Effect of Supply Chain Coordination on Performance: A Serial Mediation Model of Trust, Agility, and Collaboration

Introduction

Research on supply chain management (SCM) has largely focused on two distinct sets of determinants for an effective supply chain that result in improved performance (Leuschner et al., 2013; Mesquita et al., 2008; Whipple et al., 2010). The first set includes the relational determinants that originate within the inter-firm social exchange relationships and give rise to partnership-specific advantages that elevate performance in a way that neither partner can do independently (Cousins et al., 2006; Dyer and Singh, 1998; Law et al., 2011). The second set includes the capability-based determinants that allow firms to use their internal strategic resources as a means to enhance key outcomes that drive performance (Barney, 2001; Hunt and Davis, 2012; Ketchen and Hult, 2007). While previous studies have largely examined the independent benefits of relational (e.g., trust and collaboration), and capability-based (e.g., agility and coordinated supply chain) determinants of an effective SCM, their concurrent effects were omitted from this discussion. We argue that this omission limits our understanding of the indirect influence of each and in turn the implications on how firms can capitalize on both their supply chain relationships and capabilities to leverage their performance.

In this study we offer a comprehensive model that allows the simultaneous examination of how the relationship advantages and the capabilities that are configured within a supply chain lead to a high performing firm. Integrating the relational and the resource-based views we develop and test a serial mediation model investigating the effects of trust in supply chain (TSC), collaborative advantage (CA) (i.e., relational determinants), coordinated supply chain (CSC), and supply chain agility (SCA) (i.e., capability-based determinants) on firm performance. We argue that beyond their direct effects on firm performance, TSC, CSC, and SCA have indirect effects that are transmitted through CA. We argue that this is because of the localized relationships that limits the firms’ ability to open up and fully engage in collaborative relationships. Unless a firm establishes strong capabilities that secure the economic rents on its own it is unlikely that they will be willing to share the critical information or their competitive advantage with other firms although these firms are their supply chain partners. Therefore, developing capabilities that allow the firm to coordinate the supply chain will allow firms to escape the localized relationships and be able to deeply engage in trusting relationships, through which be able to quickly respond to the changes and uncertainties in the market, and turn arm’s length relationships into partnerships that provide CA. This network of indirect relationships we suggest serially transmits the effects of capabilities and relationships to firm performance.

Using hierarchical linear regression analysis to test our conceptual model consisting of constructs developed and verified in the literature (Cao and Zhang, 2010; Day et al., 2015; Swafford et al., 2006) we found that there is a serial mediation between the relational and capability-based determinants of a supply chain. In particular, TSC, SCA, and CA mediate the effect of CSC on firm performance through serially operating mediations. The findings suggest that relational and capability-based determinants of SCM complement each other in leveraging firm performance. Neither of them can be relied on independently for a firm’s enhanced performance. They operate interdependently forming a network of indirect relationships where the absence of one may result in the failure to capitalize on both supply chain relationships and capabilities. Thus, firms need to equally invest in trusting and collaborative relationships among their supply chain partners as well as strengthening their ability to establish a coordinated and agile supply chain. These findings highlight the entangled relationship of the relational facet of a supply chain with the internally driven capability facet.