Supply chain network, information sharing and SME credit quality

Abstract

Purpose – The purpose of this paper is to examine the effect of small and medium enterprises (SMEs)’ supply chain network on influencing credit quality, or more specifically, whether bridging tie (structural network) or strong tie (relational network) of SMEs in the supply chain can improve the availability of equity and debt capital through information sharing. Design/methodology/approach – A survey was conducted in manufacturing industry in China and 208 valid questionnaires were used to test all the hypotheses. The data were then analyzed by employing partial least squares path modeling. Findings – The results suggest that both strong tie and bridging tie of SMEs can lead to a positive effect on information sharing in supply chain, which can further enhance the credit quality for SMEs. However, without information sharing, the strong tie has not significant influence on SMEs’ credit quality, while bridging tie can directly impact on credit quality. Originality/value – Despite their crucial role in sustaining national economies, SMEs are beset by the critical constraint of risk-free financing. Based on a survey, this research finds that the credit quality of SMEs is affected by two important factors: one concerns information sharing in supply chain and the other relates to the attributes of SMEs’ supply chain network. This study implies that a SME may have a financing advantage for better embedding in the supply chain network, but different effects will be experienced according to constraints associated with information asymmetry in the supply chain.