Decoding the Interplay Between Supplier Network Flexibility and Financial Performance within the Buyer Network in Uncertain Business Environments

Abstract Multinational corporations increasingly choose flexible suppliers over low-cost options to manage uncertainties effectively. While previous research highlights the importance of buyer network design for supplier flexibility and reconfiguration, the literature barely discusses supplier network flexibility based on a supplier’s network position (e.g., centrality). The structural flexibility of the buyer network is often overlooked despite its crucial role in recovery from disruptions. Furthermore, prior research exploring supplier centrality enhances a focal buyer’s performance and provides limited insight into suppliers’ financial performance within the buyer network. Additionally, the dimensions of business environmental uncertainty are likely to interact with supplier network flexibility in the buyer network, affecting supplier financial performance. However, the literature also offers little insight into this aspect. Therefore, this study investigates the impact of the interplay between supplier network flexibility (eigenvector and closeness centralities) and business environmental uncertainty (dynamism, munificence, and complexity) on supplier financial performance. This study relies on social network theories and the literature on supplier network flexibility, environmental uncertainty, and financial performance. It develops a section of Toyota’s triadic buyer network at the corporate level, with this network involving 6152 suppliers and 14,156 relationships. Using a hierarchical moderated regression model, this study finds that higher closeness and eigenvector centralities positively impact supplier financial performance, with dynamism and complexity positively moderating these effects, whereas munificence negatively moderates them. These findings offer insights into how central suppliers can enhance their financial performance and strategically position themselves within buyer networks to adapt to business environmental uncertainties.