Does supply chain network centrality affect firm cost stickiness?

Abstract

This study constructs a supply chain network for Chinese listed firms from 2009 to 2021 and investigates the influence of the firm's supply chain network position on cost stickiness. Our findings reveal that the supply chain network centrality exacerbates cost stickiness by increasing adjustment costs and agency problems, this effect applies to firms in both industrial and services sectors, and remains valid whether before and after the COVID-19 pandemic. Furthermore, high-quality internal controls and external audits can mitigate the effect of supply chain network centrality on cost stickiness. This study enriches the determinants of cost stickiness literature by providing evidence at the supply chain network level.