Abstract Purpose- This paper draws on the dynamic capabilities approach, and aims to empirically investigate the impact of supply chain finance (SCF) on firm performance (e.g. operational risk and operational performance), the critical effect of environmental dynamism (ED) as moderator and supply chain risk (SCR) and a mediator in the relationship between SCF and OP. Design/methodology/approach –This study is based on empirical data collected from a survey of 210 companies and their supply chains in mainland China. Structural equation modeling is used to test our proposed relationships. Findings – The findings show that SCF significantly mitigates the SCR, which subsequently has a significant positive effect on organizational performance (e.g., cost performance and operational performance). The findings also show that when environmental dynamism (ED) is high, the relationship between SCF and SCR is stronger and vice versa. Moreover, supply chain risk (SCR) mediates the relationship between supply chain finance (SCF) and organizational performance (OP). Hypothesis regarding the moderating effect of environmental dynamism (ED) on the paths joining supply chain finance (SCF) and supply chain risk (SCR) was also supported. Supply chain risk (SCR) has a significant negative effect on organizational performance (OP). However, hypothesis regarding the effect of environmental dynamism (ED) on supply chain risk (SCR) was not supported. Research limitations/implications- This study has some limitations. First, we conducted our research with Chinese organizations. This may result in low generalizability in other contexts. In addition, we employed survey method and cross-sectional data design in this study, which may generate the potential issue of common method bias (CMB). However, the findings of this study will help organizations across China and other emerging economies to adopt SCF as a secure financing mechanism to enhance working capital and mitigate risk. In addition, our paper provides some new managerial insights for decision makers in organizations, while exploring different factors such as supply chain finance (SCF), supply chain risk (SCR), and environmental dynamism (ED), and their effect on organizational. Originality/value- This study has greatly developed a general SCF adoption model that helps to guide empirical research investigating the critical impact of SCF on firm performance
