Document Type
Article
Publication Date
4-2024
Keywords
absorptive capacity, customer base, customer portfolio management, government customer concentration, network embeddedness
Abstract
The interplay between a firm's customer portfolio and the firm's performance presents a theoretical conundrum that challenges traditional supply chains. In particular, the role of government customer concentration—how extensively a firm incorporates government entities as part of its customer base—emerges as a pivotal factor with the potential to both bolster and burden firm performance. Analyzing 3,643 firm-year observations from the U.S. Federal Procurement Data System-Next Generation, Compustat, and FactSet Revere reveals an inverse U-shaped relationship between government customer concentration and firm performance. Excessive or insufficient government customer concentration adversely impacts performance, suggesting that a strategic balance is essential. Firm size, absorptive capacity, and network embeddedness are crucial in navigating this complex relationship, guiding a firm toward optimizing its government customer portfolio. This research advances the discourse on customer base management, underscoring the essential strategic considerations for firms interacting with government buyers.
Citation
Falcone, E. C., Fugate, B. S., & Waller, M. A. (2024). Growing, learning, and connecting: Deciphering the complex relationship between government customer concentration and firm performance. Journal of Supply Chain Management, 60(2), 64–92. https://doi.org/10.1111/jscm.12319
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
