IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v85y2025ipds1544612325014254.html

Centralized customers hurting employees? Customer concentration and enterprise employment

Author

Listed:
  • Zhang, Yue
  • Wang, Dengquan

Abstract

This study investigates the effect of customer concentration on enterprise employment, utilizing data from Chinese listed firms from 2009 to 2023. The findings indicate that heightened customer concentration significantly constrains enterprise employment. Further analysis reveals that increasing financing constraints, rising operational risks and declining profitability are the three mechanisms through which customer concentration affects enterprise employment. This inhibitory effect is more pronounced in small scale enterprises and during periods characterized by high industry competition and rising economic policy uncertainty. This paper contributes importantly to the literature by integrating corporate finance and labor economics to assess the impact of customer concentration.

Suggested Citation

  • Zhang, Yue & Wang, Dengquan, 2025. "Centralized customers hurting employees? Customer concentration and enterprise employment," Finance Research Letters, Elsevier, vol. 85(PD).
    • Handle: RePEc:eee:finlet:v:85:y:2025:i:pd:s1544612325014254
    DOI: 10.1016/j.frl.2025.108170
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612325014254
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.108170?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Hengmiao Bao & Yushuang Li & Jiaoliang Jiang, 2024. "The employment effects of short selling: evidence from China," The European Journal of Finance, Taylor & Francis Journals, vol. 30(13), pages 1490-1519, September.
    2. Kai Wai Hui & Chuchu Liang & P. Eric Yeung, 2019. "The effect of major customer concentration on firm profitability: competitive or collaborative?," Review of Accounting Studies, Springer, vol. 24(1), pages 189-229, March.
    3. Lai, Shaojie & Chen, Lihan & Wang, Qing Sophie & Anderson, Hamish D., 2023. "Bank competition and corporate employment: Evidence from the geographic distribution of bank branches in China," Journal of Banking & Finance, Elsevier, vol. 154(C).
    4. Campello, Murillo & Gao, Janet, 2017. "Customer concentration and loan contract terms," Journal of Financial Economics, Elsevier, vol. 123(1), pages 108-136.
    5. Zheng, Siyu & Zhang, Qihao & Zhang, Pengdong, 2023. "Can customer concentration affect corporate ESG performance?," Finance Research Letters, Elsevier, vol. 58(PB).
    6. Liu, Guanchun & Liu, Yuanyuan & Ye, Yongwei & Zhang, Chengsi, 2021. "Collateral menus and corporate employment: Evidence from China's Property Law," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 686-709.
    7. B. Korcan Ak & Panos N. Patatoukas, 2016. "Customer-Base Concentration and Inventory Efficiencies: Evidence from the Manufacturing Sector," Production and Operations Management, Production and Operations Management Society, vol. 25(2), pages 258-272, February.
    8. Matts Rosenberg, 2004. "Firm risk, investment, and employment growth," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 28(2), pages 164-184, June.
    9. Lee, Sang Mook & Jiraporn, Pornsit & Song, Hakjoon, 2020. "Customer concentration and stock price crash risk," Journal of Business Research, Elsevier, vol. 110(C), pages 327-346.
    10. Dhaliwal, Dan & Judd, J. Scott & Serfling, Matthew & Shaikh, Sarah, 2016. "Customer concentration risk and the cost of equity capital," Journal of Accounting and Economics, Elsevier, vol. 61(1), pages 23-48.
    11. Cao, Xiyang & Ni, Jian & Wang, Fei & Xu, Yue, 2023. "Does customer concentration affect corporate risk-taking? Evidence from China," Finance Research Letters, Elsevier, vol. 58(PA).
    12. Caggese, Andrea & Cuñat, Vicente & Metzger, Daniel, 2019. "Firing the wrong workers: Financing constraints and labor misallocation," Journal of Financial Economics, Elsevier, vol. 133(3), pages 589-607.
    13. Ni, Jian & Cao, Xiyang & Zhou, Wei & Li, Jiali, 2023. "Customer concentration and financing constraints," Journal of Corporate Finance, Elsevier, vol. 82(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wei, Yufen & Tang, Jinghua & He, Hongbo & Wu, Chanjun & Lin, Muyangzi & Xie, Haonan, 2025. "Customer concentration and corporate greenwashing," Research in International Business and Finance, Elsevier, vol. 79(C).
    2. Yu, Xiaojun & Li, Qiang & Zhang, Lin, 2024. "Major government customer and corporate environmental responsibility: Evidence from China," Journal of Business Research, Elsevier, vol. 183(C).
    3. Zhang, Shushan & Gu, Cheng & Zhang, Peiwen, 2025. "Alleviating dependence: High-speed rail opening and firms' supply chain dependence," Transport Policy, Elsevier, vol. 167(C), pages 116-129.
    4. Mei Cheng & Jacob Jaggi & Spencer Young, 2022. "Customer concentration of targets in mergers and acquisitions," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 49(7-8), pages 1314-1355, July.
    5. Chang, Zhenghao & Zhou, Hang & Ruan, Mengyu & Li, Qin, 2025. "When major customers matter: customer concentration and ESG rating disagreement," Journal of Contemporary Accounting and Economics, Elsevier, vol. 21(3).
    6. Agnes C. S. Cheng & Wenli Huang & Shaojun Zhang, 2020. "Major government customer and management earnings forecasts," Frontiers of Business Research in China, Springer, vol. 14(1), pages 1-20, December.
    7. Zhu, Minghao & Yeung, Andy C.L. & Zhou, Honggeng, 2021. "Diversify or concentrate: The impact of customer concentration on corporate social responsibility," International Journal of Production Economics, Elsevier, vol. 240(C).
    8. Li, Na & Li, Guo & Xue, Jing, 2025. "Does ESG protect firms equally during crises? The role of supply chain concentration," Omega, Elsevier, vol. 130(C).
    9. Chen Chen & Ting‐Chiao Huang & Mukesh Garg & Mehdi Khedmati, 2021. "Governments as customers: Exploring the effects of government customers on supplier firms’ information quality," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(9-10), pages 1630-1667, October.
    10. Su, Kun & Zhao, Yan & Wang, Yinghui, 2024. "Customer concentration and corporate financialization: Evidence from non-financial firms in China," Research in International Business and Finance, Elsevier, vol. 68(C).
    11. Haomin Zhang & Ci Zhang & Zhijun Lin & Di Fan, 2025. "Major Customer Reliance and SG&A Cost Sensitivity," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(3), pages 2609-2625, September.
    12. Jyun‐Ying Fu, 2023. "Customer concentration and corporate charitable donations: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 545-561, January.
    13. Chatjuthamard, Pattanaporn & Jiraporn, Pornsit & Lee, Sang Mook & Sarajoti, Pattarake, 2024. "Customer concentration, managerial risk aversion, and hostile takeover threats," The Quarterly Review of Economics and Finance, Elsevier, vol. 95(C), pages 268-279.
    14. Dong, Yizhe & Li, Chang & Li, Haoyu, 2021. "Customer concentration and M&A performance," Journal of Corporate Finance, Elsevier, vol. 69(C).
    15. Zhang, Jiping & Mo, Haimiao & Hu, Zhijian & Zhang, Tianjiao, 2024. "The effect of stability and concentration of upstream and downstream relationships of focal firms on two-level trade credit," International Journal of Production Economics, Elsevier, vol. 270(C).
    16. Di Gao & Yuan Zhao & Jiangming Ma, 2023. "How Does Supply Chain Information Disclosure Relate to Corporate Investment Efficiency? Evidence from Chinese-Listed Companies," Sustainability, MDPI, vol. 15(8), pages 1-22, April.
    17. Chen, Xiao & Dai, Narisa Tianjing & Liu, Leo Jiahe, 2025. "Audit implications of major customer diversity," Journal of Contemporary Accounting and Economics, Elsevier, vol. 21(2).
    18. Mahla Afghahi & Farzaneh Nassirzadeh & Davood Askarany, 2024. "Exploring the impact of customer concentration on stock price crash risk," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    19. Chatjuthamard, Pattanaporn & Kijkasiwat, Ploypailin & Jiraporn, Pornsit & Lee, Sang Mook, 2023. "Customer concentration, managerial risk aversion, and independent directors: A quasi-natural experiment," The Quarterly Review of Economics and Finance, Elsevier, vol. 89(C), pages 358-368.
    20. Tanveer Ahsan & Sultan Sikandar Mirza & Ammar Ali Gull & Muhammad Ansar Majeed, 2023. "How to deal with customer and supplier concentration to attain sustainable financial growth? The role of business strategy," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4600-4619, November.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:85:y:2025:i:pd:s1544612325014254. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.