Reduce supply chain financing risks through supply chain integration: dual approaches of alleviating information asymmetry and mitigating supply chain risks

Abstract

PurposeInformation asymmetry and poor solvency caused by uncertainties in supply chains are the root causes of supply chain financing risks (SCFR). The purpose of this paper is to explore the effect of supply chain integration on reducing SCFR by incorporating the mechanisms of information sharing and controlling supply chain risks (SCR).Design/methodology/approachThis paper proposes hypothesis to discuss the impact of integration on SCFR and the mediating roles of alleviating information asymmetry and mitigating SCR, aiming at discovering factors and mechanisms to reduce SCFR. The research model was validated by applying structural equation modeling on survey data from 321 Chinese small and medium-sized enterprises (SMEs).FindingsIntegration significantly reduces SCFR by dual approaches of information sharing and mitigating SCR, confirming that alleviating information asymmetry to reach information transparency and controlling SCR to reduce uncertainties facilitate less SCFR.Research limitations/implicationsSMEs should enhance integration capability to reduce SCFR as it greatly influences the evaluation of financial service providers on SMEs and the sustainable financing capacity of SMEs. Additionally, any other methods that can improve information sharing and reduce SCR should be attached if possible.Originality/valueThis study represents a pioneering attempt to analyze the impact of integration on reducing SCFR by exploring the specific mechanisms of alleviating information asymmetry and mitigating SCR. Meanwhile, few prior empirical studies have highlighted the importance of SCFR.