Is sustainable operations constrained to financial stress in China’s manufacturers? The moderation effect of customer concentration

Abstract

Optimizing customer structure is worthy of developing because products/services offering can promote a delightful financial situation. Inspired by this, we examine the moderation effect of customer concentration targeting at the relationship between financial stress and sustainable operations of China’s manufacturers that exercise substantial impacts on climate change and industrial prosperity. Many industrial sectors, for example, shipbuilding, nonferrous metals, electronic component manufacturing, and food processing, are involved in this study. Empirical results indicate that a higher asset-liability ratio (embodying debt-level stress) and a higher ratio of tax payment to tax rebate (embodying social-level stress) both do not impose a constraint to sustainable operations, but such operations indeed need a response from a lower ratio of total operating cost to total operating revenue (embodying operation-level stress) and a decentralized customer structure. Moreover, customer concentration offers a power to be able to enhance the anti-risk capability of financial stress at the operation-level, thus suggesting narrowing the gap between tax payment and tax rebate. Our analysis transpires that a disharmony between financial stress and sustainable operations can be buffered by decentralizing customer structure. This study contributes to a new insight around the effect of customer in harmonizing finance and sustainability issues in manufacturers of emerging markets, thereby inspiring backbone industries to reach business sustainability assisted by a broad customer group.