Supply Base Risk and Buying Firm Performance: An Empirical Evidence from Emerging Economy

Abstract

This article attempts to address two research questions using a large and longitudinal sample of manufacturing firms: (a) how does supply base (or supply-side) risk affect buying firm performance, and (b) how does the presence of supply chain executive in the firm’s top management team (TMT) moderate the performance effect of supply base risk? The study uses the Prowess database and Bloomberg to operationalize empirical proxies for supply base risk drivers. Panel data regression analyses are used to test the effect of supply base risk on buying firm performance considering Indian manufacturing firms. The results show that the supply base risk has a negative and significant effect on firm performance. Moreover, the findings of the study indicate that supply chain executive representation in the firm’s TMT alleviates the negative effects of supply base risk. This study develops an objective understanding of supply chain complexity by relying on secondary panel data.