Productivity spillovers in supply chain networks

This study examines the productivity spillovers that occur along supply chains. Our data envelopment analysis (DEA)-based analyses, using publicly available data for the period 1995-2006, indicate that the productivity gains flow from the customers to the suppliers in a supply chain, and moreover, such spillovers are affected by the strength of the relationship (economic bond) between the customer and the supplier. We also find that the customers' productivity has a positive impact on the profitability of the suppliers. Our results demonstrate an additional means of enhancing firm productivity through strategic supply chain partnerships. If such productivity enhancements can accrue to the entire economy, it will be of interest to policy makers. This study complements and extends existing literature, which focuses on specific settings, to a more generalised and broader cross section of the economy.