TY - JOUR

T1 - The relational focus of small and medium sized actors’ understandings of supply chain finance (SCF)

AU - Phraknoi, Nichapa

AU - Busby, Jerry

AU - Stevenson, Mark

N1 - 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.

PY - 2022/8/12

Y1 - 2022/8/12

N2 - Purpose – This paper aims to investigate small and medium-sized upstream suppliers’ and downstreamdistributors’ 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, involving56 in-depth interviews with informants from small and medium-sized enterprises (SMEs), banks and subjectexperts in the United Kingdom (UK) and Thailand. A category structure for the data is developed. The findingsare 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 SCFarrangements. The former maintains independence between physical and financial supply chains, whereas thelatter causes them to be closely coupled or even entangled. The SCF adoption decisions of SMEs were based ona consideration of four related aspects: relationality, awareness, control and context. The authors demonstratethe 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 triadicSCF (TSCF), i.e. reverse factoring and distributor finance, need to understand that transitioning to suchschemes 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 tothe focal firm about their financial health and about the potential loss of control that might result fromentangling the physical and financial aspects of supply chains.Originality/value – This paper unpack the perspectives of both SME suppliers and distributors of large focalfirms in supply chains. These firms appear less concerned with the economic advantages (transaction costs) ofSCF and more concerned with the relational consequences or non-transactional costs of participation in a TSCFarrangement. The dyadic-triadic distinction provides a new and meaningful way of categorising SCFmechanisms, which also broadens the service triads’ literature from a focus on outsourcing services for a focalfirm’s customers to outsourcing financing for its suppliers or distributors. The paper also addresses gapsidentified by Gelsomino et al. (2016) regarding the need for a general theory of SCF, for empirically-basedholistic studies of SCF applications, and a tool for selecting SCF mechanisms

AB - Purpose – This paper aims to investigate small and medium-sized upstream suppliers’ and downstreamdistributors’ 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, involving56 in-depth interviews with informants from small and medium-sized enterprises (SMEs), banks and subjectexperts in the United Kingdom (UK) and Thailand. A category structure for the data is developed. The findingsare 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 SCFarrangements. The former maintains independence between physical and financial supply chains, whereas thelatter causes them to be closely coupled or even entangled. The SCF adoption decisions of SMEs were based ona consideration of four related aspects: relationality, awareness, control and context. The authors demonstratethe 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 triadicSCF (TSCF), i.e. reverse factoring and distributor finance, need to understand that transitioning to suchschemes 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 tothe focal firm about their financial health and about the potential loss of control that might result fromentangling the physical and financial aspects of supply chains.Originality/value – This paper unpack the perspectives of both SME suppliers and distributors of large focalfirms in supply chains. These firms appear less concerned with the economic advantages (transaction costs) ofSCF and more concerned with the relational consequences or non-transactional costs of participation in a TSCFarrangement. The dyadic-triadic distinction provides a new and meaningful way of categorising SCFmechanisms, which also broadens the service triads’ literature from a focus on outsourcing services for a focalfirm’s customers to outsourcing financing for its suppliers or distributors. The paper also addresses gapsidentified by Gelsomino et al. (2016) regarding the need for a general theory of SCF, for empirically-basedholistic studies of SCF applications, and a tool for selecting SCF mechanisms

KW - Supply chain finance

KW - Distributor finance

KW - Reverse factoring

KW - Service triads

U2 - 10.1108/IJOPM-03-2022-0170

DO - 10.1108/IJOPM-03-2022-0170

M3 - Journal article

VL - 42

SP - 1435

EP - 1466

JO - International Journal of Operations and Production Management

JF - International Journal of Operations and Production Management

SN - 0144-3577

IS - 9

ER -