We examine the relation between supply chain network topology and financial performance of the firms within the network. We first construct a data set using the supply chain network topology of forty-four publicly traded companies across different industry sectors over a three-year time period to identify key structural features of supply networks. We observe that the emergent structure of supply networks is similar (inter-industry), although dominant supply networks are apparent in some, yet not all the industry sectors.

For each network, we examine the network topology via several key structural parameters including node and edge counts, average degree, network diameter, average path length, and the power law exponent. We then link the structural parameters with financial performance of network firms and observe that higher average degree is associated with decreased overall financial performance of the supply network. Average degree is indicative of how many connections a firm has. A high average degree implies strong interconnectivity among the firms in the network. Historical analysis of the data (2013-2015) points to an overall decrease in the average degree, especially at the higher tiers. Our analysis suggests that, to increase the overall supply network’s financial performance, a low average degree should be targeted.