PACIS 2019 Proceedings


Previous studies provide mixed insights on the relationship between supplier concentration and financial performance. To reconcile the conflicting perspectives, this study draws upon social capital theory and absorptive capacity literature to propose that IT-enabled absorptive capacity moderates the influence of supplier concentration on firm financial performance. Specifically, we distinguish IT-enabled potential absorptive capacity from IT-enabled realized absorptive capacity and examine their differential effects in moderating the supplier concentration-financial performance relationship. Using data collected from 908 manufacturing firms in two rounds, this study reveals that IT-enabled potential absorptive capacity positively moderates the supplier concentration-financial performance relationship whereas ITenabled realized absorptive capacity negatively moderates the relationship. Theoretical contributions and managerial implications of the study are discussed.