Policy uncertainty and customer concentration
Policy uncertainty and customer concentration
Using data involving customer-supplier relationships and a large sample of U.S. publicly listed firms, our study documents a negative and statistically significant relationship between economic-policy uncertainty and firms’ customer-base concentration. The negative relation is predominant in firms with higher inventory efficiency and those operating in competitive, high-R&D, and nondurable industries. Customer-base diversification is further shown to enhance firm performance during periods of increasing policy uncertainty, but not when policy uncertainty decreases. Overall, our evidence suggests that firms respond to increasing policy uncertainty by diversifying their customer base and such behavior contributes positively to firm performance.
customer-base concentration, economic policy uncertainty, firm performance, customer-supplier relationships, customer-base diversification
1517-1542
Leung, Woon Sau
73a8bf54-6035-4f11-a9ec-74272abbacb5
Sun, Jiong
09b7e4dd-30d3-4c3d-b156-5d3604d4ad64
12 January 2021
Leung, Woon Sau
73a8bf54-6035-4f11-a9ec-74272abbacb5
Sun, Jiong
09b7e4dd-30d3-4c3d-b156-5d3604d4ad64
Leung, Woon Sau and Sun, Jiong
(2021)
Policy uncertainty and customer concentration.
Production and Operations Management, 30 (5), .
(doi:10.1111/poms.13335).
Abstract
Using data involving customer-supplier relationships and a large sample of U.S. publicly listed firms, our study documents a negative and statistically significant relationship between economic-policy uncertainty and firms’ customer-base concentration. The negative relation is predominant in firms with higher inventory efficiency and those operating in competitive, high-R&D, and nondurable industries. Customer-base diversification is further shown to enhance firm performance during periods of increasing policy uncertainty, but not when policy uncertainty decreases. Overall, our evidence suggests that firms respond to increasing policy uncertainty by diversifying their customer base and such behavior contributes positively to firm performance.
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More information
Accepted/In Press date: 17 November 2020
e-pub ahead of print date: 8 December 2020
Published date: 12 January 2021
Keywords:
customer-base concentration, economic policy uncertainty, firm performance, customer-supplier relationships, customer-base diversification
Identifiers
Local EPrints ID: 484603
URI: http://eprints.soton.ac.uk/id/eprint/484603
ISSN: 1059-1478
PURE UUID: ba570e50-9609-47f8-b62d-1b3f457a904e
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Date deposited: 17 Nov 2023 18:00
Last modified: 18 Mar 2024 04:17
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Author:
Woon Sau Leung
Author:
Jiong Sun
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