TY - JOUR
T1 - The relationship between supply environment, supply chain integration and operational performance
T2 - The role of business process in curbing opportunistic behaviour
AU - Wong, Wai Peng
AU - Sinnandavar, Chandra Mohan
AU - Soh, Keng-Lin
N1 - Funding Information:
The authors would like to thank the Academy of Sciences Malaysia , British Academy and Newton-Ungku Omar Fund [grant number 304/PMGT/650912/B130] for supporting this research project.
Funding Information:
There is a lack of theory application in SCI studies as only 35.5% had an underpinning theory supporting their framework (Kamal and Irani, 2014). Studies which underpin TCE theory comprises only 4.09% (Kamal and Irani, 2014). Therefore, the use of TCE in building the theoretical framework of this study helps address the scarcity of its theoretical applications in SCI studies.The outcome, either TCE theory could support the theoretical framework or otherwise, shall contribute to the body of knowledge for SCI. Fig. 1 provides the theoretical framework and Table 1 provides the definitions of variables.The analysis was conducted at 5000 bootstrap sample size at the confidence level of p < 0.05 (t > 1.960). For the 3-independent variables, supply alternative and supply complexity significantly affect SCI while supply dynamism did not. Supply alternative path loading to SCI is 0.310 (t = 3.598), and supply complexity path loading to SCI is 0.536 (t = 6.375) which are both significant. Therefore, H1 and H3 are supported. Supply dynamism path loading to SCI is 0.031 (t = 0.305), as such H2 is not supported. Therefore, results confirm that supply alternative and supply complexity affect SCI, while supply dynamism does not affect SCI. SCI path loading to operational efficiency is 0.616 (t = 6.062), and path loading of operational efficiency to environmental performance is 0.694 (t = 9.364). Both paths are significant, and therefore it can be confirmed that a higher SCI will lead to higher operational efficiency and higher operational efficiency leads to higher environmental performance. Therefore, H4 and H5 are supported.Study findings support supply alternative and supply complexity affect SCI as hypothesized while supply dynamism did not. The three supply environment factors explain 39.2% of the variance in SCI. The R-square is between moderate and weak, which could be due to various factors that affect SCI besides supply alternative, complexity and dynamism.The prediction of TCE that supply alternative affects SCI is supported, though the direction of the relationship is contrary to TCE prediction. TCE proposes that higher supply alternatives lower the asset specificity for the buying organization and therefore require weaker SCI. Contrarily, this study finding provides evidence that higher supply alternatives lead to stronger SCI. Some supply environment such as the suppliers of rail services which is monopolized by a few companies may not seek strong SCI with the buyers even though desired by the buyers. The rail services providers may not want stronger SCI with the buyers as they may not see a need for it. They could quickly sell their services to other buyers as the supply alternatives are limited. It could be more economical for the rail services companies not to have stronger SCI. The imbalance dependency elevates their opportunistic behavior in seeking higher rents at the expense of the buyers. Likewise, due to the imbalance dependency, which is favorable to the depots, this could incline them to be opportunistic in seeking higher rents at the expense of the hauliers.Findings do not support supply dynamism relationship with SCI. The non-significant relationship could be due to the changes that took place internally in the depots such as changes in support services and technology in the depots which could have critically affected the hauliers and were beyond the haulier's control. Instability and volatility in the environment are aspects of dynamism (Keats and Hitt, 1988) which bring unpredictable variations towards the organizations. Likewise, the unpredictable variations in the depots bring random variations to the hauliers' SCI. The ?noise? caused by supply dynamism has no bearing on the SCI level as dynamism is unpredictable or directionless and therefore, supply dynamism may not have any relationship with SCI.This study finding provides evidence that supply complexity has a linear relationship with SCI. Findings support TCE proposition that increase in transaction complexities intensifies supply chain coordination between members (Leiblein, 2003; Sinnandavar et al., 2018). The complexity of the service provided by the depots could be due to the different operating procedures, infrastructures such as equipment and yard area, and personnel in depot operations fronting the hauliers. These could positively affect the SCI between the depots and the hauliers because these complexities necessitate the hauliers to work closely with the depots. On the other hand, if the haulier finds that the transaction with the depots is simple and easy to understand and does not require much technical expertise, the hauliers may find that they do not need to have a stronger SCI with the depots. This study confirms that as the complexities decreases, the requirement of a stronger SCI decreases.The findings provide evidence that business process (BP) moderate SCI impact on operational efficiency. A stronger BP further heightens the impact of SCI on operational efficiency. The persistent delays at the depots (Wong et al., 2016) provide signs of opportunistic behavior of the depots in taking advantage of the hauliers and therefore, hindering the SCI impact on operational efficiency. The appropriate BP provides the formal platform for the timely information flow between supply chain parties and fosters higher information symmetry. The presence of BP reduces the rent-seeking opportunistic behavior of the depots which improves the SCI's effect on operational efficiency. The close coupling between information system and BP is also supported, concurring with Rai et al. (2006) and Zhang et al. (2016).The authors would like to thank the Academy of Sciences Malaysia, British Academy and Newton-Ungku Omar Fund [grant number 304/PMGT/650912/B130] for supporting this research project.
Publisher Copyright:
© 2020
PY - 2021/2
Y1 - 2021/2
N2 - The opportunistic behavior of parties in the supply chain leads to resource wastages. Information asymmetry and the opportunistic behavior of transacting parties in supply chains squanders the intended benefits of supply chain integration (SCI). Literature suggests that reducing information asymmetry between transacting organizations will curb their opportunistic behavior. This study investigates the SCI between the hauliers and the container depots. The hauliers provide the transportation of containers for the shippers and consignees to and from the depots. Transaction Cost Economics (TCE) underpins the conceptual framework. The supply environment which embodies transaction cost economics attributes is expected to affect SCI and SCI is expected to affect operational efficiency and subsequently environmental performance. Business process is anticipated to moderate the impact of SCI on operational efficiency by reducing information asymmetry and curbing opportunistic behavior. Responses from 84 haulier companies were analyzed using partial least squares, structural equation modeling. Results indicate strong support for almost all transaction cost economics propositions. However, transaction cost economics suggests that transaction attributes have a linear relationship with SCI, though findings from this study indicate that it could be curvilinear. Results confirm that strengthening of business process between hauliers and depots could strengthen the SCI positive impact on hauliers' performance and subsequently their environmental performance. Stronger SCI can reduce cost and increase revenue and at the same time, reduce the greenhouse-gas emissions of the hauliers. Findings support that economic gains and environmental protection can be complementary and can be attained by curbing the opportunistic behavior of organizations in supply chains.
AB - The opportunistic behavior of parties in the supply chain leads to resource wastages. Information asymmetry and the opportunistic behavior of transacting parties in supply chains squanders the intended benefits of supply chain integration (SCI). Literature suggests that reducing information asymmetry between transacting organizations will curb their opportunistic behavior. This study investigates the SCI between the hauliers and the container depots. The hauliers provide the transportation of containers for the shippers and consignees to and from the depots. Transaction Cost Economics (TCE) underpins the conceptual framework. The supply environment which embodies transaction cost economics attributes is expected to affect SCI and SCI is expected to affect operational efficiency and subsequently environmental performance. Business process is anticipated to moderate the impact of SCI on operational efficiency by reducing information asymmetry and curbing opportunistic behavior. Responses from 84 haulier companies were analyzed using partial least squares, structural equation modeling. Results indicate strong support for almost all transaction cost economics propositions. However, transaction cost economics suggests that transaction attributes have a linear relationship with SCI, though findings from this study indicate that it could be curvilinear. Results confirm that strengthening of business process between hauliers and depots could strengthen the SCI positive impact on hauliers' performance and subsequently their environmental performance. Stronger SCI can reduce cost and increase revenue and at the same time, reduce the greenhouse-gas emissions of the hauliers. Findings support that economic gains and environmental protection can be complementary and can be attained by curbing the opportunistic behavior of organizations in supply chains.
KW - Business process
KW - Opportunistic behavior
KW - Supply chain integration
KW - Sustainable operations
KW - Transaction cost economics
UR - https://www.scopus.com/pages/publications/85094585401
U2 - 10.1016/j.ijpe.2020.107966
DO - 10.1016/j.ijpe.2020.107966
M3 - Article
AN - SCOPUS:85094585401
SN - 0925-5273
VL - 232
JO - International Journal of Production Economics
JF - International Journal of Production Economics
M1 - 107966
ER -