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Financial Shocks and Firm Innovation in Supply Chain Networks

Author

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  • Emanuele Brancati

    (Dipartimento di Economia e Diritto, University of Rome, La Sapienza, 00185 Rome, Italy)

  • Raoul Minetti

    (Department of Economics, Michigan State University, East Lansing, Michigan 48824)

  • Susan Chun Zhu

    (Department of Economics, Michigan State University, East Lansing, Michigan 48824)

Abstract

We study the influence of supply chains on the transmission of financial shocks to firms’ innovation. Using matched Italian firm-bank data over the 2007–2017 period, we find that firms’ engagement in supply chains enhanced the resilience of innovation activities to the banking shock caused by the “twin financial crises” (Great Financial Crisis and sovereign debt crisis). The results suggest that, amid the banking shock, supply chains facilitated purchases of innovative intermediates through trade credit provision and helped to sustain firms’ joint research and development efforts. The estimates imply, however, that the support offered by supply chains did not extend to radical product advances.

Suggested Citation

  • Emanuele Brancati & Raoul Minetti & Susan Chun Zhu, 2026. "Financial Shocks and Firm Innovation in Supply Chain Networks," Management Science, INFORMS, vol. 72(6), pages 4715-4736, June.
    • Handle: RePEc:inm:ormnsc:v:72:y:2026:i:6:p:4715-4736
    DOI: 10.1287/mnsc.2023.03601
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