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Supply Chain Structure and Nature of Financing

Tracks
Jade 3
Tuesday, July 2, 2024
4:30 PM - 4:45 PM

Presenter

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Mr Ajantha Velayutham
Lecturer
Auckland University of Technology

Supply Chain Structure and Nature of Financing

Abstract

Purpose
This study investigates the relationship between supply chain dimensions and capital structure (as proxied by book leverage). We use the resource-based view (RBV) to look into the dimensions of the supply chain of which we examine four dimensions; (i) customer base, (ii) operating portfolio, (iii) environmental dimensions, and (iv) social dimensions.

Design
The study employs a sample of 80 companies listed on the FTSE All-Share index in the United Kingdom (UK). This is a longitudinal study across the 2018 to 2021 periods which provides 320 firm-year observations.

Findings
The findings show that only a companys customer base is significantly associated with book leverage. The dimensions of operating portfolio, environmental dimensions, and social dimensions do not show a significant relationship. The study also conducts additional moderation analyses and also using alternative variables to book leverage; (i) long-term financing and (ii) working capital.

Practical Implications
This study will assist in helping companies match the operational dimensions of their supply chain with external financing sources, thereby helping companies develop resiliency against supply chain disruptions. This is especially the case given the COVID-19 pandemic has affected the operational dimensions of the supply chain and has also created liquidity and financing problems for supply chains.

Research Implications
Future studies may find it beneficial to extend the time period of the study given the long-term effects of the Covid-19 pandemic on supply chains. Further to this, future research can compare the financing structures of manufacturing and service supply chains given the differences in such supply chains.

Originality
This study is novel in that it uses alternate variables to book leverage in the form of long-term financing and working capital. This thereby acknowledges the importance of internal supply chain financing sources in financing the supply chain.

Biography

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