The Structural and Executional Components of Customer Concentration: Implications for Supplier Performance

43 Pages Posted: 27 Sep 2016 Last revised: 19 Oct 2020

See all articles by Ella Mae Matsumura

Ella Mae Matsumura

University of Wisconsin-Madison - Department of Accounting and Information Systems

Jason D. Schloetzer

Georgetown University - McDonough School of Business

Date Written: September 22, 2016

Abstract

We examine how suppliers’ structural decisions (strategic choices regarding scale, scope, and complexity) and executional skills (drivers that support the day-to-day operations of the firm) influence its customer base concentration and, in turn, supplier performance. We investigate our research question through an in-depth study of suppliers in the apparel industry. We find that suppliers’ structural decisions have an important relation to the level of a supplier’s customer concentration. However, we find little evidence that the component of concentration arising from structural decisions is associated with supplier performance (both financial and operational). Instead, the favorable relation between supplier performance and suppliers’ customer concentration is primarily driven by the component of concentration arising from suppliers’ executional skills. Our evidence indicates that greater customer concentration in and of itself does not relate to the anticipated benefits and risks, which has implications for our understanding of how concentration impacts suppliers.

Keywords: Strategy implementation, value chain, channel management, supply chain management, customer relationships

JEL Classification: M40, D23, D29, L67, M11

Suggested Citation

Matsumura, Ella Mae and Schloetzer, Jason D., The Structural and Executional Components of Customer Concentration: Implications for Supplier Performance (September 22, 2016). Journal of Management Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2842669

Ella Mae Matsumura (Contact Author)

University of Wisconsin-Madison - Department of Accounting and Information Systems ( email )

School of Business
975 University Avenue
Madison, WI 53706
United States
608-262-9731 (Phone)
608-265-6040 (Fax)

Jason D. Schloetzer

Georgetown University - McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States
202-687-2672 (Phone)

HOME PAGE: http://explore.georgetown.edu/people/jds99/?PageTemplateID=319

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