The Transfer of Risk Taking Along the Supply Chain

Review of Quantitative Finance and Accounting (forthcoming)

63 Pages Posted: 13 Mar 2018 Last revised: 22 Jul 2023

See all articles by Manh Cuong Nguyen

Manh Cuong Nguyen

University of East London - Royal Docks Business School

Viet Anh Dang

Alliance Manchester Business School

Tri Tri Nguyen

University of Roehampton

Date Written: July 19, 2023

Abstract

We show that suppliers’ risk taking is positively influenced by that of their major customers. This result is consistent with the notion that when major customers take more risk to enhance their bargaining power and rent extraction ability, suppliers may respond by also engaging in more risk taking to improve their bargaining positions. Further cross-sectional analysis shows that the transfer of risk taking along the supply chain becomes stronger when suppliers and customers have more comparable bargaining power and when the former have greater risk-taking capacities. Our findings are robust to a series of tests addressing endogeneity concerns.

Keywords: Risk taking, customer-supplier relationships, supply chain, bargaining power

JEL Classification: G30, G32, L14

Suggested Citation

Nguyen, Manh Cuong and Dang, Viet Anh and Nguyen, Tri Tri, The Transfer of Risk Taking Along the Supply Chain (July 19, 2023). Review of Quantitative Finance and Accounting (forthcoming), Available at SSRN: https://ssrn.com/abstract=3139547 or http://dx.doi.org/10.2139/ssrn.3139547

Manh Cuong Nguyen (Contact Author)

University of East London - Royal Docks Business School ( email )

4-6 University Way
London, E16 2RD
United Kingdom

Viet Anh Dang

Alliance Manchester Business School ( email )

AMBS Crawford House
Booth Street West
Manchester, Greater Manchester M15 6PB
United Kingdom
+44(0)16127 50438 (Phone)

Tri Tri Nguyen

University of Roehampton ( email )

Roehampton Lane
London, SW15 5SL
United Kingdom

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