this study empirically and quantitatively explored the relationship between NWCM and corporate performance and the mediating effect of the SCC. Enterprise heterogeneity was considered. Specifically, we selected 312 companies listed on both the Shanghai and Shenzhen Exchanges from 2012 to 2022; these companies applied supply chain finance with the assistance of web crawling and textual analysis technology. The fixed effect panel regression model and the mediating model embedded with interaction terms were used in the empirical analysis. The empirical results showed that corporate performance had an inverted U-shaped relationship with NWCM, and the vertex was 1.123%. When the NWCM was less than the vertex, corporate performance was positively related to NWCM, and a negative relationship existed between them when NWCM was greater than the vertex. Moreover, the heterogeneity results showed differences among companies of different scales and with different ownership styles, and the mediating effect of SCC was negative, weakening the inverted U-shaped relationship between NWCM and corporate performance. The results of difference testing, instrumental variables analysis and Hausman-Taylor tests supported the robustness of the above conclusions.