The dual effect of environmental dynamism on proactive resilience: can governance mechanisms negate the dark side?

Abstract

Environmental dynamism can drive the need for proactive supply chain resilience capabilities by requiring the supply chain partners to stay focused and vigilant about potential changes and disruptions through early detection and projection. However, environmental dynamism can also simultaneously play a negative role as it could increase confusion, mismatch, and disagreement within buyer-supplier relationships. This research empirically tests this paradoxical effect of environmental dynamism on proactive resilience. Using the tenets of the relational view, this research examines the role of output-based contracts and trust in mitigating the adverse effects of environmental dynamism. Specifically, this research tests a moderated-moderated-mediation model based on survey data collected from manufacturing firms within the USA and the UK. The results show that a plural governance form of output-based contract guided by trust could reduce the possibility of conflicts and allow supply chains to take better advantage of the dynamism in their environment. When it comes to supply chain managers, this research provides a clear understanding of the dual role of environmental dynamism. Additionally, by demonstrating the benefits of strategic balance among plural governance mechanisms, the findings could enable managers to take better advantage of the dynamic environment and be proactively resilient.

Keywords:

• Supply chain resilience
• environmental dynamism
• conflict
• plural governance
• buyer-supplier relationship

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 In this study, we use the term resilience to indicate resilience at the interorganizational level (based on collective and complementary resources) and not at the firm-level (based on only firm’s internal resources).

Additional information

Notes on contributors

Murtaza Faruquee

Murtaza Faruquee is a Lecturer (Assistant Professor) in Operations Management in the Department of Management at the University of Sussex Business School. His current research is focused on supply chain resilience, sustainability, service, and humanitarian supply chains. His work has been published in journals including the International Journal of Operations and Production Management, Supply Chain Management: An International Journal, Production Planning & Control, among others. He completed a PhD in Supply Chain from The University of Nottingham. He won the Nottingham Tri-campus Postgraduate Award (2020) during his PhD. Throughout his academic degrees, he was awarded many scholarships. He has a substantial amount of global and SME industry experience.

Antony Paulraj

Antony Paulraj is a Professor of Operations and Supply Chain Management at NEOMA Business School. He completed his PhD in Operations Management from the Cleveland State University, Ohio, USA. His research interests are within operations management, supply chain management, strategic sourcing, sustainable supply chains and supply chain innovation. His work had been published in journals including Journal of Operations Management, Research Policy, International Journal of Operations and Production Management, Journal of Supply Chain Management, Journal of Business Ethics, among others. He has taught courses at undergraduate, masters, and doctorate programs. He has also been involved in numerous executive education as well as executive training programs in UK, Europe and India. Before joining academia, he worked as an information technology consultant for over 10 years. His consulting experience includes a range of organisations in the USA.

Chandra Ade Irawan

Chandra Ade Irawan is an Associate Professor in Operations Management at the Nottingham University Business School Ningbo China (UNNC). He has published his works in well-known international journals such as European Journal of Operational Research, Computer and Operations Research, Journal of Heuristics and Annals of Operations Research. Prior to the UNNC, he was a research fellow at the Department of Mathematics at the University of Portsmouth UK for 3 years. He received the BSc and MSc degree in industrial engineering from Bandung Institute of Technology (ITB) Indonesia in 1996 and 2003 respectively. He obtained his PhD in Management Science from the University of Kent UK in 2014.