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Reliance on major customers and product market competition

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  • Larkin, Yelena

Abstract

Although reliance on major customers has been growing over time, the literature has been largely silent on the determinants of customer base structure. This paper shows that low levels of product market competition in the customer industry is one important factor that can encourage supplier firms to establish relationship with major customers, and enhance existing ones. In support of the argument, we find that the fraction of suppliers’ total sales to major customers is positively associated with customer industry product market concentration. We argue that the recent increase in concentration of customer industries could have increased reliance on major customers.

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  • Larkin, Yelena, 2021. "Reliance on major customers and product market competition," Finance Research Letters, Elsevier, vol. 38(C).
    • Handle: RePEc:eee:finlet:v:38:y:2021:i:c:s154461231930474x
    DOI: 10.1016/j.frl.2020.101436
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    Cited by:

    1. Huang, Yichu & Fan, Yaoyao, 2022. "Risk along the supply chain: Geographic proximity and corporate risk taking," Finance Research Letters, Elsevier, vol. 50(C).
    2. Cui, Xin & Ji, Xinyuan & Meng, Wei & Song, Qi, 2023. "Product market competition and corporate advertising expenditure: Evidence from a natural experiment," Research in International Business and Finance, Elsevier, vol. 64(C).

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