The effect of supply chain finance on sustainability performance: empirical analysis and fsQCA

Abstract

Purpose In the context of global economic downturn and intense competition, firms are increasingly resorting to supply chains to acquire capital support and achieve sustainability. This study aims to investigate the effect of supply chain finance (SCF) on corporate sustainability performance (CSP) and identifies SCF-related recipes for CSP. Design/methodology/approach Based on a sample of 1,038 firms that disclose CSP – namely, corporate financial performance (CFP) and environmental, social and governance performance (ESGP) – the authors use a quasi-replication method consisting of empirical analysis with fuzzy-set qualitative comparative analysis (fsQCA) to investigate SCF’s effects on CSP. Findings The authors find that SCF has a “doing well by doing good” effect on CSP. CFP can promote the positive effect of SCF and ESGP while ESGP’s positive effect on SCF and CFP is nonsignificant. In addition, heterogeneity tests show that SCF’s promoting effect on CSP is affected by high-low CFP and ESGP. The fsQCA results verify the empirical findings and reveal five SCF-related recipes for achieving high CSP. Research limitations/implications This study has the following two limitations. First, we do not consider how SCF affects CSP in different industries. There is a need to investigate whether industry heterogeneity changes SCF’s effects on CSP, especially in prominent industries, such as the energy industry, with its high susceptibility to ESGP, and the manufacturing industry, with its extensive application of SCF. It will be important to investigate these industries to better understand SCF’s role in sustainability. Second, we study the secondary supply chain – namely, core firm–suppliers and core firm–customers. The authors do not consider financial institutions (e.g. banks and guarantee institutions). SCF modes that include the participation of financial institutions, such as factoring financing and reverse factoring financing, cater more to the capital needs of diversified firms. In the future, studying specific industries that have made significant contributions to the application of SCF along with others that are more sensitive to environmental governance could better highlight the effect of SCF on sustainability and help supply chain managers understand the application value of SCF. Future research could also extend SCF participants into multiple roles to explore separate effects. Tracking financing demanders, fund providers and credit guarantors could capture SCF characteristics more comprehensively. Methodologically, it will be challenging to accurately measure SCF networks in terms of quantification. In future work, this could be performed with the help of artificial intelligence. Practical implications First, our findings indicate that SCF has a “doing well by doing good” effect on core firms. SCF can not only overcome the capital shortage of SMEs but also provide significant benefits to core firms. Second, our findings provide SCF-related recipes to help firms fulfil ESGP obligations without sacrificing CFP under the pressure to “do good.” The authors provide valuable insights and diverse recommendations to help supply chain managers, marketing executives and researchers adjust supply chain management strategies. Third, this work can guide executives in various fields to adopt SCF to achieve sustainability as a risk-mitigation strategy by means of marketing. Originality/value This study identifies better, more straightforward SCF-related recipes for CSP (consisting of CFP and ESGP) using a quasi-replication analysis that improves upon conventional methods such as regression analysis, which have limited power. The authors provide valuable insights and diverse recommendations to help managers pursue sustainable development. The findings point to practical guidelines and feasible solutions that can support well-founded operational strategic and management decision-making, which can enhance a firm’s competitiveness under uncertainty and a sluggish economy.

Analyzing rational decision‐making's effect: Empirical evidence from Green supply chain

“…effects, and empirically investigated the RDM's effects on environmental, social welfare, and sustainability in emerging economies. The results of the above two research methods are mutually verified, which improves the credibility of our findings (Wang et al, 2023).…”

“…By providing a quantitative approach, it enhances our understanding of development law and aids in making predictions. To enhance the robustness of results and improve the credibility of conclusions, the quasi replication method can be employed as well as (Wang et al, 2023). This method involves testing the validity of the model and replicating the analysis using different datasets or alternative methodologies.…”

“…Retailers, in the context of intense global competition, must prioritize the consideration of long-term benefits and sustainable development (DasGupta, 2022). This entails a constant focus on the long-term development and profitability of the firm (Wang et al, 2023). By taking into account long-term interests, retailers can ensure the maintenance of a competitive advantage in a fiercely competitive market and achieve sustained profitability through the formulation of long-term strategies and decisions.…”

“…According to the literature (Alexopoulos et al, 2018;Torugsa et al, 2013;Wang et al, 2023;Wijethilake, 2017) CSMAR. Additionally, we winsorize continuous variables at the 1st and 99th percentiles to deal with outliers and control their effect on the regression results.…”

Supplier selection among manufacturing companies based on their MSME partners’ supply chain finance adoption capability using BWM and VIKOR

“…Studies such as Hofmann et al (2019), Vu et al (2022) and Bi et al (2022) also found that SCF significantly affects supply chain financing and organisational performance. Recent studies also established a relationship between SCF and corporate sustainability performance (Wang et al , 2023). Factors such as collaboration, digitisation, information sharing and financial institutions enable better SCF adoption, which eventually leads to supply chain effectiveness (Beka Be Nguema et al , 2020).…”