Supply network position and firm performance: evidence from Chinese listed manufacturing companies

    Jinyan Shi Affiliation
    ; Jiangheng Yang Affiliation
    ; Yanxi Li Affiliation


The aim of this paper is to examine the relationship between supply network position and firm performance. A-share manufacturing companies listed from 2013 to 2015 are chosen as the initial samples, and large sample supply networks are constructed with relational embeddedness and structural embeddedness. The location of supply network is depicted by network centrality and structural hole with social network analysis, and the influence of supply network position on the corporate performance is examined with multiple OLS regression analysis. This paper observes that a firms’ supply network position is an important factor affecting its performance. The higher the network centrality is, the richer the structural holes are, and the worse the company’s performance is. The results suggest that firms that have a high level of centrality or rich structural holes in their supply networks will gain limited information, resource and control benefits and face great business risks that may negatively influence their performance.

Keyword : firm performance, supply network position, network centrality, structural holes, relational embeddedness, structural embeddedness

How to Cite
Shi, J., Yang, J., & Li, Y. (2019). Supply network position and firm performance: evidence from Chinese listed manufacturing companies. Journal of Business Economics and Management, 20(6), 1258-1277.
Published in Issue
Oct 17, 2019
Abstract Views
PDF Downloads
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.


Ahern, K. R., & Harford, J. (2014). The importance of industry links in merger waves. The Journal of Finance, 69(2), 527-576.

Akdogan, Y. E., & Boyacioglu, M. A. (2014). The effect of corporate governance on firm performance: a case of Turkey. International Journal of Critical Accounting, 6(2), 187-210.

Anderson, E., & Jap, S. D. (2005). The dark side of close relationships. MIT Sloan Management Review, 46(3), 75. Retrieved from

Autry, C. & Griffis, S. (2008). Supply chain capital: The impact of structural and relational linkages on firm execution and innovation. Journal of Business Logistics, 29(1), 157-173.

Bagul, A., & Mukherjee, I. (2018). An insight into centralised sourcing strategy for enhancing performance and sustainability of multi-tier supply network. International Journal of Intelligent Enterprise, 5(1-2), 18-49.

Basole, R., & Bellamy, M. (2014). Visual analysis of supply network risks: Insights from the electronics industry. Decision Support Systems, 67, 109-120.

Baum, J. A., Calabrese, T., & Silverman, B. S. (2015). Don’t go it alone: Alliance network composition and startups’ performance in Canadian biotechnology. Strategic Management Journal, 21(3), 267-294.<267::AID-SMJ89>3.0.CO;2-8

Bell, G. G. (2005). Clusters, networks, and firm innovativeness. Strategic Management Journal, 26, 287-295.

Bellamy, M. A., Ghosh, S., & Hora, M. (2014). The influence of supply network structure on firm innovation. Journal of Operations Management, 32(6), 357-373.

Booth, L., Aivazian, V., Demirguc‐Kunt, A., & Maksimovic, V. (2001). Capital structures in developing countries. The Journal of Finance, 56(1), 87-130.

Borgatti, S., Mehra, A., & Labianca, G. J. (2009). Network analysis in the social sciences. Science, 323(5916), 892-895.

Burt, R. S. (1992). Structural holes: The social structure of competition. Harvard university press.Carnovale, S., Rogers, D. S., & Yeniyurt, S. (2019). Broadening the perspective of supply chain finance: The performance impacts of network power and cohesion. Journal of Purchasing and Supply Management, 25(2), 134-145.

Chen, Y., Wang, Y., & Lin, L. (2014). Independent directors’ board networks and controlling shareholders’ tunneling behavior. China Journal of Accounting Research, 7(2), 101-118.

Choi, T. Y., & Krause, D. R. (2006). The supply base and its complexity: Implications for transaction costs, risks, responsiveness, and innovation. Journal of Operations Management, 24(5), 637-652.

Choi, T. Y., & Hong, Y. (2002). Unveiling the structure of supply networks: case studies in Honda, Acura, and DaimlerChrysler. Journal of Operations Management, 20(5), 469-493.

Chuluun, T., Prevost, A., & Puthenpurackal, J. (2014). Board ties and the cost of corporate debt. Financial Management, 43(3), 533-568.

Coleman, J. S. (1988). Social capital in the creation of human capital. American Journal of Sociology, 94, S95-S120.

De Prato, G., & Nepelski, D. (2014). Global technological collaboration network: network analysis of international co-inventions. The Journal of Technology Transfer, 39(3), 358-375.

Detthamrong, U., Chancharat, N., & Vithessonthi, C. (2017). Corporate governance, capital structure and firm performance: evidence from Thailand. Research in International Business and Finance, 42, 689-709.

Dhaliwal, D., Judd, J. S., Serfling, M., & Shaikh, S. (2016). Customer concentration risk and the cost of equity capital. Journal of Accounting and Economics, 61(1), 23-48.

Dong, M. C., Liu, Z., Yu, Y., & Zheng, J. H. (2015). Opportunism in distribution networks: The role of network embeddedness and dependence. Production and Operations Management, 24(10), 1657-1670.

El-Khatib, R., Fogel, K., & Jandik, T. (2015). CEO network centrality and merger performance. Journal of Financial Economics, 116(2), 349-382.

Engelberg, J., Gao, P., & Parsons, C. A. (2012). Friends with money. Journal of Financial Economics, 103(1), 169-188.

Faruq, H. A., & Weidner, M. L. (2018). Culture, institutions, and firm performance. Eastern Economic Journal, 1-16.

Granovetter, M. (1985). Economic action and social structure: the problem of embeddedness. American Journal of Sociology, 91(3), 481-510.

Gulati, R. (1998). Alliances and networks. Strategic Management Journal, 19(4), 293-317.<293::AID-SMJ982>3.0.CO;2-M

Hochberg, Y. V., Ljungqvist, A., & Lu, Y. (2007). Whom you know matters: Venture capital networks and investment performance. The Journal of Finance, 62(1), 251-301.

Hoskisson, R. E., Hitt, M. A., & Hill, C. W. (1993). Managerial incentives and investment in R&D in large multiproduct firms. Organization Science, 4(2), 325-341.

Irvine, P. J., Park, S. S., & Yıldızhan, Ç. (2015). Customer-base concentration, profitability, and the relationship life cycle. The Accounting Review, 91(3), 883-906.

Kao, T. W. D., Simpson, N. C., Shao, B. B., & Lin, W. T. (2017). Relating supply network structure to productive efficiency: A multi-stage empirical investigation. European Journal of Operational Research, 259(2), 469-485.

Kao, T. W. D., Su, H. C., & Chen, Y. S. (2019). The curvilinear relationships between structural embeddedness and productive efficiency: An exploratory study. International Journal of Production Economics, 212, 176-185.

Kim, Y., Choi, T. Y., Yan, T., & Dooley, K. (2011). Structural investigation of supply networks: A social network analysis approach. Journal of Operations Management, 29(3), 194-211.

Kim, Y., Chen, Y. S., & Linderman, K. (2015). Supply network disruption and resilience: A network structural perspective. Journal of operations Management, 33, 43-59.

Kim, Y. H. (2017). The effects of major customer networks on supplier profitability. Journal of Supply Chain Management, 53(1), 26-40.

Lanier Jr, D., Wempe, W. F., & Zacharia, Z. G. (2010). Concentrated supply chain membership and financial performance: Chain-and firm-level perspectives. Journal of Operations Management, 28(1), 1-16.

Larcker, D. F., So, E. C., & Wang, C. C. (2013). Boardroom centrality and firm performance. Journal of Accounting and Economics, 55(2-3), 225-250.

Marsden, P. V. (2002). Egocentric and sociocentric measures of network centrality. Social Networks, 24(4), 407-422.

Nee, V., Liu, L., & DellaPosta, D. (2017). The entrepreneur’s network and firm performance. Sociological Science, 4, 552-579.

Park, S. H., Li, S., & David, K. T. (2006). Market liberalization and firm performance during China’s economic transition. Journal of International Business Studies, 37(1), 127-147.

Patatoukas, P. N. (2011). Customer-base concentration: Implications for firm performance and capital markets: 2011 American accounting association competitive manuscript award winner. The Accounting Review, 87(2), 363-392.

Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. The Free Press.

Rezapour, S., Srinivasan, R., Tew, J., Allen, J. K., & Mistree, F. (2018). Correlation between strategic and operational risk mitigation strategies in supply networks. International Journal of Production Economics, 201, 225-248.

Rothaermel, F. T. (2001). Incumbent’s advantage through exploiting complementary assets via interfirm cooperation. Strategic Management Journal, 22(6‐7), 687-699.

Sharma, A., Kumar, V., Yan, J., Borah, S. B., & Adhikary, A. (2019). Understanding the structural characteristics of a firm’s whole buyer–supplier network and its impact on international business performance. Journal of International Business Studies, 1-28.

Sun, Q., & Tong, W. H. (2003). China share issue privatization: the extent of its success. Journal of Financial Economics, 70(2), 183-222.

Uzzi, B. (1997). Social structure and competition in interfirm networks: The paradox of embeddedness. Administrative Science Quarterly, 35-67.

Vissa, B., & Chacar, A. S. (2009). Leveraging ties: the contingent value of entrepreneurial teams’ external advice networks on Indian software venture performance. Strategic Management Journal, 30(11), 1179-1191.

Weisbuch, G., & Battiston, S. (2007). From production networks to geographical economics. Journal of Economic Behavior & Organization, 64(3-4), 448-469.

Withers, M. C., & Fitza, M. A. (2017). Do board chairs matter? The influence of board chairs on firm performance. Strategic Management Journal, 38(6), 1343-1355.

Whittington, K. B., OwenSmith, J., & Powell, W. W. (2009). Networks, propinquity, and innovation in knowledge-intensive industries. Administrative Science Quarterly, 54(1), 90-122.

Xiao, Z., & Tsui, A. S. (2007). When brokers may not work: The cultural contingency of social capital in Chinese high-tech firms. Administrative Science Quarterly, 52(1), 1-31.

Yan, T., Choi, T. Y., Kim, Y., & Yang, Y. (2015). A theory of the nexus supplier: A critical supplier from a network perspective. Journal of Supply Chain Management, 51(1), 52-66.

Yang, H., Lin, Z., & Lin, Y. (2010). A multilevel framework of firm boundaries: firm characteristics, dyadic differences, and network attributes. Strategic Management Journal, 31(3), 237-261.

Zaheer, A., & Bell, G. G. (2005). Benefiting from network position: firm capabilities, structural holes, and performance. Strategic Management Journal, 26(9), 809-825.