Supply chain finance and firm strategic change: A firm life cycle perspective

Abstract

Using a proprietary data set from the Shanghai and Shenzhen Stock Exchanges, we examine the relationship between Supply Chain Finance (SCF) and strategic change in core firms. Our analysis reveals that SCF facilitates strategic change in growing firms but hinders it in declining firms, with no significant effect on mature firms. In growing firms, SCF enhances risk-taking capacity and reduces equity costs, while in declining firms, it stabilizes supply chains and increases customer concentration. In mature firms, SCF leads to strategic inertia. Economic tests suggest SCF aids firms in establishing unique competitive advantages at various stages of their life cycles.