A Study Of The Measurement,Drivers And Economic Effects Of The Bullwhip Effect

The bullwhip effect is a phenomenon of demand variation amplification in the supply chain.The bullwhip effect is a significant phenomenon in the supply chain.Its existence seriously affects the operational efficiency of the supply chain,increases enterprise costs and supply chain management difficulties,and affects enterprise profitability.In the era of global supply chain restructuring,reducing the corporate bullwhip effect is a key strategy for coordinating the supply chain and significantly affects the degree of modernization of China’s industrial supply chain.The corporate bullwhip effect reflects the efficiency of internal supply chain management,whereas measuring the industry-or supply chain-level bullwhip effect may result in its underestimation.Therefore,we select the corporate bullwhip effect for our research.Most existing research is based on the perspective of management science and uses mathematical modelling,simulation or game theory methods to analyse the factors affecting the bullwhip effect.This approach provides an important theoretical basis for enterprises to mitigate this effect and proposes a variety of countermeasures to mitigate the effect in enterprises.Although the enterprise bullwhip effect has been significantly improved,this problem still plagues enterprises.Therefore,further exploring the issue of the corporate bullwhip effect in depth from other perspectives is necessary.The research object of this paper is the corporate bullwhip effect.The corporate bullwhip effect refers to the phenomenon in which demand information is amplified over time in a single enterprise along the upstream and downstream links of the internal supply chain,such as sales,planning,production,and purchasing,causing fluctuations in the production volume of the enterprise to be much larger than fluctuations in the demand volume and overflowing to external enterprises.We comb through existing studies and identify the following four aspects that need to be further studied:(1)the characteristics of the degree of the corporate bullwhip effect and the differences in industries,nature of property rights and regions need to be clarified;(2)the centrality,structural holes and core-edge chain network characteristics of the corporate bullwhip effect have not been sufficiently demonstrated;(3)the driving role of the enterprise’s internal and external factors on the corporate bullwhip effect has not been empirically tested,especially the driving role of external factors on the corporate bullwhip effect,which has rarely been studied in depth;moreover,research on the heterogeneity of different industries,the nature of property rights and regions is lacking;and(4)the extent of the impact of the corporate bullwhip effect on the economic consequences of corporate performance,market growth,corporate efficiency,industry heterogeneity,nature of property rights and regions needs to be further verified.On the basis of combining the relevant concepts and theories,we use real enterprise data to measure the corporate bullwhip effect and adopt empirical research methods such as kernel density estimation,Dagum’s Gini coefficient method,social network analysis,panel fixed effect model,and panel Tobit model to portray the horizontal and chain network characteristics of this effect,clarify the driving roles of each factor on the effect,and explore its impact on enterprises’ business activities.Based on the research in this paper,the following conclusions are obtained.First,the corporate bullwhip effect fluctuates downwards;however,its impact remains significant.Over time,the corporate bullwhip effect has displayed a small,fluctuating downwards trend,more than half of the corporate bullwhip effect remains significantly greater than 1,the kernel density estimation of the effect also shows a small,downwards trend,and there is no multileveling – presenting a trend of increasing concentration.From the industry point of view,the enterprise bullwhip effect is significant in most industries and is significantly higher in the manufacturing industry than in other industries,which mainly originates from intragroup disparities within the manufacturing industry.The disparities in the bullwhip effect between the manufacturing and nonmanufacturing industries fluctuate downwards and display a rising trend in concentration.The differing nature of property rights substantially affects the enterprise bullwhip effect and arises mainly from intragroup disparities in property rights of the same nature,whereas the intergroup gap contribution rate accounts for a small percentage.The bullwhip effect is more significant for state-owned than nonstateowned enterprises.From a regional perspective,the bullwhip effect is significant in the eastern,central and western regions,with regional disparities mainly stemming from intraregional disparities in the eastern,central and western regions and interregional crossover contributions.The concentration of the enterprise bullwhip effect in the eastern and central regions tends to increase but also tends to decrease in the western region.Moreover,the centre of the cluster of the enterprise bullwhip effect shows clustering characteristics greater than 1.Second,the corporate bullwhip effect has centrality,structural holes and core–edge chain-network characteristics.According to the results of the chain-network characterization,there is no absolute core in the supply chain network of listed companies,and the difference in centrality among individuals causes an increase in the bullwhip effect in the supply chain network.Individual firms’ differences in structural holes have an impact on their bullwhip effect.For closer links among enterprises,higher action effects,increasing strength of the links and declines in the degree of restrictions,the corporate bullwhip effect exhibits a certain degree of decline.The greater the difference in the structural hole index between enterprises is,the greater is the bullwhip effect in the supply chain network.Declines in the enterprise core degree and the bullwhip effect also show a decreasing trend.The greater the difference in the core degree between two enterprises is,the greater is the enterprise’s bullwhip effect.Third,corporate operations management,managers,supply and demand uncertainty,economic policy uncertainty and market competition factors significantly drive the corporate bullwhip effect.The internal control index,as a proxy variable for corporate operations management,has a significant negative impact on the corporate bullwhip effect.Corporate governance level and managerial competence serve as proxy variables for managers.Corporate governance and managerial abilities have significant driving effects on the corporate bullwhip effect,and the interaction of the two can effectively reduce the effect.Demand and supply uncertainty have a significant positive driving effect on the corporate bullwhip effect.Greater economic policy uncertainty results in a more significant corporate bullwhip effect.A stronger market monopoly results in a higher corporate bullwhip effect.The level of marketisation and managerial competence have an interaction effect.Industry,property rights and regional heterogeneity exist in the impact of the drivers on firms’ bullwhip effect.Managerial competence and demand and supply uncertainty drive the presence of the bullwhip effect more significantly for manufacturing firms than for other firms.Economic policy uncertainty has a more significant impact on the corporate bullwhip effect in the western region.Improving internal controls and managerial competence has a greater impact on firms’ bullwhip effect in that region.Fourth,the corporate bullwhip effect has a significant adverse effect on firm performance,market growth and firm efficiency and is heterogeneous across industries,ownership properties and regions.The corporate bullwhip effect has a significant negative impact on returns on total assets,and this impact is more significant for manufacturing and state-owned enterprises than for other enterprises.The corporate bullwhip effect has a significant negative impact on market growth,with no significant difference in impact on different industries,the nature of property rights or regions.The corporate bullwhip effect has a significant negative impact on corporate efficiency that is more significant on state-owned enterprises and enterprises in the eastern region than on other enterprises.The innovations and features of this paper are mainly manifested as follows.First,we provide a systematic and comprehensive analysis of the level and chain-network structural characteristics of the bullwhip effect,taking into account the heterogeneous characteristics of industries,the nature of property rights and regions,making up for the shortcomings of modelling and simulation studies.Second,we identify the impact of different drivers on the corporate bullwhip effect and provide empirical evidence for its governance effect.Third,we empirically test the impact of the corporate bullwhip effect on business operations and enrich the research on its economic consequences on business operations.