Collaboration in demand-driven supply chain: Based on a perspective of governance and IT-business strategic alignment

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Highlights

  • This paper presents an empirical study using a moderated mediation model, and explores the effect of formal contract, e-business strategic alignment (including intellectual and operational alignment) and the degree of competition on collaboration in demand-driven supply chain.

  • Using data from a survey of IT and business executives in 209 firms, we discover that formal contract has a positive effect on supply chain collaboration through intellectual and operational alignment.

  • The positive mediating effect of operational alignment is stronger under the higher degree of competition.

  • The degree of competition shows a negative moderated effect on the relationship between formal contract and intellectual alignment, and a positive moderated effect on the relationship between intellectual alignment and supply chain collaboration.

Abstract

In today’s marketplace, firms participating in a supply chain are required to work collaboratively to quickly respond to market and consumer demands. To understand how firms may effectively achieve supply chain collaboration, this paper presents an empirical study using a moderated mediation model that explores the effects of formal contract, e-business strategic alignment (including intellectual and operational alignment) and the degree of competition on collaboration in demand-driven supply chain. Using data from a survey of IT and business executives in 209 firms, we discover that formal contract has a positive effect on supply chain collaboration through intellectual and operational alignment. In addition, the positive mediating effect of operational alignment is stronger under a higher degree of competition. Although there is no moderated mediation effect in the path of formal contract-intellectual alignment-supply chain collaboration, the degree of competition shows a negative moderated effect on the relationship between formal contract and intellectual alignment, and a positive moderated effect on the relationship between intellectual alignment and supply chain collaboration. Learnings from this study contribute to supply chain management literature, and provide a comprehensive view of the governance and strategic antecedents of supply chain collaboration under various environmental circumstances.

Introduction

Recent practice in supply chain management emphasizes the importance of providing products and services that meet market demand and customer needs, known as demand-driven supply chain (Lun, Lai, Wong, & Cheng, 2013; Ma, Thomassey, & Zeng, 2018). Demand-driven supply chain allows organizations to acutely respond to changing market conditions and optimizes inventory management and capacity utilization efficiency. Effectively managed demand-driven supply chains increasingly require new technological and managerial approaches to data transparency and collaboration (Hu & Monahan, 2015). Technical approaches of demand-driven supply chain involve data analytics that support “build to order” and a pull system to minimize out of stock and/or excessive inventory (Nguyen, Zhou, Spiegler, Leromonachou, & Lin, 2018). Successful assimilation of such new information systems proves to have positive effect on supply chain integration and value creation (de Mattos & Laurindo, 2017). Complementary to technical capabilities are collaboration processes and relationships along the supply chain that focus on sharing real-time planning, management and execution information (Anthony, 2000) to enable seamless flow of demand signals between customers and suppliers. Collaboration is key to an effective supply chain (Horvath, 2001; Narayanan, Narasimhan, & Schoenherr, 2015), and is particularly critical to demand-driven supply chain, which requires participating organizations to respond rapidly to changes in demand, particularly when demand is volatile and unpredictable (Paulo, Leal, & Thomé, 2016).

Collaboration in demand-driven supply chain can be challenging to realize given the barriers arising from communicating across various supply chain platforms and the requirement of information visibility and seamless coordination among all supply chain participants (Budd, Knizek, & Tevelson, 2012). Over time, information visibility improves as advanced computing power supports rapid and frequent data transmission. Nevertheless, having the right technologies only brings half success whereas it is equally important for supply chain partners to recognize the importance of sharing real-time POS data and commit to coordinated processes and behaviors. Organizations ought to develop procedures and incentives to help cross-functional participants in the supply chain coordinate work objectives and priorities to march in the same direction.

Existing literature has empirically explored the collaborative consequences and its impacts on supply chain performance (e.g., Cao & Zhang, 2011; Wu & Chiu, 2018), but still lacks studies explaining the development of supply chain collaboration. To address the research gap, this paper focuses on studying how supply chain partners may effectively collaborate to quickly sense changes in the external environment (for example, the degree of competition) and respond readily to market and consumer demand. As we suggested earlier, when faced with ever-changing market and customer needs, firms participating in a supply chain ought to strategize collaboration with channel partners to actively sense shifts in the external environment and respond to changing consumer needs as a way to achieve long-term competitive advantage (Sambamurthy, Bharadwaj, & Grover, 2003). Such competitive advantage requires co-development with supply chain channel partners and is heterogeneous, immobile and difficult to imitate, thus ensuring long-term benefits (Gligor, Esmark, & Holcomb, 2015).

Effective collaboration in demand-driven supply chain requires real-time information enabled by coordinated technologies and processes (Choi & Ko, 2012; DeGroote & Marx, 2013). We acknowledge the importance of supply chain technologies in enabling supply chain collaboration, but we also emphasize the management and organizational effects of such technologies. Among various management and organizational factors that facilitate demand-drive supply chain, supplier contracts are essential as they guarantee the decisions made to improve supply chain performance are in alignment with the interests of individual participating firms (Budd et al., 2012). Based on this perspective, we will explore how organizations may develop supply chain collaboration by considering the roles of governance through contract and strategic alignment, as well as the influence of environmental factors (the degree of competition). Specifically, the general research question of this study is the following: What are the effects of formal contract, e-business strategic alignment and the degree of competition on collaboration in demand-driven supply chain?

The contributions of our study are three-fold. First, this research contributes to the supply chain management literature by empirically exploring the antecedents of supply chain collaboration, which helps increase our understandings of how to achieve collaboration in demand-driven supply chain. Second, the study extends the supply chain management literature by applying the IT-business strategic alignment concept to the inter-organizational setting and unfolding the mechanisms through which formal contracts structurally shape collaboration. Third, the study also examines the effects of intellectual and operational alignment among supply chain partners under various environmental circumstances and provides a moderated-mediation view of the relationship between contracts, alignment, and environmental factors along the supply chain.

The article proceeds as follows. We begin by introducing the theories and literature that frame our conceptualization, followed by the development of research hypotheses. Next, we describe our research methodology and empirical results. We then conclude by discussing the implications of research findings for theory and practice.

Section snippets

Supply chain collaboration

Collaboration within a supply chain context has been well studied due to the rationale that any single company participating in the supply chain cannot compete by itself – raw materials suppliers have to understand the needs of downstream customers in order to adjust upstream supplies to enable the manufacturing of highly demanded products and keep up with the competitiveness of the complete supply chain (Rosenzweig, 2009). Similarly, firms in downstream supply chain need to communicate

Sampling and data collection

We conducted a survey in China to test the research model. China has become the world's manufacturing center of consumer products and represents a global economic power (Liu, Ke, Wei, & Hua, 2013; Qi, Huo, Wang, & Yeung, 2017). The study required respondents to have specific knowledge about information systems and supply chain management, which challenged data collection through a survey questionnaire. Under this condition, we worked with the Chinese Electronic Commerce Association and the

Results

Hypotheses were tested using SPSS 22.0. We mean-centered constructs to compute the interaction term to avoid multicollinearity problems (Aiken & West, 1991). To evaluate the impacts of formal contract, e-business strategic alignment, and the degree of competition on supply chain collaboration, we employed a series of ordinary least squares hierarchical regression models. The results of the regression analysis are shown in Table 4.

Discussions and conclusions

This study focuses on the following three specific questions: (1) What is the direct effect of formal contract on collaboration in demand-driven supply chain, (2) How would formal contract affect collaboration in demand-driven supply chain through intellectual and operational alignment, and (3) how would the degree of competition moderate the relationship between formal contract and e-business strategic alignment to influence collaboration in demand-driven supply chain.

Based on the governance

Conclusion

With the development of digital technologies, many firms rely on collaboration in demand-driven supply chain. However, few literature concerns with the generation mechanisms of supply chain collaboration. Based on a perspective of governance and IT-business strategic alignment, we propose a moderated mediation model that explores the effect of formal contract, e-business strategic alignment and the degree of competition on collaboration in demand-driven supply chain. Our research model receives

CRediT authorship contribution statement

Maomao Chi: Conceptualization, Methodology, Software, Data curation, Writing - original draft. Rui Huang: Data curation, Writing - original draft, Writing - review & editing. Joey F. George: Writing - review & editing.

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    This research has been supported by grants from the National Natural Science Foundation of China under Grant 71801104 and 71974072, and supported by the Fundamental Research Funds for the Central Universities CCNU18QN041 and CCNU19TD013.

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