Supply Network Structure and Firm Performance: Evidence From the Electronics Industry

Although research in the supply chain area inherently involves the study of supply networks, the majority of existing work is limited to utilizing a dyadic approach in examining relationships between buyer and supplier firms. However, real-world supply networks are characterized by a complex network of interfirm relationships and not just dyads. Thus, it is important to examine how structural relationships among supply chain partners impact the performance of firms using a network analytic lens. This paper examines the influence of structural characteristics of a firm's supply network on its performance. Using a dataset of 114 firms consisting of firm-level variables drawn from multiple sources in the electronics industry, we investigate two important structural characteristics of the supply network-structural prominence, depicting the centrality of a firm's position in the supply network, and density, characterizing the interconnectedness among firms in a supply network. Using a robust regression approach, we find that both the structural prominence of firms and the density of the supply networks, along with the interaction between them, positively influence the performance of firms as measured by the firm's asset utilization, cost performance, and operational efficiency. We discuss both theoretical and practical implications of our findings, and relate the results to managerial significance.