Trade credit extended to suppliers in the video game industry does not serve as a commitment device for large customers in determining which vendors to make relationship-specific investments in. Suppliers of video games are better off investing in relationships with trade creditors than seeking out large customers. The costs of large customer relationships are lower sales growth and less long-term debt leverage. Also, large customers don’t form relationships with suppliers in this industry, which has high research and development expenditures nor do they facilitate economic viability with regard to continued independent operational performance or listing on a stock exchange.
G10, G30, G32
Trade credit, innovation, relationship-specific investments, suppliers, large customers, economically-linked firms, vertical supply chain
Evans, Jocelyn D. and Outlaw, Dominique G.
"Why Trade Credit Financing is More Important than Developing Large Customer Relationships for Video Game Suppliers,"
The Journal of Entrepreneurial Finance:
Available at: https://digitalcommons.pepperdine.edu/jef/vol19/iss1/5
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