Supply Chain Relational Capital and the Bullwhip Effect: An Empirical Analysis Using Financial Disclosures

International Journal of Operations and Production Management, Forthcoming

59 Pages Posted: 26 Nov 2018

See all articles by Rong Zhao

Rong Zhao

University of Calgary

Raj Mashruwala

University of Calgary

Shail Pandit

University of Illinois at Chicago

Jaydeep Balakrishnan

University of Calgary

Date Written: October 28, 2018

Abstract

The primary objective of this study is to conduct a large-sample empirical investigation of how relational capital impacts bullwhip at the supplier. The study uses mandatory disclosures in regulatory filings of US firms to identify a supplier’s major customers and constructs empirical proxies of supply chain relational capital i.e., length of the relationship between suppliers and customers, and partner interdependence. Multivariate regression analyses are performed to examine the effects of relational capital on bullwhip at the supplier. The findings show that bullwhip at the supplier is greater when customers are more dependent on their suppliers, but is reduced when suppliers share longer relationships with their customers. The results also provide additional insights on several firm characteristics that impact supplier bullwhip, including shocks in order backlog, selling intensity, and variations in profit margins. Further, we document that the effect of supply chain relationships on bullwhip tends to vary across industries and over time. The study employs a novel dataset that is constructed using firms’ financial disclosures. This large panel dataset consisting of 13,993 observations over 36 years enables thorough and robust analyses to characterize supply chain relationships and gain a deeper understanding of their impact on bullwhip.

Keywords: Bullwhip Effect, Relational Capital, Supply Chain, Regression Analysis, Financial Statements

Suggested Citation

Zhao, Rong and Mashruwala, Raj and Pandit, Shailendra and Balakrishnan, Jaydeep, Supply Chain Relational Capital and the Bullwhip Effect: An Empirical Analysis Using Financial Disclosures (October 28, 2018). International Journal of Operations and Production Management, Forthcoming . Available at SSRN: https://ssrn.com/abstract=3274287

Rong Zhao (Contact Author)

University of Calgary ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada
403-220-2568 (Phone)
403-210-2217 (Fax)

Raj Mashruwala

University of Calgary ( email )

2500 University Drive NW
Calgary, Alberta T2N 1N4
Canada
403-220-4332 (Phone)

Shailendra Pandit

University of Illinois at Chicago ( email )

601 South Morgan Street
University Hall, Room 2303
Chicago, IL 60607
United States
(312) 355-1331 (Phone)
(312) 996-4520 (Fax)

HOME PAGE: http://business.uic.edu/faculty/shailendra-shail-pandit

Jaydeep Balakrishnan

University of Calgary ( email )

University Drive
Calgary, Alberta T2N 1N4
Canada

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