Do Common Analysts Along Supply Chains Facilitate Suppliers' Operational Efficiencies?

ABSTRACT

This study investigates the implications of common analysts covering both sides of a buyer–supplier dyad for suppliers' operational efficiencies. Drawing on the knowledge sharing perspective, we consider a positive association between common analysts and supplier operational efficiency. Using 20,359 buyer–supplier dyads collected from Compustat during the period 1994 to 2017, we empirically find that the existence of common analysts significantly enhances suppliers' operational efficiencies. Additionally, the positive association is amplified when the supplier's bargaining power is lower or the buyer's demand uncertainty is higher. We further examine the underlying mechanisms through which common analysts improve supplier operational efficiency by showing that common analysts transmit buyer‐related information to suppliers via both private and public channels and help suppliers reduce bullwhip effects. Finally, compared with other relational ties, common analysts uniquely mitigate suppliers' bullwhip effects and, in turn, have a stronger positive impact on their operational efficiencies. Collectively, our evidence highlights the distinctive and important role of common analysts in transferring operational information along supply chains and improving supply base outcomes.