SCCEI Seminar Series (Winter 2025)

Friday, January 17, 2025 | 12:00 pm -1:20 pm Pacific Time
Goldman Room E409, Encina Hall, 616 Jane Stanford Way

Effects of Referring Business Partners on Firm Networks and Performance

Firms often struggle to find and connect with suitable suppliers and clients, hindering growth and industrial development.  We surveyed 700 Chinese brush pen industry firms to understand their supplier-client networks and implemented a targeted referral program to address these barriers. The program introduced four treatment groups: screened referrals between likely compatible firms with a subsidy for the first transaction, random referrals with a subsidy for the first transaction, screened referrals without a subsidy, and control where firms were observed but received no referrals. We found that screened referrals with subsidies significantly increased subsequent transactions while partially crowding out prior partnerships; information-only referrals showed no impact. The referrals increase revenue, profit, and work hours among suppliers and growth-oriented clients. Suppliers upgraded product quality, while clients expanded product variety into higher-quality offerings, indicating complementary improvements within the supply chain. The intervention also shifted firms’ beliefs about the value of partnerships, spurring increased search efforts and forming additional non-referred partnerships, suggesting pessimistic beliefs as a critical friction in firm-to-firm access. Overall, the referrals yielded substantial private and social returns, underscoring the potential of targeted matchmaking interventions to drive industrial development.

Please register for the event to receive email updates and add it to your calendar. Lunch will be provided.

About the Speaker 
 

Jing Cai is an Associate Professor at the University of Maryland. She received her PhD from the University of California at Berkeley in 2012. Her research areas are development economics and household finance. Her current research examines the growth of micro-enterprises and SMEs, impacts of tax incentives on firm behavior, and diffusion and impacts of financial innovations in developing countries. Dr. Cai is a Co-Chair of the firm sector of the Abdul Latif Jameel Poverty Action Lab (J-PAL), a Research Associate at the National Bureau of Economic Research (NBER), and a fellow of the Bureau for Research and Economic Analysis of Development (BREAD). She currently serves as an associate editor of the American Economic Journal: Applied Economics, the Journal of Development Economics, and the Economic Development and Cultural Change.

A NOTE ON LOCATION

Please join us in-person in the Goldman Conference Room located within Encina Hall on the 4th floor of the East wing.

Questions? Contact Xinmin Zhao at xinminzhao@stanford.edu