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Does Partner Volatility Have Firm Value Relevance? An Empirical Analysis of Part Suppliers

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  • Insung Son

    (Department of Management, Gyeongsang National University, Jinjudae-ro 501, JinJu 52828, Korea)

  • Sihyun Kim

    (Department of Logistics, Korea Maritime and Ocean University, Busan 49112, Korea)

Abstract

Considering the lifecycle of products, firms are releasing new products through diversified strategic partnerships via the global supply chain. As the uncertainty about the future increases and strategic partnership grows more important, part suppliers are becoming more and more significant in assessing firm value. From the perspective of the signaling effect, this study analyzed the impact of partner volatility (new partner, old partner, revocation partner) on firm value in terms of global supply chain management. Regarding both Apple and Samsung which have bisected the premium smart phone market, research results reveal that companies eliminated from partnership selection are found to show negative signaling effect, and the newly selected companies have the stronger innovative capacity and higher signaling effect of higher excess earning rate than that of re-selected companies. The findings indicate that the partner volatility of partner companies work as a reliable investment signal for investors to recognize as an investment indication, contributing to firm value. In particular, it is meaningful to confirm that a new partner’s differentiated R&D capacity is a key factor of new product launching and a significant variable capable of determining a firm’s survival in the smart phone market.

Suggested Citation

  • Insung Son & Sihyun Kim, 2018. "Does Partner Volatility Have Firm Value Relevance? An Empirical Analysis of Part Suppliers," Sustainability, MDPI, vol. 10(3), pages 1-19, March.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:3:p:736-:d:135140
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    Cited by:

    1. Hyun-Joon Jo & Timothy Connerton & Hyun-Jung Kim, 2019. "Dynamic Outsourcing Development for Sustainable Competitive Advantage in a High-Tech Backend Semiconductor Equipment Firm," Sustainability, MDPI, vol. 12(1), pages 1-13, December.
    2. Insung Son & Sihyun Kim, 2021. "Is Establishing a New Partnership Useful Information for Investors in the Smartphone Supply Market?," Sustainability, MDPI, vol. 13(10), pages 1-10, May.
    3. Mu-Hsin Chang & James J. H. Liou & Huai-Wei Lo, 2019. "A Hybrid MCDM Model for Evaluating Strategic Alliance Partners in the Green Biopharmaceutical Industry," Sustainability, MDPI, vol. 11(15), pages 1-20, July.
    4. Insung Son & Sihyun Kim, 2022. "Supply Chain Management Strategy and Capital Structure of Global Information and Communications Technology Companies," Sustainability, MDPI, vol. 14(3), pages 1-13, February.
    5. Insung Son & Sihyun Kim, 2018. "Mobile Payment Service and the Firm Value: Focusing on both Up- and Down-Stream Alliance," Sustainability, MDPI, vol. 10(7), pages 1-16, July.
    6. Insung Son & Jinsu Kim & Gwijeong Park & Sihyun Kim, 2018. "The Impact of Innovative Technology Exploration on Firm Value Sustainability: The Case of Part Supplier Management," Sustainability, MDPI, vol. 10(10), pages 1-17, October.

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