Product Market Competition and Corporate Relocations: Evidence from the Supply Chain

76 Pages Posted: 15 Aug 2020 Last revised: 9 Feb 2021

See all articles by Chen Chen

Chen Chen

Monash University - Department of Accounting

Sudipto Dasgupta

Chinese University of Hong Kong, ABFER, CEPR, and ECGI

Thanh Huynh

Monash University - Department of Banking and Finance

Ying Xia

Monash University - Monash Business School

Multiple version iconThere are 2 versions of this paper

Date Written: February 2, 2021

Abstract

We show that increasing competition changes the location of business activity and, in turn, affects supply chain relationships. Using establishment-level data, we find that when upstream product markets become more competitive, suppliers are more likely to relocate their establishments closer to customers. Following the supplier’s relocation, its sales to the customer increase, its relationship with the customer is less likely to be terminated, and its innovation is more aligned with the customer’s innovation. However, the improved relationship, by causing the supplier to engage more in innovation dedicated to the customer, adversely affects creative innovation, which is known to drive growth.

Keywords: Establishment Relocation, Supply Chain, Product Market Competition, Knowledge Spillover

JEL Classification: G30, L1, O3

Suggested Citation

Chen, Chen and Dasgupta, Sudipto and Huynh, Thanh D. and Xia, Ying, Product Market Competition and Corporate Relocations: Evidence from the Supply Chain (February 2, 2021). Available at SSRN: https://ssrn.com/abstract=3652190 or http://dx.doi.org/10.2139/ssrn.3652190

Chen Chen

Monash University - Department of Accounting ( email )

Building H, Level 3
Caulfield campus
Melbourne, Victoria 3800
Australia

Sudipto Dasgupta

Chinese University of Hong Kong, ABFER, CEPR, and ECGI ( email )

CUHK, Cheng Yu Tung Building, Room 1224
Shatin, NT
Hong Kong
Hong Kong

Thanh D. Huynh

Monash University - Department of Banking and Finance ( email )

Melbourne
Australia

Ying Xia (Contact Author)

Monash University - Monash Business School ( email )

900 Dandenong Road
Caulfield Campus
Melbourne, Victoria 3145
Australia

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