Acquaintance means booster? Why stable customers matter for firm productivity

Amid sluggish global growth and rising uncertainties, supply chain stability is vital for sustaining economic production. Although studies examine the impacts of supply chain relationships on firm performance, their effect on total factor productivity (TFP) remains unexplored. Using data from 1559 A-share listed companies in China (2008–2022), this study examines customer stability’s impact on TFP and finds that customer stability enhances TFP by reducing Type I agency costs and improving firm reputation. It also generates significant spillover effects, increasing customer TFP through supply chain finance. This effect is more pronounced for firms in high-tech industries and regions with higher marketization and social trust. These findings offer new insights into enhancing firms’ efficiency through effective supply chain relationship management.