Benchmarking supplier performance: How scorecard comparisons and supply risk influence termination decisions

O'Connor, Neale G. and Romero, Jorge and Asiaei, Kaveh (2025) Benchmarking supplier performance: How scorecard comparisons and supply risk influence termination decisions. International Journal of Production Economics. p. 109838. ISSN 0925-5273

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Abstract

This study examines how supplier termination decisions are influenced by scorecard performance, peer supplier performance, and component supply risk in multisourcing supply chains. While supplier selection has been extensively studied, supplier termination remains underexplored, particularly in dynamic industries like electronics manufacturing. Drawing from agency theory, we examine how relative performance evaluation (RPE) mechanisms and supply risk shape termination decisions. Using proprietary data from a major electronics firm covering 78 suppliers across 15 components over 42 months, we provide novel evidence that firms employ comparative evaluation rather than absolute performance thresholds. Supplier scorecard improvements significantly increase survival probability, while strong peer performance decreases survival probability for other suppliers, demonstrating RPE effectiveness. However, component supply risk systematically moderates these relationships through distinct mechanisms: supplier scarcity weakens both own performance and peer performance effects on termination decisions. In contrast, component specialization selectively reduces peer performance effects but does not moderate own performance effects. These patterns reflect situations where supply constraints limit performance-based termination effectiveness. The study contributes by extending agency theory's RPE to inter-firm settings and demonstrating how different supply risk dimensions selectively moderate different performance evaluation types. These insights guide supply chain managers in understanding when performance-based termination criteria are most effective.

Item Type:	Article
Identification Number:	10.1016/j.ijpe.2025.109838
Dates:	Date Event 27 October 2025 Accepted 28 October 2025 Published Online
Uncontrolled Keywords:	Relative performance evaluation, Supplier termination, Supply risk, Electronics industry, Agency theory, Scorecard
Subjects:	CAH17 - business and management > CAH17-01 - business and management > CAH17-01-08 - accounting
Divisions:	Business School > Accountancy, Finance and Economics Business School > Accountancy, Finance and Economics > Centre for Accountancy Finance and Economics
Depositing User:	Gemma Tonks
Date Deposited:	12 Nov 2025 13:24
Last Modified:	12 Nov 2025 13:24
URI:	https://www.open-access.bcu.ac.uk/id/eprint/16717

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