Supply chain and firm performance: Analysis of listed companies in the Chinese automobile industry

Inalegwu Ode-Ichakpa, Yuan Zhao, Tidings Ndhlovu, Chibuzo Amadi, Michael Mubaiwa

Research output: Contribution to journalArticlepeer-review


We adopt the transaction and resource dependence theories to investigate the impact of supply chain integration on the financial performance of Chinese automobile manufacturing enterprises. We utilized 160 observations from carefully selected listed automobile companies from 2011 – 2020. Fixed effects panel estimate was used in analysing the data. Gross profit expense ratio and total asset turnover were used as mediating variables to clarify causality between variables. Robustness test was conducted to address heteroscedasticity. Generalised Methods of Moments (GMM) was introduced to address endogeneity. Results show: Supplier concentration positively affects financial performance. Customer concentration has no obvious impact on financial performance. Supplier concentration indirectly affects financial performance through the ratio of gross profit to cost. Mediating effect of total asset turnover on the relationship between supplier concentration and corporate financial performance is not obvious, possibly because concentration degree of suppliers has little influence on inventory management cost, accounts payable cycle and business process optimization. We conclude that competitive advantage in automobile firms can be achieved through stable cooperative relationships with suppliers. China’s economy is the second largest in the world and has the world's largest vehicle market which makes the implication of this research far reaching.
Original languageEnglish
JournalJournal of Purchasing and Supply Management
Publication statusSubmitted - 30 Dec 2021


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