Business Partner Concentration, Equity Nature And Firm Performance

In today’s "Made in China 2025" Strategy, as well as the background of the rapid development of Internet, contacts and links between enterprises are more closely and sharing of information resources comes into a more effective and extensive stage. In order to gain a competitive advantage to a greater extent, manufacturing enterprises must strengthen win-win cooperation between different enterprises and develop business partnerships in order to ensure the healthy development of enterprises. Most of the research results show that the closer business partnership, the more conducive to enhance corporate performance. However, some studies have shown that the more focused business partners’ concentration, the stronger bargaining power of suppliers and customers, and thus it is not conducive to enhance corporate performance.So in today’s background, what has happened of manufacturing companies’ business partnership? What is it that the affect of business partner concentration on enterprise performance? What is the impact on the different nature of equity relationship between business partners and corporate performance? So this paper uses the Shanghai Stock Exchange listed companies manufacturing data from 2008--2014 and studies the influence of business partners concentration on enterprise performance from the concentration of suppliers and customers, and analysis the effects of different nature of equity on the relationship between business partner concentration and corporate performance. The results show that(1) There is a significant negative correlation between the concentration of suppliers and customer concentration and corporate performance.(2) There is not a nonlinear relationship between supplier concentration and corporate performance, but the performance between customer concentration and corporate performance is a positive U-shaped relationship. With the improvement of customer concentration, corporate performance decreases. when the customer concentration and bargaining power tends to a certain extent, corporate performance to reach the worst, then, as to further enhance customer concentration, and corporate performance on the rise trend.(3)Relationship compared to non-state-owned holding companies, state-owned holding enterprises’ supplier concentration and firm performance are weakened, but there is not much difference between the correlation of customer concentration and firm performance. Finally, this paper presents a number of management recommendations and future research directions.