Unravelling the impact of performance feedback on supplier concentration: the moderating role of competitive intensity

Purpose Drawing upon the behavioral theory of the firm (BTOF) and agency theory, this study examines how performance feedback influences a firm's supplier concentration and how this effect is further moderated by the competitive intensity of the environment in which the firms operate. Design/methodology/approach Using data comprising 14,652 firm-year observations from 2,512 Chinese listed firms over the period 2008–2019, we tested our research model using fixed-effect regression. To address endogeneity concerns, we employed Heckman's two-stage selection model. We also conducted several robustness tests, including replacing social performance with historical performance and using return on equity (ROE) instead of return on assets (ROA) to calculate performance feedback. In addition, given the potential time persistence of supplier concentration, we applied generalized method of moments (GMM) estimation to account for dynamic panel bias. Findings This study finds a negative relationship between negative performance feedback and supplier concentration, and a positive relationship between positive performance feedback and supplier concentration. Furthermore, competitive intensity mitigates the negative relationship between negative performance feedback and supplier concentration but has no significant effect on the relationship between positive performance feedback and supplier concentration. Originality/value Grounded in the BTOF and agency theory, our study shifts the focus from static analyses of how supplier concentration affects firm performance to an examination of how performance feedback drives dynamic adjustments in supplier concentration. By further introducing competitive intensity as a contingency factor in these relationships, our study contributes to the operations and supply chain management (OSCM) literature by providing a comprehensive understanding of how different types of performance feedback influence supplier concentration under varying environmental conditions.