Growing, learning, and connecting: Deciphering the complex relationship between government customer concentration and firm performance

Title	Growing, learning, and connecting: Deciphering the complex relationship between government customer concentration and firm performance
Author	Falcone, Ellie C.; Fugate, Brian S.; Waller, Matthew A.
Date	3/31/2024
Description	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.
Link	https://doi.org/10.1111/jscm.12319 https://repository.tcu.edu/handle/116099117/65941
Department	Supply and Value Chain Management

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