| There is a longer history of marketization in western than China.Especially,the degree of marketization is lower in our country,so is the legal institutions and the development of factor market.It is very vital to protect contractual interests of firm when the legal is deficiency.Compared with market-based transactions with a lot of companies,there is more convenient communication with a small number of partners based on connected transactions.It is advantage for saving transaction costs and improving communication efficiency with limited partners.In addition,China has always been a "relational society",and the organization form of the society is mainly the network relationship community,which provides a fertile "soil" for the widespread existence of relational transactions in Chinese enterprises.It is one of the such transactions for supplier-firm partnership.The close relationship with suppliers takes some benefits: on the one hand,it can help firms to strengthen communication and cooperation with upstream companies;on the other hand,it can improve the efficiency of inventory management and reduce the procurement and negotiation cost.However,there is a dark side for firm with over relying on major suppliers.For example,Huawei and ZTE are get into trouble by failure supply of chip due to over depend on chip suppliers such Qualcomm.Regulators around world also pay attention to the risk from the big suppliers.The United States Auditing Standards No.59 and the International Auditing Standards No.570 require certified public accountants to assess the risks of sustainable operation brought by the supplier concentration.The CSRC(China Securities Regulatory Commission)require listed firms should disclose the name,order,purchase amount and proportions of top five suppliers because these suppliers represent “a significant concentration of risk.” The SEC under Regulation S-K Item 101 also has similar disclosure requirements.Companies apply for IPO listings will be rejected by the CSRC if there is excessive supplier concentration without rational reasons.In consequence,the impact of supplier concentration on the firm may be a "double-edged sword",which can have multiple effects on the enterprise.It is useful for researchers and manager for uncover the influence and mechanism of supplier concentration on the firm’s financial behavior.Corporate investment,as a financial decision,is an important way to gain profit and increase value,and is a necessary condition for the survival and development of enterprises.It is an important and hot topic for explore the factors of firm investment in the field of corporate finance by the researchers.The typical investment decisions of firms are cash holdings,financial investment and innovation investment.Cash is an asset that is widely used in the daily production and operation for firms,with strong liquidity and low profitability.Enterprises pay cash frequently for goods and services provided by suppliers.The decision of corporate cash holding is related with firm-supplier relationship.Under the background of a decline in margins in the traditional industry,more and more firms hold financial investments to obtain short-term profits and dispersed enterprise risk.Companies may be occupied by the supplier when firms over rely on big or major suppliers.It difficult to gain profit from the main business activities for firms.Alternatively,firms may tend to hold financial assets to obtain profit and spread risk.Therefore,the supplier relationship may exacerbate the trend of "moving from real to virtual".Innovation is the source of enterprise competitiveness,but it is a long investment period,return uncertainty,high risk of project.when companies over depend on major supplier,the suppliers obtain strong bargaining power,then it may occupy innovation resources and increase the risks of enterprise.Finally,the willingness of innovation ability may be weakened by the big suppliers.So,there is an impact between supplier relationships on corporate innovation.In view of the above,this paper explores the impact and mechanism among supplier concentration,firm investment(such as cash holdings,financial investment and R&D investment)and firm high-quality development.In order to systematic and comprehensive research,the idea and method of this paper is based on the background of relational society of our country,reviewing literatures and theories both the domestic and foreign,using empirical research method.This study fully reveals the internal mechanism of supplier concentration affects enterprise investment and high-quality development.It provides guides for the managers to improve method of management for supplier relationship,as well as for regulators to supervise risk of supplier relationship.This paper construct logical mainline of “supplier relationships-firm investment-high quality development”.It tests the effect and mechanism among supplier concentration,corporate investment and high-quality development employing a variety of empirical methods with the sample of Chinses listed firms from 2007 to 2018.The research objectives of this paper are mainly four.Firstly,it explores the impact of supplier concentration on enterprise investment including cash holdings,financial investment and R&D investment.Secondly,it uncovers the mechanism of supplier concentration on different enterprise investment.Thirdly,it studies the influence of supplier concentration on the high-quality development of enterprises through enterprise investment.Fourth,according to the research conclusions,it gives some guide about the supplier relationship for the managers and market regulators.Based on the above research,the main conclusions of this paper are as follows.First,supplier concentration has a significant impact on corporate investment.Specifically,the higher the supplier concentration,the higher the cash investment and financial investment;The higher the supplier concentration,the lower the corporate innovation investment.This conclusion shows that,although in theory,the supplier concentration is showing a “double-edged sword” effect.On the one side,the close relationship with big supplier can exert the “synergistic effect” of supply chain integration for the enterprise and reduce the enterprise cost;On the other hand,the “entrenchment effect” caused by the imbalance of relationship or even supply interruption leads to enterprise risk.However,our evidence show that the main effect is the “entrenchment effect” but nor“synergistic effect” brought by the supplier concentration.Therefore,the firm hold more cash in order to avoid risk,hold more financial investment due to the risk diversification,and invest less R&D activity because of superimposed risk from major suppliers.Second,there are different influencing mechanisms between supplier concentration and firm investment.Firms hold more cash when the supplier concentration is high due to the precautionary motivation.Supplier concentration intensifies financing constraints of firms.In order to prevent sudden payment demands of large suppliers,enterprises hold more cash.To spread risk from big supplier,the firm hold more financial investment due to its risk diversification and profitability function.Supplier concentration affects corporate innovation investment,because higher supplier concentration will increase enterprise procurement cost and enterprise risk,further weaken its internal and external financing ability,and thus inhibit R&D investment.The above conclusions indicate that the supplier concentration will bring certain risks to the enterprise.In order to prevent the high risks,the firm increases the demand for cash and financial investment,and reduces the innovation investment due to the high risk.Furthermore,the big supplier occupies the enterprise resources such as cash and trade credit,lead to cut down the innovation investment.Third,the supplier concentration has a negative impact on the corporate high-quality development.Specifically,the higher the supplier concentration is,the lower the corporate high-quality development is.Supplier concentration inhibits high-quality development because high supplier concentration increases cash holdings,financial investment and reduces innovation investment of enterprises,thus hindering high-quality development of enterprises.The conclusions show that the centralized supplier relationship has a resistance effect on the high-quality development of enterprises,and is not conducive to the long-term development and competitiveness for firms.High supplier concentration distorts the structure of firm resource allocation,forcing firms to choose a more short-sighted portfolio such as cash and financial assets,cutting R&D investment which is benefit for future development.In the business practice of Chinese enterprises,the concentrated supplier relationship is more manifested as "risk effect" rather than "synergistic effect",and the cooperation between enterprises and large suppliers needs to maintain the core competitiveness and avoid being choked by the throat.The main innovations of this paper are as follows:Firstly,this paper uncovers the impact of supplier-firm relationship on high-quality development.Previous studies mainly focus on the connotation,evaluation system,implementing paths of high-quality development.A emerge literature focuses on the influence factors of highquality development.But few researchers focus the factor of supplier relationship.This paper attempt to uncover the impact and mechanism between supplier concentration and high-quality development,and considering the role of firm investment between them.This study enriches the literature on the influence factor of high-quality development and provides theoretical basis and empirical evidence for the impact of supplier concentration.Second,this paper demonstrates the influence of supplier concentration on financial investment for the first time.The existence literatures mainly explore the factor of financial investment from the macro and micro perspective.It is unknow the impact of supplier concentration on financial investment.This paper answers this question by uncover the mechanism between supplier concentration and financial investment.The research enriches the factor of financial assets of firm from supplier angle of review,and confirmed the over-reliance on supplier relationships will lead to financialization of firms,exacerbate them “take off the real to virtual”.It gives new evidence for the motivation of firm financialization.Third,this paper proved that supplier concentration affects firm innovation through multi-layer mediating variables.The current literatures explore the impact of supplier concentration on the corporate R&D input or output,but only considering single layer mediating effect.However,there is a complexity influence between supplier concentration and innovation investment.It cannot enough uncover the mechanism between them if only considering the single acting path.This paper adopts chain mediating effect method to discuss the influence of the multi-level path between supplier concentration and innovation.It extends the literature about supplier concentration,digs mechanism about the supplier concentration and corporate innovation. |
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