Insights from lower-tier ICT suppliers: How network centrality in multi-tier supply chain relationships affects buyer financial performance

Information and communication technology (ICT) outsourcing to suppliers has the potential to enhance buyers' product innovation and overall performance. However, the impact of technology outsourcing to lower-tier suppliers on buyers' financial performance in multi-tier supply chain networks remains unclear. Unlike prior dyadic studies that focus on a buyer-tier1 supplier perspective, our study extends the analytical scope to encompass buyer, tier-1, and tier-2 ICT supplier triads using multi-tier supply network data from Capital IQ. Building on existing literature indicating that a buyer's betweenness centrality negatively affects its financial performance, we further find that tier-1 suppliers' betweenness centrality also exhibits a negative relationship with buyers' financial performance. In addition, we provide the empirical evidence that a buyer's timely supplier payment amplifies the positive effect of buyer degree centrality on its financial performance, while alleviating the positive effect of tier-1 suppliers' degree centrality on buyers' financial performance. Interestingly, timely supplier payment negatively moderates the association between a buyer's closeness centrality and its financial performance, but positively moderates the corresponding association between tier-1 supplier closeness centrality and buyer financial performance. Our empirical analysis advances theoretical understanding of lower-tier suppliers and sheds light on the bridging role of tier-1 suppliers in the literature of multi-tier supply chain relationships. These findings highlight the benefits of technology-enabled multi-tier supply network structures and their interactions with the buyer-tier1 supplier relationships. This study also provides practical insights for firms to improve financial outcomes through strategic ICT outsourcing to multi-layer suppliers.