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Article history:
Received 22 October 2012
Accepted 21 March 2014
Available online 1 April 2014
This research explores the mechanism through which IT infrastructure enables superior rm performance by empirically examining the links among IT-enabled sharing capability, supply chain exibilities
(as measured by a manufacturing rm's product development exibility, production exibility, logistics
exibility, suppliers' exibility, and the exibility of the supply base), and competitive performance.
This study expands the research on IT's impact on competitive performance by focusing on IT-enabled
sharing capability and the indirect effect of this capability on rm performance. Most prior research
focused on the technical aspects of IT infrastructure and tested direct relationships.
In this research, a large-scale survey was used to collect 198 responses from U.S. manufacturers to
investigate this framework. Structural Equation Modeling was used to examine and test the measurement and structural models. The results indicated that IT-enabled sharing capability is associated with
exibilities in a manufacturer's supply chain, which in turn are associated with the rm's competitive
performance. This nding suggests that a rm should focus on exibilities in the supply chain to improve
its performance. IT-enabled sharing capability is an antecedent for improving these exibilities.
Longitudinal research, multiple respondents, and techniques for improving response rate should be
considered in future research to provide more robust results.
& 2014 Elsevier B.V. All rights reserved.
Keywords:
IT-enabled sharing capability
A manufacturer's supply chain exibility
Extended resource based view (ERBV)
Dynamic view of RBV
1. Introduction
A recent survey of corporate boards of directors by the Gartner
Group found that 52% believe that maintaining competitive
performance is of extremely high importance (Lopez, 2011). The
same survey, however, indicated that there is no real consensus
about how that maintenance of competitive performance is
related to IT capabilities. IT infrastructure itself does not differentiate a rm from its competitors because IT applications are
becoming increasing standardized (Zhang and Dhaliwal, 2009).
However, greater rm performance and sustainable competitive
performance can be achieved when IT infrastructure is used to
meet customer-determined organizational needs. IT infrastructure
can create a strong positive impact on the effectiveness of a
manufacturing rm's supply chain when it enables the rm's
IT-enabled sharing capability. These sharing capabilities can help
n
Correspondence to: WH223, School of Business and Economics, Elizabeth City
State University, Elizabeth City, NC 27909, USA. Tel.: 1 252 335 8533;
fax: 1 252 335 3491.
E-mail addresses: yjin@mail.ecsu.edu (Y. Jin),
mark.vonderembse@utoledo.edu (M. Vonderembse),
traguna@utoledo.edu (T.S. Ragu-Nathan), jtsmirh@mail.ecsu.edu (J.T. Smith).
http://dx.doi.org/10.1016/j.ijpe.2014.03.016
0925-5273/& 2014 Elsevier B.V. All rights reserved.
25
26
Research Model
00
Product
Production Logistics
Dev. Flex Flex
Flex
Annual Industry
Sales
Sector
CA1
ITSC2
ITSC3
IT-enabled
sharing
capability
H1
Supply chain
flexibility
H2
ITSC4
Competitive
advantage
CA2
CA3
ITSC6
Suppliers
flexibility
Supply base
flexibility
H3
Fig. 1. The research model.
the rm and between the rm and its suppliers. Thus, they are the
strategic sources of sustainable competitive performance for the
rm (Duncan, 1995; Kayworth, et al., 2001).
The relational extension of the RBV incorporates the relational
view theory, named the extended resource based view (ERBV) by
Lewis et al. (2010), arguing that the unique capabilities of a rm
may also reside in the relationship with its suppliers (Dyer and
Singh, 1998). According to ERBV, a particular IT infrastructure may
develop sustainable competitive performances by generating a
relation-specic capability, which is difcult for competitors to
copy. For example, EDI is an openly available information technology that connects a rm with its suppliers and facilitates information sharing with them. Yet, the effectiveness of using EDI largely
depends on the characteristics of the specic buyersupplier
relationship, such as the level of commitment to use the technology and the willingness to share information. These long-term
oriented characteristics foster specic investment in a particular
buyersupplier relationship, which in turn improves both information sharing and the connectivity between manufacturer and
supplier (Fawcett et al., 2011). For example, the relationship could
include the ability for the manufacturer to check the supplier's
production lead time status before ordering or the use of procurement modules that automatically ordered necessary raw materials
on receipt of a customer order. A rm's IT-enabled sharing
capability generates the competitive performances over time,
because such capability is relation-specic and thereby a unique
resource.
2.2. IT-enabled sharing capability
Typically, technology by itself is not a rare or heterogeneously
differentiated resource. IT-enabled sharing capability, depending
on the way the IT is implemented, however, can be unique and
difcult to imitate (Radhakrishnan et al., 2008). Two aspects of
IT-enabled sharing capability have been used to explain how the
rm can exploit proprietary deployment of IT infrastructure to
enhance organization capability effectively.
The rst aspect, named IT range, represents the extent to which
a manufacturing rm can provide the seamless information ow in
an accurate and timely manner within the rm and with its
suppliers (Bharadwaj, 2000; Closs et al., 2005; Keen, 1991). This
competitive information of a manufacturing rm can be classied
into three types manufacturing information, logistics information,
27
needed to meet the nal customers' demands (Das and AbdelMalek, 2003; Pujawan, 2004). This exibility has positive impacts
on a manufacturer's product development, production, logistics,
and other capabilities (Lau, 1999). To a manufacturer, the most
important elements of suppliers' exibility are order quantity and
product variety, which determine its ability to provide the right
amount and the right type of products in a timely manner
(Tachizawa and Thomsen, 2007). Because a manufacturer is striving to satisfy its customers on multiple competitive dimensions
simultaneously, it views suppliers' exibility as a way of integrating both its needs and those of the customers.
Supply base exibility is a rm's ability to change its buyer
supplier linkage without high penalties (cost, time, and effort)
(Gosain et al., 2004; Lummus et al., 2003). Supply base exibility
resides in the connection between the manufacturing rm and
supplier rms, not within these rms, as is the case with both a
manufacturing rm's exibility and suppliers' exibility. This
exibility is important because supply chain performance depends
on the performance of each supply chain member and the
effectiveness of the connections among the members. Considering the different ways of varying a buyersupplier relationship
(e.g., adding a new supplier, changing the closeness of the
relationship, switching purchasing orders to an alternative supplier), two focuses of exibility (i.e., range and mobility) stand out
(Pujawan, 2004; Stevenson and Spring, 2007). First, the range of
supply base exibility indicates the number of qualied suppliers.
When emergencies arise, the availability of qualied suppliers to
which orders can be switched is critical in maintaining the
expected manufacturing schedule. For example, the 2011 tsunami
in Japan and ooding in Thailand caused severe disruption for
some auto companies with key suppliers in those countries and
relatively few alternatives in other countries (Powell, 2011).
Second, mobility or responsiveness represents the manufacturer's
efciency in developing new suppliers, adjusting supplier relationships, and switching purchasing orders. When rapid adjustments
are made at low cost, the competitive position of the supply chain
is maintained.
Suppliers' exibility and supply base exibility correlate with
each other and are associated to the rm's exibility. These two
types of exibilities are an asset specic to the manufacturing rm,
which both adds value to the suppliermanufacturer relationship
(Dyer and Singh, 1998) and is imperfectly imitable and imperfectly
suitable as well as rare (Lavie, 2006). A manufacturer with a high
supply base exibility (e.g., a strong ability to identify a new
supplier or make a quick transition if necessary) can determine the
best source to use to meet customer demand, even if that means
using a different supplier than would normally be used (Gosain
et al., 2004; Gosling et al., 2010). When a rm has a broad supply
base, it can use that base to respond to last-minute needs from
different quantities of supplies or different supplies altogether
without having any adverse effect on the performance of the
supply chain. This ability gives the rm a high level of suppliers'
exibility. IT-enabled sharing capability facilitates supply base
exibility and suppliers' exibility by enhancing the depth of
information shared. This depth of information reects the partnership nature of the relationship rather than merely the presence of
the supplier in the network. Further, the dynamic adaptability
created by these partnerships creates a high level of exibility for
the manufacturer that helps it respond to various customers'
demands. For these reasons, a manufacturing rm's supply chain
exibility is a higher order construct that includes product development exibility, production exibility, logistics exibility, suppliers'
exibility, and supply base exibility (Mishra and Shah, 2009).
IT-enabled sharing capability inuences all these exibilities.
First, IT-enabled sharing capability inuences the rm's exibility
28
2005; Fawcett et al., 1996; Keen, 1991; Li, 2006; Li et al., 2005; Zhang
et al., 2006). Keen (1991) discusses IT infrastructure in terms of IT
reach and IT range and their impact on competitive advantage. Closs
et al. (2005) suggest that there are two elements that are of critical
interest here timeliness and sharing between the rm and its
supplier. Fawcett et al. (1996) suggest that two major categorizations
manufacturing information and logistics information. Li et al. (2005)
suggests the importance of accuracy and timely information. These
references translated into the inclusion of the rst three ITSC items.
Li (2006) and Zhang et al. (2006) indicate the importance of the
connection of relevant parts in the manufacturing rm suggesting
items regarding the use of the IT system in a way that supports
competitive advantage for the rm.
All ve exibility variables were developed based on two
popular aspects of exibility, range and mobility/adaptability
(e.g., Koste and Malhotra, 1999; Swafford et al., 2006). Range
represents the number of states an organization can adopt;
mobility is the ease of changing from one state to another in
terms of cost and time. From these two aspects, each exibility
variable was developed from various exibility literatures. The
items measuring product development exibility came from
existing literature, which discussed the ability for new product
introduction and design change accommodation (e.g., Narasimhan
et al., 2004; Vickery et al., 1999). Production exibility items were
built on the literature of volume and mix exibilities (e.g.,
Swafford et al., 2006; Zhang et al., 2003). Logistics exibility items
came from the concept of Zhang et al. (2002)'s physical supply and
purchasing exibilities, with an emphasis on the ability of a rm's
inbound transportation to provide the needed materials and
suppliers. Suppliers' exibility measures were based on Lau
(1999)'s analysis of a supplier's ability to change production
volume and variety. Supplier base exibility items were extended
from Gosain et al. (2004)'s partnering exibility regarding the ease
of replacing the existing supplier with a new supplier. We added
two items to reect the different ways of changing a manufacturer's supply base.
Items focusing on the rm's competitive advantage, the potential to achieve the competitive performance, were modied from
performance measures used in prior research (e.g., Krause et al.,
2007). All variables were measured through managerial perceptions by using 5-point Likert scales (1 strongly disagree to
5 strongly agree).
Two most commonly used control variables, a rm's industry
sector (SIC code) and the number of employees, are used in the
research model. First, SIC codes are recoded as nine dummy
variables (SIC20, SIC25, SIC28, SIC30, SIC34, SIC35, SIC36, SIC37,
and SIC38) to classify the sample into 10 groups according to a
manufacturing rm's industry sector. Second, the number of
employees is recoded as three binary variables (EMP_1 for rms
under 100 employees; EMP_2 for rms with 100249 employees;
and EMP_3 for rms with 250999 employees) so that manufacturing rms in this research were grouped into four categories
according to the rm size. These variables are included to control
the effects of industry sector and rm size on competitive
advantage so that the research model is a complete model and
results are rigorous.
A questionnaire was developed after conducting a careful
literature review of IT infrastructure, supply chain exibility, and
rm performance to ensure the initial content validity of instruments (Haynes et al., 1995). The questionnaire was pre-tested to
rene the content validity through consultation with professionals
and practitioners who have extensive knowledge in this eld.
A Q-sort method was applied in a pilot study to assess the preliminary convergent validity and discriminant validity of the
instruments (Moore and Benbasat, 1991). Items were revised as
needed and the nal version is given in Appendix A.
29
Table 1
Prole of respondents.
Frequency
Industries (SIC code)
Electronic/electrical equipment (36)
Industrial/commercial machinery (35)
Instruments and related products (38)
Chemicals (28)
Transportation equipment (37)
Furniture and xtures (25)
Rubber and plastic products (30)
Fabricated metal products (34)
Food (20)
Others (39)
Total
Percentage (%)
60
30
25
20
16
11
9
9
7
11
30.30
15.15
12.63
10.10
8.08
5.56
4.54
4.54
3.54
5.56
198
100.00
30
Table 2
Descriptive statistic, factor loadings, critical ratio, and R2 from CFA.
Item
Mean
IT-enabled
ISC1a
ISC2
ISC3
ISC4
ISC5a
ISC6b
S.D
Factor loading
3.444
1.068
0.701
2.909
1.172
0.790
3.444
1.083
0.664
3.338
1.197
3.116
1.193
0.828
Competitive Advantage(CA)
4.525
0.674
CA1b
CA2
4.222
0.873
CA3
3.778
1.062
0.703
0.781
0.584
Critical ratio
R2
9.898
11.174
9.308
0.492
0.625
0.441
0.686
8.228
6.854
0.494
0.610
0.341
PDF2b
3.525
1.001
0.747
PDF3
4.030
0.842
0.681
PDF4
3.768
0.965
0.869
8.977
10.604
0.559
0.464
0.755
Production
PF1b
PF2
PF3a
PF4
0.803
0.890
0.751
13.044
11.108
0.645
0.793
0.564
0.882
0.848
11.322
0.777
0.720
(SBF)
1.023
1.002
1.104
0.745
0.847
0.836
11.000
10.935
0.554
0.718
0.699
0.814
0.821
0.631
10.186
8.426
0.663
0.675
0.398
0.745
0.792
0.742
0.605
0.583
5.619
5.959
5.930
5.203
0.555
0.627
0.550
0.366
0.340
a
b
Flexibility (PF)
3.687
0.984
3.631
1.023
3.975
0.920
3.742
0.878
Table 3
Descriptive statistic, Cronbach's alpha, CR, AVE, MSV, and ASV.
ITSC
CA
PDF
PF
LF
SF
SBF
SCF
Mean S.D.
Cronbach's
alpha
CR
AVE
Maximum
Average
shared variance shared
variance
3.440
2.857
3.604
3.598
3.428
3.528
3.093
2.657
0.837
0.690
0.751
0.855
0.848
0.796
0.848
0.858
0.846
0.733
0.812
0.857
0.856
0.802
0.851
0.824
0.561
0.482
0.592
0.667
0.749
0.578
0.657
0.488
0.274
0.555
0.467
0.466
0.250
0.316
0.247
0.555
0.913
0.421
0.693
0.744
0.658
0.655
0.709
0.405
0.144
0.268
0.248
0.275
0.181
0.242
0.172
0.407
31
32
Table 4
Summary of hypotheses testing.
Mediated model
AMOS coefcient
ITSC-SCF
SCF-CA
ITSC-CA
SIC20-CA
SIC25-CA
SIC28-CA
SIC30-CA
SIC34-CA
SIC35-CA
SIC36-CA
SIC37-CA
SIC38-CA
EMP_1-CA
EMP_2-CA
EMP_3-CA
a
b
0.403
4.802a
0.805
7.018a
0.107
0.411
0.052
0.670
0.183
2.218b
0.053
0.541
0.026
0.324
0.040
0.498
0.035
0.318
0.242
1.818
0.055
0.581
0.022
0.208
0.041
0.186
0.098
0.395
0.116
0.899
2
296.991, df 171; CFI 0.937, NFI 0.870; RMR 0.044;
RMSEA 0.061, 90% CI: 0.0490.073
AMOS coefcient
t-value
0.438
1.221
0.108
1.102
1.101
0.938
0.043
0.343
0.045
0.441
0.055
0.539
0.014
0.103
0.237
1.414
0.035
0.296
0.052
0.398
0.093
0.307
0.179
0.525
0.043
0.249
2 149.135, df 73; CFI 0.947, NFI 0.907; RMR 0.045;
RMSEA 0.073, 90% CI: 0.0560.089
p o 0.001.
p o0.05.
enable the rm to build exibility and achieve multiple competitive objectives and as such both improve the bottom line for the
corporation. Such competency will bring more prots for the rm.
5.1. Limitations and future research
Although this research provides several signicant contributions,
some limitations need to be addressed in future research. First, this
research is a cross-sectional study. Future longitudinal research may
provide further insights underlying relationships between ITenabled sharing capability, supply chain exibility, and competitive
performance. Second, multiple respondents, multiple methods for
obtaining measures and randomizing the order of items can be used
in future research to moderate the mono-respondent problem.
Third, future research might attempt to improve the response rate
by using different media for data collection, reaching the intended
respondents via state-of-the-art techniques, shortening the questionnaire, and establishing collaborative relationships between
researchers and respondents (Dillman et al., 2009). Fourth, because
of the low reliability of competitive performance, a second-order
construct might be considered to better represent this variable. In
addition, the perceptual measures of business performance could be
added in the survey to test how IT-enabled sharing capabilities,
supply chain exibilities, and other cumulative capabilities will
inuence the manufacturing rm's performance. Moreover,
although the model ts are acceptable, they were not great. This
might be the result of some double-barreled items for IT-enabled
sharing capability. For example, Our IT system provides accurate
and timely information can be broken up into two items Our IT
system provides accurate information and Our IT system provides
timely information. Balanced items between the internal and the
external measures for IT-enabled sharing capability are recommended as well.
In addition to these methodological limitations, different
research models can be considered. Human skills are discussed
widely in IT infrastructure management (Ray et al., 2005). People
decide what information technology to use and how to use it.
Employee knowledge and ability constrains the IT-enabled sharing
capability. Examining the interdependence between human
capital and information technology and the effect of their interactions on the rm's supply chain exibility and competitive
33
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