The impacts of supply chain finance initiatives on firm risk: evidence from service providers listed in the US

Purpose This study empirically investigates how supply chain finance (SCF) initiatives together with different firm capabilities and resources (i.e. information technology (IT) capability, operational slack and political connections) affect the financial risk of service providers. Design/methodology/approach This study collects secondary longitudinal data to test for a direct impact of SCF initiatives on service providers' financial risk. It further investigates the moderating effects of the service provider's IT capability, operational slack and political connections. Additional tests and analytical strategies are performed to ensure the robustness of the results. Findings The findings indicate that SCF initiatives help service providers mitigate financial risk. The risk reduction is greater for service providers with higher IT capability, operational slack and political connections, but the last factor applies only to multinational corporations, not domestic companies. Research limitations/implications The data used in this research is limited to SCF service providers publicly listed in the United States, which may restrict the generalisability of the findings. Nonetheless, the research urges scholars to focus more on the financial risk implications of SCF in different market contexts. Practical implications This study encourages service providers to embrace the power of SCF initiatives for mitigating financial risk and allows them to evaluate their SCF investments in light of different firm capabilities and resources. Originality/value This is the first study investigating the impacts of SCF initiatives and various firm capabilities and resources on service providers' financial risk. The empirical findings provide important implications for future research and practices.