Moderating Role of Financing Constraints on the Influence of Supply Chain Concentration and Strategic Deviation on Firm Performance through Trade Credit Financing: Evidence from Chinese Listed Manufacturing Companies

Abstract

This research aims to investigate: 1) the mediating role of trade credit financing between supply chain concentration and strategic deviation on firm performance and 2) the moderating role performed by financing constraints, including the moderated mediation effects. The samples consisted of 1,357 manufacturing companies listed on the Chinese stock exchange from 2016 to 2021, resulting in a total of 7,488 firm-year observations. The data were collected from the Chinese CSMAR database and the annual financial reports. The statistical methodologies employed for analysis consist of descriptive statistics, univariate analysis, and multivariate regression analysis at a statistical significance level of .05. The research results revealed that: 1) the supplier concentration affects firm operating performance (gross profit margin: GPM) through trade credit financing from suppliers, 2) the customer concentration affects firm financial performance (return on assets: ROA) through trade credit financing from customers, and 3) the strategic deviation impacts firm financial performance (ROA) through trade credit financing from suppliers. Moreover, the study revealed the moderating effect of financing constraints on the relationship between customer concentration and trade credit financing, as well as its moderated mediation on trade credit financing.