Supply base complexity and firm profitability: The role of sustainability visibility in monitoring supplier performance and financial outcomes

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School of Business | Master's thesis
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Date

2025-12-29

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Mcode

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Master's programme in Business Analytics
Liiketoiminnan analytiikan maisteriohjelma

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en

Pages

95

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Abstract

This study examines the relationship between supply base complexity, sustaina-bility visibility, and firm profitability in global Fortune 100 companies. Drawing on Information Processing Theory, Contingency Theory, and the Relational View, the research explores whether having a complex supplier base directly harms financial performance and whether firms’ ability to monitor supplier sustainability performance influences this relationship. Using a quantitative research approach, the study analyzes secondary data from the Refinitiv (LSEG) Workspace database for 94 Fortune 100 firms over the period 2021–2023. The proposed relationships are tested using hierarchical regression analysis. The results challenge several common assumptions in the literature. First, supply base complexity does not show a direct negative relationship with profitability. Instead, firms with more complex supplier networks tend to exhibit higher levels of sustainability visibility. Second, sustainability visibility has a strong and positive direct association with profitability, independent of supply base complexity. The expected moderating effect of sustainability visibility on the complexity–profitability relationship is not supported. Overall, the findings suggest that sustainability visibility operates as an inde-pendent strategic capability rather than as a conditional buffer against complexity. Complex supply networks appear to motivate firms to develop stronger visibility systems, and these systems are associated with improved financial performance. This study therefore positions sustainability visibility as a value-creating capability that supports effective management of complex global supply chains.

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Supervisor

Kim, Seongtae

Keywords

supply base complexity, sustainability visibility, transparency, profitability, dynamic capabilities, supply chain management

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https://urn.fi/URN:NBN:fi:aalto-202601151312

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[gradu] Kauppakorkeakoulu / BIZ