The Mediating Role of Information Technology (IT) on the relationship between Supply Chain Management and Firms Performance: Evidence from Rwanda
Author(s)
Download Full PDF Pages: 42-61 | Views: 503 | Downloads: 145 | DOI: 10.5281/zenodo.5066239
Abstract
This study's major objective is to evaluate the mediating role of IT on the relationship between supply chain management and firm performance in Rwanda. The research design used simple random and stratified sampling methods as a representative sample of SMEs in Rwanda. The sample size of the study was 300 respondents. In pursuit of data collection for the study, both supplier and buyer relationships were incorporated. However, the participants were logistics managers, procurement or purchasing officers/managers, or supply chain managers who considered the field interviews' appropriate participants. The data was analyzed using appropriate models for appropriateness, convenience, clarity, and simplicity. The models such as structural equation modelling was used be evaluate the direct and indirect effect of IT on supply chain management in Rwanda. However, the elliptical reweighted least squares (ERLS) procedure of the EQS program was used as the statistical tools to analyze the research. The overall fit statistics show that the model suits the results very well in its entirety (x2 = 1076.96 with df = 249, CFI = 0.917, RMSEA = 0.062, NFI =0.913, NNFI = 0.956). However, IT advancement has a substantial positive impact on both IT alignment (t = 0.321, p<0.05) and supply chain management (t =0.612, p<0.05) in the hypothesized relationship. Thus, hypothesis 2 is supported in this findings which implies that information technology infrastructure positively relates to supply chain management as it is evidential that both IT alignment and advancement showed positive and significant relationship with supply chain management. The total effect was assessed considering supply chain management with the mediating effect of IT alignment (t=0.321, p<0.05), and IT advancement (t=0.612, p<0.05) as well as firm performance (t=0.512, p<0.05) indicating that H1 and H3 are supported which implies that supply chain management positively relates to IT infrastructure which positively influence firms’ performance significantly. To attract and retain customers, businesses must be committed to consistently providing high-quality services at a low or managed rate. This can be accomplished by instilling a customer service philosophy in the supply chain management department. In today's world, Information and Communication Technology (ICT) is rapidly evolving. In light of the findings, it was observed that information technology plays crucial role in supply chain management such that it eliminates paper works and smoothen workflow.
Keywords
Supply chain management; Information technology; Firm performance; Marketing performance; Firm size
References
i. Achrol, R. S., & Etzel, M. J. (2003). The Structure of Reseller Goals and Performance in Marketing Channels. Journal of the Academy of Marketing Science, 31(2), 146-163.
ii. Akkermans, H.A., Bogerd, P., Yucensan, E., & Wassenhove, L.N. (2003). The impact of ERP on supply chain management: Exploratory findings from a European Delphi Study. European Journal of Operational Research, 146, 284-301.
iii. Amit, R., & Schoemaker, P. J. H. (1993). Strategic assets and organizational rent. Strategic Management Journal, 14(1), 33– 46.
iv. Auramo, J., Kauremaa, J., & Tanskanen, K. (2005). Benefits of IT in supply chain management: An explorative study of progressive companies. International Journal of Physical Distribution & Logistics Management. 35, 82-100
v. Bagorogoza, J., & Waal, A. D. (2010). The Role of Knowledge Management in Creating and Sustaining High Performance Organizations the Case of Financial Institutions in Uganda. World Journal of Entrepreneurship Management and Sustainable Development, 6(4), 307-323.
vi. Bakar, L. J., & Ahmad, H. (2010). Assessing the Relationship between Firm Resources and Product Innovation Performance. Business Process Management Journal, 16(3), 420-435.
vii. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.
viii. Barney, J., Wright, M., & Ketchen Jr., D. J. (2001). The resource-based view of the firm: Ten years after 1991. Journal of Management, 27(6), 625–641.
ix. Bensaou, M. (1997). Interorganizational Cooperation: The Role of Information Technology an Empirical Comparison of U.S. and Japan Supplier Relations. Information Systems Research, 8(2), 107-123.
x. Bentler, P. M. (1989). EQS Structural Equations Program manual. Encino, CA’ Multivariate Software Inc.
xi. Bharadwaj, A. S. (2000). A resource-based perspective on information technology capability and firm performance: An empirical investigation. MIS Quarterly, 24(1), 169–196.
xii. Boddy, D., Macbeth, D. & Wagner, B. (2000). Implementing collaboration between organizations: an empirical study of supply chain partnering. Journal of Management Studies, 37(7), 1003-1018.
xiii. Boone, T., & Ganeshan, R. (2001). The effect of information technology on learning in professional service organizations. Journal of Operations Management, 19(4), 485– 495.
xiv. Booth, M. E., & Philip, G. (1998). Technology, competencies, and competitiveness: The case for reconfigurable and flexible strategies. Journal of Business Research, 41(1), 29– 40.
xv. Bowersox, D.J., Closs, D.J., Stank, T.P., (1999). 21st century logistics: Making supply chain integration a reality. East Lansing: Michigan State University and Council of Logistics Management.
xvi. Bryman, A., & Bell, E. (2015). Business research methods. Oxford University Press, USA.
xvii. Brynjolfsson, E. (1993). The productivity paradox of information technology. Communications of the ACM, 36(12), 67– 77.
xviii. Castelli, C.M. & Brun, A. (2010). Alignment of retail channels in the fashion supply chain an empirical study of Italian fashion retailers. International Journal of Retail & Distribution Management, 38(1), 24-44.
xix. Clark, T. H., & Stoddard, D. B. (1996). Interorganizational business process redesign: Merging technological and process innovation. Journal of Management Information Systems, 13(2), 9 – 28.
xx. Clemons, E. K., & Row, M. C. (1991). Sustaining IT advantage: The role of structural differences. MIS Quarterly, 15(3), 275– 292.
xxi. Clemons, E. K., & Row, M. C. (1993). Limits to interfirm coordination through information technology: Results of a field study in consumer packaged goods distribution. Journal of Management Information Systems, 10(1), 73– 95.
xxii. Collis, D. J. (1994). Research note: How valuable are organizational capabilities? Strategic Management Journal, 15, 143– 152
xxiii. Cooper, M.C., Lamberth, D.M., & Pagh, J.D. (1997). Supply chain management: more than a new name for logistics. The International Journal of Logistics Management, 8(1), 1-14.
xxiv. Christopher, M., & Peck, H. (2007). ‘Building the Resilient Supply Chain. Retrieved from http://www.martinchristopher.info/downloads/building%20the%20resilient%20supply%20chain.pdf
xxv. Day, G. S. (1994). The capabilities of market-driven organizations. Journal of Marketing, 58(4), 37–52.
xxvi. Day, M. & Lichtenstein, S. (2006). Strategic supply management: the relationship between supply management practices, strategic orientation and their impact on organisational performance. Journal of Purchasing and Supply Management, 12(6), 313-321.
xxvii. De Toni, A. & Nassimbeni, G. (2000). Just-in-time purchasing: an empirical study of operational practices, supplier development and performance. Omega: The International Journal of Management Science, 28(6), 31-651.
xxviii. Dobbs, M., & Hamilton, R.T. (2006). Small Business Growth: Recent Evidence and New Directions. International Journal of Entrepreneurial Behaviour and Research, 13 (5), 296-322.
xxix. Frohlich, M. T. (2002). E-integration in the supply chain: Barriers and performance. Decision Sciences, 33(4), 537– 556.
xxx. Gandhi, A.V., Shaikh, A., & Sheorey, P. A. (2017). Impact of supply chain management practices on firm performance: Empirical evidence from a developing country. International Journal of Retail & Distribution Management, 45(4), 366-384, https://doi.org/10.1108/IJRDM-06-2015-0076
xxxi. Garay-Rondero, Z.L., Martinez-Flores, L.J., Smith, R.N., Morales, S.O.C., & Aldrette-Malacara, A. (2019). Digital supply chain model in Industry 4.0. Journal of Manufacturing Technology Management, 1741-038X, DOI 10.1108/JMTM-08-2018-0280
xxxii. Garrigos-Simon, F. J., & Marques, D. P. (2004). Competitive Strategies and Firm Performance: A Study in the Spanish Hospitality Sector. Management Research, 2(3), 251–269.
xxxiii. Gatignon, H., & Xuereb, J. (1997). Strategic orientation of the firm and new product performance. Journal of Marketing Research, 34(1), 77–90.
xxxiv. Gharakhani, D., Mavi, R.K. and Hamidi, N. (2012). Impact of supply chain management practices on innovation and organizational performance in Iranian companies. African Journal of Business Management, 6(19), 5939-5949.
xxxv. Grant, R.M., Jammine, A.P., & Thomas, H. (1988). Diversity, Diversification, and Profitability among British Manufacturing Companies 1972–1984. Academy of Management Journal, 31, 771–801.
xxxvi. Grant, R. M. (1996, Winter Special Issue). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17, 109–122.
xxxvii. Gravetter, F. J., & Forzano, L. A. B. (2018). Research methods for the behavioural sciences. Cengage Learning.
xxxviii. Gunasekaran, A. & Chung, W.W.C. (2004). Special issue on supply chain management for the 21st century organizational competitiveness. International Journal of Production Economics, 87(3), 209-212.
xxxix. Hausman, A., & Stock, J. R. (2003). Adoption and implementation of technological innovations within long-term relationships. Journal of Business Research, 56(8), 681– 686.
xl. Hair, J., Ringle C. M., & Sarstedt, M. (2011). PLS-SEM: Indeed, a Silver Bullet. Journal of Marketing Theory and Practice, 19(2), 139–151.
xli. Hillman, M., & Keltz, H. (2007). Managing risk in the supply chain – A quantitative study’. Retrieved from http://www.amrresearch.com/Content/View.aspx?pmillid=19994
xlii. Hult, G.T.M., Ketchen, D.J., & Slater, S.F. (2004). Information Processing, Knowledge Development, and Strategic Supply Chain Relationship. Academy of Management Journal, 47(2), 241-253.
xliii. Hunt, S., & Morgan, R. (1995, April). The comparative advantage theory of competition. Journal of Marketing, 59, 1 – 15.
xliv. Inkpen, A.C., & Dinur, A. (1998). Knowledge Management Process and International Joint Ventures. Organization Science, 9(4), 454-468.
xlv. Jadhav, V.V. (2015). Role of Information Technology in Supply Chain Management. International Journal of Management Research & Review, 5(6), 369-379.
xlvi. Kearns, G. S., & Lederer, A. L. (2003). A resource-based view of strategic IT alignment: How knowledge sharing creates competitive advantage. Decision Sciences, 34(1), 1– 19.
xlvii. Kumar, N., Stern, L. W., & Anderson, J. G. (1993). Conducting interorganizational research using key informants. Academy of Management Journal, 36(6), 1633–1651.
xlviii. Lambert, D. M., & Cooper, M. C. (2000). Issues in Supply Chain Management. Industrial Marketing Management, 29, 65-83.
xlix. Lee, L. S., Fiedler, K. D., & Smith, J. S. (2008). Radio Frequency Identification (RFID) Implementation in the Service Section: A Customer-facing Diffusion Model. International Journal of Production Economics, 11(2), 587 – 600.
l. Li, T., & Calantone, R. J. (1998). The impact of market knowledge competence on new product advantage: Conceptualization and empirical examination. Journal of Marketing, 62(4), 13– 29.
li. Li, S., Rao, S., Ragu Nathan, T. & Ragu Nathan, B. (2005). Development and validation of a measurement instrument for studying supply chain management practices. Journal of Operations Management, 23(6), 618-641.
lii. Lin, C. H., Peng, C. H., & Kao, D. T. (2008). The innovativeness effect of market orientation and learning orientation on business performance. International Journal on Manpower, 29(8), 725-772. http://dx.doi.org/10.1108/01437720810919332
liii. Lin, F., Huang, S., & Lin, S. (2002). Effects of information sharing on supply chain performance in electronic commerce. IEEE Transactions on Engineering Management, 49(3), 258– 268.
liv. Lincoln, J. R., Ahmadjian, C. L., & Mason, E. (1998), Organizational Learning and Purchase-Supply Relations in Japan: Hitachi, Matsushita, and Toyota Compared. California Management Review, 40(3), 241.
lv. MacCarthy, B.L., Blome, C., Olhager, J., Srai, J.S., & Zhao, X. (2016). Supply chain evolution theory, concepts and science. International Journal of Operations & Production Management, 36(12), 1696-1718.
lvi. Malhotra, A., Gosain, S., & El Sawy, O.A. (2005). Absorptive Capacity Configurations in Supply Chains: Gearing for Partner Enabled Market Knowledge Creation. MIS Quarterly, 29(1), 145-187.
lvii. Malone, T. W., Yates, J., & Benjamin, R. I. (1987). Electronic markets and electronic hierarchies. Communications of the ACM, 30(6), 484–497.
lviii. McGinnis, M. A., & Kohn, J. W. (1993). Logistics strategy, organizational environment, and time competitiveness. Journal of Business Logistics, 14(2), 1– 23.
lix. Min, S., Zacharia, Z.G., & Smith, C.D. (2019). Defining supply chain management: in the past, present, and future. Journal of Business Logistics, 40(1), 44-55.
lx. Mohr, J., & Sohi, R. S. (1995). Communication flows in distribution channels: Impact on assessments of communication quality and satisfaction. Journal of Retailing, 71(4), 393– 416.
lxi. Mukhopadhyay, T., Rajiv, S., & Srinivasan, K. (1997). Information technology impact on process output and quality. Management Science, 43(12), 1645–1659.
lxii. Narasimhan, R. & Kim, S.W. (2002). Effect of supply chain integration on the relationship between diversification and performance: evidence from Japanese and Korean firms. Journal of Operations Management, 20(3), 303-323.
lxiii. Niu, Y. (2010). The impact of information technology on supply chain Performance: a knowledge management perspective. Unpublished Doctoral dissertation, A dissertation University of North Carolina, Charlotte, 1-221.
lxiv. Oettmeier, K., & Hofmann, E. (2016). Impact of additive manufacturing technology adoption on supply chain management processes and components. Journal of Manufacturing Technology Management, 27(7), 944-968.
lxv. Oh, J., & Rhee, S. K. (2008). The Influence of Supplier Capabilities and Technology Uncertainty on Manufacturer-Supplier Collaboration. International Journal of Operations & Production Management, 28(6), 490-517.
lxvi. Philip, G., & Booth, M. E. (2001). A new six ’S’ framework on the relationship between the role of Information Systems (IS) and competencies in ’IS’ management. Journal of Business Research, 51(3), 233– 247.
lxvii. Powell, T. C. (1992). Organizational alignment as competitive advantage. Strategic Management Journal, 13(2), 119–134.
lxviii. Powell, T. C., & Dent-Micallef, A. (1997). Information technology as competitive advantage: The role of human business, and technology resources. Strategic Management Journal, 18(5), 375– 405.
lxix. Porter, M. E. (2001). Strategy and the internet. Harvard Business Review, 79(3), 62– 78.
lxx. Rai, A., Patnayakuni, R., & Seth, N. (2006). Firm performance impacts of digitally enabled supply chain integration capabilities. MIS Quarterly, 30(2), 225-246.
lxxi. Raut, R.D., Bhasin, H.V. & Kamble, S.S. (2012). Analysing the effect of uncertain environmental factors on supplier-buyer strategic partnership (SBSP) by using structural equation model (SEM). International Journal of Procurement Management, 5(2), 202-228.
lxxii. Ringle, C.M., Wende, S., & Becker, J.M. (2015). SmartPLS 3, Hamburg: SmartPLS. Retrieved from http://www.smartpls.com
lxxiii. Raghunathan, S., & Yeh, A. (2001). Beyond EDI: Impact of Continuous Replenishment Program (CRP) between a Manufacturer and its Retailers. Information Systems Research, 12(4), 406-419.
lxxiv. Rogers, D. S., Daugherty, P. J., & Stank, T. P. (1993). Enhancing service responsiveness: The strategic potential of EDI. Logistics Information Management, 6(3), 27– 32.
lxxv. Rosli, M. M., & Sidek, S. (2013). The impact of innovation on the performance of small and medium manufacturing enterprises: Evidence from Malaysia. Journal of Innovation Management in Small & Medium Enterprises, 1.
lxxvi. Rubio, A., & Aragon, A. (2009). SMEs Competitive Behavior: Strategic Resources and Strategies. Management Research, 7(3), 171–190.
lxxvii. Sahin, F., & Robinson, E. P. (2002). Flow coordination and information sharing in supply chains: Review, implications, and directions for future research. Decision Sciences, 33(4), 505– 536.
lxxviii. Seidler, J. (1974). On using informants: A technique for collecting quantitative data and controlling for measurement error in organizational analysis. American Sociological Review, 39, 816–831.
lxxix. Scott, J.E. (2000). Facilitating Interorganizational Learning with Information Technology. Journal of Management Information Systems, 17(2), 81-113.
lxxx. Segars, A. H., Grover, V., & Teng, J. T. C. (1998). Strategic information systems planning: Planning system dimensions, internal coalignment, and implications for planning effectiveness. Decision Sciences, 29(2), 303– 345.
lxxxi. Shah, R., Goldstein, S. M., & Ward, P.T. (2002). Aligning Supply Chain Management Characteristics and Interorganizational Information Systems Types: An Exploratory Study. IEEE Transactions on Engineering Management, 49(3), 282.
lxxxii. Sharma, R., & Kaur, D. (2017). Role of Information Technology in Supply Chain Management. Biz and Bytes, 8(1), 33-36.
lxxxiii. Shin, N. (1999). Does information technology improve coordination? An empirical analysis. Logistics Information Management, 12(1/2), 138– 144.
lxxxiv. Shore, B., & Venkatachalam, A. R. (2003). Evaluating the information sharing capabilities of supply chain partners: A fuzzy logic model. International Journal of Physical Distribution & Logistics Management, 33(9/10), 804– 824.
lxxxv. Sinkula, J. M., Baker, W. E., & Noordewier, T. (1997). A framework for market-based organizational learning: Linking values, knowledge, and behavior. Journal of Academy of Marketing Science, 25(4), 305– 318.
lxxxvi. Srivastava, R. K., Fahey, L., & Christensen, H. K. (2001). The resource based view and marketing: The role of market-based assets in gaining competitive advantage. Journal of Management, 27(6), 777– 802.
lxxxvii. Srivastava, R. K., Shervani, T. A., & Fahey, L. (1998). Market-based assets and shareholder value: A framework for analysis. Journal of Marketing, 62(1), 2– 18.
lxxxviii. Srivastava, R. K., Shervani, T. A., & Fahey, L. (1999). Marketing, business processes, and shareholder value: An organizationally embedded view of marketing activities and the discipline of marketing. Journal of Marketing Management, 63, 168– 179.
lxxxix. Srinivasan, K., Kekre, S., & Mukhopadhay, T. (1994). Impact of Electronic Data Interchange Technology on JIT Shipments. Management Science 40(10),
xc. Stank, T., Crum, M., & Arango, M. (1999). Benefits of interfirm coordination in food industry supply chains. Journal of Business Logistics, 20(2), 21–41.
xci. Stevens, G. (1989). Integrating the supply chain. International Journal of Physical Distribution & Materials Management, 19(8), 3-8, https://doi.org/10.1108/EUM0000000000329
xcii. Straub, D. W., Rai, A., & Klein, R. (2004). Measuring Firm Performance at the Network Level: A Nomology of the Business Impact of Digital Supply Networks. Journal of Management Information Systems, 21(1), 83–114.
xciii. Sundram, V.P.K., Ibrahim, A.R. & Govindaraju, V.G.R.C. (2011). Supply chain management practices in the electronics industry in Malaysia: consequences for supply chain performance. Benchmarking: An International Journal, 18(6), 834-855.
xciv. Tavitiyaman, P., Zhang, H. Q., & Qu, H. (2012). The Effect of Competitive Strategies and Organizational Structure on Hotel Performance. International Journal of Contemporary Hospitality Management, 24(1), 140- 159.
xcv. Taylor, D. A. (2003). Supply chain vs. supply chain. Computerworld, 37(45), 44– 45.
xcvi. Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533.
xcvii. Tippins, M. J., & Sohi, R. S. (2003). IT competency and firm performance: Is organizational learning a missing link? Strategic Management Journal, 24(8), 745– 761.
xcviii. Tu, M., Lim, M.K., & Yang, M.F. (2018). IoT-based production logistics and supply chain system – Part 2. Industrial Management & Data Systems, 118(1), 96-125.
xcix. Vakharia, A. J. (2002). E-business and supply chain management. Decision Sciences, 33(4), 495–504.
c. Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171–180.
ci. Wooldridge, J. M. (2000). Introductory econometrics: A modern approach. South-Western College Publishing
cii. Wolff, J.A., & Pett, T.L. (2006). Small-firm Performance: Modeling the Role of Product and Process Improvements. Journal of Small Business Management, 44 (2), 268-84.
ciii. Wu, F., Mahajan, V., & Balasubramanian, S. (2003). An analysis of ebusiness adoption and its impact on business performance. Journal of Academy of Marketing Science, 31(4), 425– 447.
civ. Xml.org, (2002). XML FAQ. Available at http://www.xml.org/xml/xmlfaq.shtml
cv. Zahra, S. A. (2008). Being Entrepreneurial and Market Driven: Implications for Company Performance. Journal of Strategy and Management, 1 (2), 125-142.
Cite this Article: