Policy Uncertainty and Customer Concentration

Using data involving customer–supplier relationships and a large sample of US publicly listed firms, our study documents negative statistically significant relationship between economic policy uncertainty firms’ customer-base concentration. The relation is predominant in firms with higher inventory efficiency those operating competitive, high-R&D, nondurable industries. Customer-base diversification further shown to enhance firm performance during periods increasing uncertainty, but not when decreases. Overall, evidence suggests that respond by diversifying their customer base such behavior contributes positively performance.