Financial benefits from JIT adoption: Effects of customer concentration and cost structure

Journal Article (Journal Article)

This paper examines whether firms exhibiting improved inventory utilization subsequent to JIT adoption achieve a corresponding increase in their Return on Assets (ROA) and whether firm-specific characteristics affect such ROA responses. On average, we do not find a significant ROA response to JIT adoption. Cross-sectionally, JIT adopting firms with a diffuse customer base have a superior ROA response relative to both adopting firms with a high degree of customer concentration and their matched control firms. Evidence is consistent with a superior ROA response for firms with lower inventory turns in the adoption year, particularly for work-in-process inventory. Data do not supportthe prediction that firms with lower committed costs will report a greater ROA response than firms with a higher proportion of committed costs.

Duke Authors

Cited Authors

  • Balakrishnan, R; Linsmeier, TJ; Venkatachalam, M

Published Date

  • April 1, 1996

Published In

Volume / Issue

  • 71 / 2

Start / End Page

  • 183 - 205

International Standard Serial Number (ISSN)

  • 0001-4826

Citation Source

  • Scopus