E-business services and business performance: a study of the telecommunications manufacturing industry

The development of information and communication technologies has significantly changed the business interactions as well as created new approaches for improving business performances. While the benefits from this development have been well documented in the literature, it also poses a significant challenge for companies in tracking or further improving e-business services. This article contributes to this body of knowledge by investigating the impact of e-business service dimensions on business performance in the telecommunications manufacturing industry. Based on 121 usable responses from a questionnaire survey of the UK telecommunication manufacturers, structural equation modelling is employed to identify the main e-business service dimensions which affect business performance significantly. The data analysis reveals that two e-business service dimensions significantly influence suppliers’ performance from the buyer's perspective. It also indicates the significant relationships between suppliers’ performance, buyer-perceived buyer–supplier relationship maintenance and the buyer's competitive advantage. The findings in this research not only help the supplier to understand which practices significantly improve its overall performance (as perceived by the buyer), but also assist the buyer in its supplier development efforts to improve its own business performance.     

Intensity of Interaction in Supply of Business Advice and Client Impact: A Comparison of Consultancy,Business Associations and Government Support Initiatives for SMEs

This paper assesses the supply of business advice using new empirical evidence from a large-scale survey of SMEs. The chief focus of the paper is on a comparison of suppliers that operate in different environments of regulation, contract and reputation. The paper argues that interaction intensity varies with the level of information asymmetry of these different environments, between different types of service supplier and their clients. Interaction intensity between suppliers also varies as a result of the level of trust they enjoy: for example, the low trust enjoyed by consultants appears to encourage higher intensity of interaction which improves the tailoring of the service to the client's needs and enhances impact. The paper assesses interaction intensity using the existence of site visits and/or a written brief/contract as indicators. Although these measures have limitations, the paper demonstrates clear and significant differences between suppliers in terms of interaction intensity, use of contracts and impact in three broad categories: private-sector consultancy (low trust, high intensity, high impact), business associations (high trust, low intensity, moderate impact) and government support agencies (moderate trust, moderate to high intensity, moderate or low impact). Multivariate estimation methods demonstrate that significant differences in interaction intensity, use of contracts and impact by client type are much less important than differences in supplier type. This indicates that suppliers generally develop more into niche service fields or groups of services rather than niches related to types of firm.     

COUNTERVAILING POWER AND DYNAMIC EFFICIENCY

This paper studies the impact of buyer power on dynamic efficiency. We consider a bargaining model in which buyer power arises endogenously from size and may impact on a supplier’s incentives to invest in lower marginal cost. We challenge the view frequently expressed in policy circles that the exercise of buyer power stifles suppliers’ incentives. Instead, we find that the presence of larger buyers keeps a supplier “more on his toes” and induces him to improve the competitiveness of his offering, in terms of both price and quality, relative to buyers’ alternative options.     

The effect of supplier development on outsourcing performance: the mediating roles of opportunism and flexibility

Abstract

In this increasingly competitive business environment, firms utilise outsourcing as a strategic tool to leverage globally dispersed resources so that they may focus on their core competencies and improve efficiency. The more firms rely on outsourcing, the more they depend on their suppliers, and the more important it is to manage and develop suppliers in order to achieve and maximise the benefits of outsourcing. This paper explores the impact of supplier development on outsourcing performance. Structural equation modelling was used to analyse data collected from 213 manufacturing firms in China. The results indicate that supplier development has a strong direct positive impact on outsourcing performance, and that supplier development also leads to enhanced outsourcing performance through reducing outsourcing opportunism risk and improving outsourcing flexibility. In addition to making a contribution to current theories of outsourcing, our findings also provide outsourcing managers with practical understanding and insights about the role of supplier development in enhancing outsourcing performance.     

A multiple buyer – supplier relationship in the context of SMEs’ digital supply chain management*

Abstract

By underlining the relevance of the use of ICTs, knowledge sharing and electronic markets for SMEs, it emerges the need for stimulating a debate on digitisation process of supply chain management (SCM). Electronic infrastructure in the service sector are reducing each kind of cost and improving multiply buyer–supplier relationships, facilitating negotiations and transactions. However, since the coordination costs are still high, the use of ICTs is limited. This phenomenon thus attracts the interests of scholars and practitioners. Although it still needs to further investigate. Especially, the optimal use of ICTs within SMEs’ SCM have not been studied yet. Therefore, by leveraging on four proxies: ICTs specialised human resources, knowledge sharing activities, buyer–supplier relationships, adoption of electronic markets this optimal was analysed via structural equation modelling based on a sample of 1254 SMEs operating in the service sector in Italy.     

Drivers and Enablers That Foster Environmental Management Capabilities in Small‐ and Medium‐Sized Suppliers in Supply Chains

The limited capabilities and resources available within many small‐ and medium‐sized enterprises frequently hamper an effective response to environmental pressures, which in turn hurts large buying firms (i.e., customers). Using a case study method with multiple suppliers of two large buying firms, we mapped factors that initiated and improved environmental capabilities in small‐ and medium‐sized enterprises over time. Through several specific mechanisms, buyers' green supply chain management initiated and then enabled the improvement of suppliers' environmental capabilities. Independent of buyers, internal championing of environmental concerns also provided an impetus for small‐ and medium‐sized enterprise suppliers to acquire resources outside the supply chain. Thus, synergistic linkages emerged in supportive buyer‐supplier relationships, resource acquisition, and capability development. When these findings are combined with earlier research on larger suppliers, an integrative framework emerges that provides direction for suppliers, buyers, and public agencies seeking to improve environmental performance.     

Impact of competitive conditions on supplier evaluation: a construction supply chain case study

This research proposes a multi-criteria decision-making (MCDM) framework and demonstrates the impact of competitive conditions on supplier evaluation process for construction supply chains. The paper focuses on the supply chain of a large-scale housing project in order to illustrate the role of competitive capability and suppliers’ profile and its influence on supplier evaluation based on prevailing supply/market conditions. Various scenarios are investigated to demonstrate the impact of competition on supplier evaluation. The contribution of the study lies in highlighting the impact of supply/market conditions on MCDM decisions causing supplier evaluation ‘imbalance’ and MCDM usage. It is expected that the study will be useful for project management, construction, supply chain management, sourcing professionals. The findings of the study are generalisable to projects-based situations such as petroleum refinery and ship building where bill of materials typically consists of thousands of items and a large number of suppliers are involved.     

Improving supply chain social responsibility through supplier development

Abstract

Corporate social responsibility (CSR) emphasises that the entire supply chain of a company should protect natural environment and contribute to social well-being in a tangible way. This study aims to clarify the effects of supplier development practices on supply chain social responsibility. The investigation uses a qualitative case study approach and empirically explores how to develop supplier’s CSR capabilities in a pharmaceutical supply chain. The results indicate that manufacturers can apply supplier development practices, including standard operating procedures (SOPs), audits, collaboration and training, to develop supply chain social responsibility. SOPs and audits are indirect supplier development practices that are designed in response to institutional pressures, and collaboration and training are direct supplier development practices that provide resources for bridging supplier’s CSR capability gaps. In addition, the indirect and direct supplier development practices positively influence each other and they are complementary in enhancing supply chain social responsibility.     

Search for Alternatives and Collaboration with Incumbents: Two-Sided Sourcing Behavior in Business Markets*

Sourcing strategies in business markets have been considered separately and the practice of two-sided sourcing behavior—engaging in search for alternative suppliers and collaboration with an incumbent supplier—has not been examined. To fill that gap, we first identify boundary conditions under which the poor performance of an incumbent supplier intensifies an original equipment manufacturer's (OEM) search and collaboration. Then, we examine how an OEM's two-sided sourcing behavior influences one of the critical elements of sourcing performance: the responsiveness of the incumbent supplier. Our proposed hypotheses were tested with data from a national survey of 539 OEM purchasing managers in the Japanese electronics industry. The analysis results indicate three main findings. First, two environmental conditions—pace of technological change and volume uncertainty—have contrasting influences on the link between incumbent supplier performance and an OEM's search and collaboration. While uncertainty from the upstream channel (pace of technological change) enhances an OEM's search and collaboration, uncertainty from the downstream channel (volume uncertainty) lowers an OEM's search and collaboration. Second, an OEM's dependence on its incumbent supplier has differential effects: an OEM reduces search as its dependence on incumbent supplier increases, while it enhances collaboration as its dependence on incumbent supplier increases. Third, while search alone has a negative effect on responsiveness of an incumbent supplier, engaging in two-sided sourcing behavior (i.e., combining search with collaboration) has a positive effect on responsiveness of the incumbent supplier.     

Supplier Strategies and Routines for Capability Development: Implications for Upgrading

This paper examines the strategies and routines adopted by small and medium-sized suppliers to develop capabilities that enable them to engage in upgrading, despite a precarious relational and institutional context. To this end, we investigate the strategic behaviour of two Bangladeshi garment manufacturers. Both started out as small suppliers for multinational enterprises (MNEs) and have eventually grown into micro-multinationals. The firms are involved in ‘tacit promissory contracting’ with their buyers, a specific form of international outsourcing relationship. The study adopts a multiple case study design that involves interviews with managers/owners of the firms. The analysis yields two key findings. Both firms have devised strategies and taken coherent routines involving actions to develop skills and motivation needed to perform appropriate functional activities (i.e. pre-production, production and post-production) as they embarked on different stages of upgrading. Furthermore, firms have designed routines to internalise the challenges originating from their relationships with their buyers and the institutional environment at the time that had the potential to affect their upgrading goals. The paper contributes to IB studies by highlighting how suppliers, even in a precarious context, can control their own strategies and routines, so as to develop capabilities that allow them to gradually redress the power imbalance between themselves and their buyers.     

Role of Random Capacity Risk and the Retailer in Decentralized Supply Chains with Competing Suppliers

This research considers a supply chain under the following conditions: (i) two heterogeneous suppliers are in competition, (ii) supply capacity is random and pricing is endogenous, (iii) consumer demand, with and without an intermediate retailer, is price dependent. Specifically, we examine how uncertainty in supply capacity affects optimal ordering and pricing decisions, supplier and retailer profits, and the incentives to reduce such uncertainty. When two suppliers sell through a monopolistic retailer, supply uncertainty not only affects the retailer's diversification strategy for replenishment, but also changes the suppliers’ wholesale price competition and the incentive for reducing capacity uncertainty. In this dual‐sourcing model, we show that the benefit of reducing capacity uncertainty depends on the cost heterogeneity between the suppliers. In addition, we show that a supplier does not necessarily benefit from capacity variability reduction. We contrast this incentive misalignment with findings from the single‐supplier case and a supplier‐duopoly case where both suppliers sell directly to market without the monopolistic retailer. In the latter single‐supplier and duopoly cases, we prove that the unreliable supplier always benefits from reducing capacity variability. These results highlight the role of the retailer's diversification strategy in distorting a supplier's incentive for reducing capacity uncertainty under supplier price competition.     

Impacts of buyers' order batching on the supplier's demand correlation and capacity utilization in a branching supply chain

There are several ways for a manufacturer to cope with demand uncertainty, e.g. inventories, capacity and cash. Among these, this study focuses on the second one, the capacity, especially on the problem of investing in flexible facilities and enhancing their utilization via demand management. In a supply chain, demands that an upstream firm (supplier) faces are the purchase orders from the downstream members (buyers). We analyse the impacts of buyers' order batching on the supplier's demand correlation and capacity utilization in a simple branching supply chain, where a supplier does business with two buyers whose market demands are correlated. Our results show that: (i) a supplier whofacesa smaller demand correlation coefficient (i.e. closer to-1) would invest more in flexible facilities; (ii) an increase in order lot size mitigates the correlation of purchase orders; and (iii) a supplier whose facilities are flexible would prefer frequent orders with smaller lots only when market demands are highly negatively correlated. This means that even suppliers whose facilities are flexible would rather prefer infrequent orders with larger lots in the presence of positively correlated demands. Additionally, some managerial implications are discussed.     

Supplier Selection for Framework Agreements in Humanitarian Relief

In this study, we consider the supplier selection problem of a relief organization that wants to establish framework agreements (FAs) with a number of suppliers to ensure quick and cost‐effective procurement of relief supplies in responding to sudden‐onset disasters. Motivated by the FAs in relief practice, we focus on a quantity flexibility contract in which the relief organization commits to purchase a minimum total quantity from each framework supplier over a fixed agreement horizon, and, in return, the suppliers reserve capacity for the organization and promise to deliver items according to pre‐specified agreement terms. Due to the uncertainties in demand locations and amounts, it may be challenging for relief organizations to assess candidate suppliers and the offered agreement terms. We use a scenario‐based approach to represent demand uncertainty and develop a stochastic programming model that selects framework suppliers to minimize expected procurement and agreement costs while meeting service requirements. We perform numerical experiments to understand the implications of agreement terms in different settings. The results show that supplier selection decisions and costs are generally more sensitive to the changes in agreement terms in settings with high‐impact disasters. Finally, we illustrate the applicability of our model on a case study.     

Complexity as a Contract Design Factor: A Human‐to‐Human Experimental Study

Despite being theoretically suboptimal, simpler contracts (such as price‐only contracts and quantity discount contracts with limited number of price blocks) are commonly preferred in practice. Thus, exploring the tension between theory and practice regarding complexity and performance in contract design is especially relevant. Using human subject experiments, Kalkancı et al. (2011) showed that such simpler contracts perform effectively for a supplier interacting with a computerized buyer under asymmetric demand information. We use a similar set of experiments with the modification that a human supplier interacts with a human buyer. We show that human interactions strengthen the supplier's preference for simpler contracts. We find that suppliers have fairness concerns even when they interact with computerized buyers. These fairness concerns tend to be even stronger when suppliers interact with human buyers, particularly when the complexity of the contract is low. We also find that suppliers are more prone to random decision errors (i.e., bounded rationality) when interacting with human buyers. In the absence of social preferences, Kalkancı et al. identified reinforcement and bounded rationality as key biases that impact suppliers' decisions. In human‐to‐human experiments, we find evidence for social preference effects. However, these effects may be secondary to bounded rationality.     

How does information sharing affect first-tier suppliers’ flexibility? Evidence from the automotive industry in Sweden

This study addresses the critical research issue of how supplier delivery performance can be enhanced by integrating information sharing into volume and delivery flexibility. This study developed a research model to relate information sharing on demand forecasts and inventory data between original equipment manufacturers (OEMs) and first-tier suppliers. Based on a sample of 52 suppliers from automotive industry in Sweden, partial least squares structural equations modelling (PLS-SEM) was used to assess the model. The results confirm that sharing demand forecasts is a key enabler of supplier volume and delivery flexibility while sharing inventory data is not. The study contributes to enlarging the knowledge about supply chain management from the suppliers’ perspective. It also contributes to knowledge by validating the conceptual model and operationalisation of constructs. The study also has practical contribution in which management should focus on improving communication and collaboration practices with OEMs for effective sharing of demand forecasts.     

Supply Management Under High Goal Incongruence: An Empirical Examination of Disintermediation in the Aerospace Supply Chain

Aftermarket sales and profits are becoming an increasingly important part of an original equipment manufacturer's (OEM) business model. Because replacement parts often do not require further manufacturing, OEMs act as intermediaries in the aftermarket. As with any intermediary, the OEM must concern itself with suppliers disintermediating its supply chain selling replacement parts directly to the OEM's customers. We frame supply chain disintermediation (SCD) as a principal–agent contracting problem between an OEM buyer and a supplier. Hypotheses relate contract conditions, goal incongruence, supplier capabilities and contract enforcement to SCD. The data are collected from the aerospace industry using a multimethod study, combining an Internet‐based survey with archival data. Causal modeling with structural equation modeling (SEM) shows general support for the hypotheses. Particularly, SCD is positively related to buyer–supplier goal incongruence. The agency model offers insights that differ from previous transaction‐cost‐based models of buyer–supplier relationships. OEM buyers with a lucrative aftermarket should consider aligning goals through incentives rather than relying entirely on economic hostages associated with specific assets.     

A Structural Analysis of the Effectiveness of Buying Firms' Strategies to Improve Supplier Performance

Many manufacturing firms have increased the amount of component parts and services they outsource, while refocusing on their core capabilities. Outsourcing parts and services to independent, external suppliers means that suppliers' performance is increasingly critical to the long‐term success of these buying firms. Buying firms are increasingly using disparate supplier development strategies to improve supplier performance including supplier assessment, providing incentives for improved performance, instigating competition among suppliers, and direct involvement of the buying firm's personnel with suppliers through activities such as training of suppliers' personnel. Using resource‐based theory, internalization theory, and structural equation modeling, we examine the impact of these supplier development strategies on performance. We conclude that direct involvement activities, where the buying firm internalizes a significant amount of the supplier development effort, play a critical role in performance improvement.     

The Effect of Socialization Mechanisms and Performance Measurement on Supplier Integration in New Product Development

This article examines the effect of socialization mechanisms and supplier performance measurement on the level of supplier integration in new product development and subsequent firm performance outcomes. Prior research has found socialization mechanisms and performance measures to be effective in managing supplier relationships, though research examining their impact within a product development context has been limited. Socialization mechanisms, such as supplier conferences and on‐site visits, help establish communication and information‐sharing routines necessary to achieve supplier integration in the product development process. Using performance measures to evaluate a supplier helps focus managerial attention on areas such as innovation and communication that are important to integration success. A structural equation model, using a sample of 142 manufacturing firms based in the United Kingdom, indicates that the level of supplier integration in new product development is positively influenced by socialization mechanisms and innovation‐focused measures of supplier performance, but not significantly associated with the use of communication measures. In turn, increased levels of supplier integration led to improvements in both collaboration outcomes and business performance. Socialization mechanisms were also found to have a direct effect on collaboration outcomes achieved by the firm. Managerial implications and future research directions are discussed.     

Outsourcing Competition and Information Sharing with Asymmetrically Informed Suppliers

This paper studies an outsourcing problem where two service providers (suppliers) compete for the service contract from a client. The suppliers face uncertain cost for providing the service because they do not have perfect information about the client's type. The suppliers receive differential private signals about the client type and thus compete under asymmetric information. We first characterize the equilibrium of the supplier competition. Then we investigate two of the client's information sharing decisions. It is shown that less information asymmetry between the suppliers may dampen their competition. Therefore, the client does not necessarily have the incentive to reduce information asymmetry between the suppliers. We characterize the conditions under which leveling the informational ground is beneficial to the client. We also find that under the presence of information asymmetry (e.g., when the suppliers have different learning abilities), sharing more information with both suppliers may enhance the advantage of one supplier over the other and at the same time increase the upper bound of the suppliers' quotes in equilibrium. Consequently, the suppliers compete less aggressively and the client's payoff decreases in the amount of shared information. The findings from this study provide useful managerial implications on information management for outsourcing firms.