THE MODERATING ROLE OF HORIZONTAL COMPLEXITY IN THE SUPPLIER DEPENDENCE-FINANCIAL PERFORMANCE
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This study examines the moderating effect of a focal firm's horizontal complexity on the relationship between supplier dependence and the focal firm's financial performance. Drawing upon Transaction Cost Economics (TCE) and Resource Dependence Theory (RDT), we propose a nuanced model that integrates these theoretical perspectives to explore the strategic interplay between supplier management and supply chain configuration. We used the Bloomberg SPLC dataset of supply chain dependencies in U.S. tech firms in order to run our results. We applied fixed effects models to assess how supplier dependence and horizontal complexity impact financial performance, controlling for firm-specific factors. Our findings reveal that horizontal complexity significantly moderates the positive relationship between supplier dependence and financial performance, suggesting that firms with greater supplier base diversity can leverage their dependence on suppliers more effectively to enhance financial outcomes. This research contributes to the strategic management and supply chain literature by providing empirical evidence on the conditional effects of supplier relationships on firm performance, highlighting the importance of managing horizontal complexity in optimizing these effects. The study offers valuable insights for practitioners on the strategic balancing of supplier dependence and supply chain structure to achieve superior financial performance.
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