The relational focus of small and medium sized actors’ understandings of supply chain finance (SCF)

Phraknoi, Nichapa and Busby, Jerry and Stevenson, Mark (2022) The relational focus of small and medium sized actors’ understandings of supply chain finance (SCF). International Journal of Operations and Production Management, 42 (9). pp. 1435-1466. ISSN 0144-3577

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Purpose – This paper aims to investigate small and medium-sized upstream suppliers’ and downstream distributors’ understandings of supply chain finance (SCF) arrangements and their decisions to adopt such schemes. Design/methodology/approach – In this paper grounded theory-informed methods are employed, involving 56 in-depth interviews with informants from small and medium-sized enterprises (SMEs), banks and subject experts in the United Kingdom (UK) and Thailand. A category structure for the data is developed. The findings are then examined systematically from both a transaction cost economics (TCE) and non-TCE perspective. Findings – SME members made sense of SCF through a core distinction between dyadic and triadic SCF arrangements. The former maintains independence between physical and financial supply chains, whereas the latter causes them to be closely coupled or even entangled. The SCF adoption decisions of SMEs were based on a consideration of four related aspects: relationality, awareness, control and context. The authors demonstrate the limits of TCE in explaining the findings, leading to a proposed combined theory of the transactional and, importantly, non-transactional influences on how SMEs make decisions about SCF. Practical implications – Focal firms wanting their SME suppliers and distributors to participate in triadic SCF (TSCF), i.e. reverse factoring and distributor finance, need to understand that transitioning to such schemes involves the unwinding of existing financing arrangements, which may be problematic for SMEs. Moreover, it is important to be aware of SMEs’ concerns, such as about what accessing TSCF might signal to the focal firm about their financial health and about the potential loss of control that might result from entangling the physical and financial aspects of supply chains. Originality/value – This paper unpack the perspectives of both SME suppliers and distributors of large focal firms in supply chains. These firms appear less concerned with the economic advantages (transaction costs) of SCF and more concerned with the relational consequences or non-transactional costs of participation in a TSCF arrangement. The dyadic-triadic distinction provides a new and meaningful way of categorising SCF mechanisms, which also broadens the service triads’ literature from a focus on outsourcing services for a focal firm’s customers to outsourcing financing for its suppliers or distributors. The paper also addresses gaps identified by Gelsomino et al. (2016) regarding the need for a general theory of SCF, for empirically-based holistic studies of SCF applications, and a tool for selecting SCF mechanisms

Item Type:
Journal Article
Journal or Publication Title:
International Journal of Operations and Production Management
Additional Information:
This article is (c) Emerald Group Publishing and permission has been granted for this version to appear here. Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.
Uncontrolled Keywords:
?? supply chain financedistributor financereverse factoringservice triadsstrategy and managementdecision sciences(all)management of technology and innovation ??
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Deposited On:
10 Jun 2022 12:00
Last Modified:
30 Apr 2024 00:13