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

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.

Dynamic Outsourcing Development for Sustainable Competitive Advantage in a High-Tech Backend Semiconductor Equipment Firm

“…As the high-tech market is always a volatile and uncertain situation, insight or knowledge of the environment is important in outsourcing partners. To achieve an overall satisfaction of outsourcing, operational and financial performance should be advanced by the integration of factors in the market variables of sales and relationship, like customers and competitors [53,54]. The environment in outsourcing development is configured as supportive, cooperative, and responsible in a behavior for customers, and as aggressive and conservative in a behavior for competitors [55,56] (Table 3).…”

The Impact of Innovative Technology Exploration on Firm Value Sustainability: The Case of Part Supplier Management

“…Then, Apple has maintained sustainable competitive advantages by eliminating technical uncertainties and strategic uncertainties through sustaining innovation, making a better way rather than competing with other companies by giving an edge that gradually improves rather than by seeking for big changes. Based on the research of Son and Kim [15], the following hypotheses are used to examine the impact of Apple's disruptive innovation that created the smartphone market called "iPhone 2G" and sustaining innovation of iPhone 3G-iPhone X which have been released since then.…”

“…In the results of technology development, however, exploration technology has a more positive impact on performance than exploitation technology. Therefore, based on the research of Son and Kim [15], this study set the following hypotheses to examine the impact of exploitation and exploration technologies on the performance of the part supplier of the technology applied to the iPhone. Hypothesis 3.…”

“…In the existing research, new technology reflects both the process and the results of the technology search [30]. Based on the research of Son and Kim [15], technical data applied to Apple iPhone was sued as data, and the specific method of collection was as follows: First, we collected part supplier data based on the supplier list provided by Apple's annual report. Second, we obtained data based on the part supplier list disclosed by Apple.…”

“…Son and Kim [15] analyzed market responses to partner volatility of the part suppliers. Research results identified that the newly selected companies have the stronger innovative capacity and higher excess earning rate than that of re-selected companies.…”