Effects of customer’s investment in ICT on partners’ decisions through the supply chain: an empirical study of the manufacturing industry in Thailand

ABSTRACT

Information and communication technology (ICT) is considered as a determinant of innovation and enhances the efficiency of a manufacturer. A compatible and integrated ICT system among supply chain partners can enhance the effectiveness of the information sharing in a supply chain. This paper investigates how a customer’s investment in ICT and investment for product innovation affects the ICT investment of a manufacturer and its next-tier suppliers. We used 254 valid data samples obtained from the Thai manufacturers collected from November 2017 to March 2018. We use the structural equation modelling technique in hypothesis testing. The results show that the customer’s investment in ICT and for product innovation significantly impacts ICT investment of the manufacturer and pressures its next-tier suppliers to adopt compatible ICT systems. Manufacturers will invest in ICT systems if customers invest in ICT systems and product innovation. Furthermore, the manufacturers can put pressure on their suppliers to adopt compatible ICT systems, to develop an integrated and compatible system for smooth and efficient operations. The findings also suggest that customers dominate the decision process of ICT investment in a supply chain, including the next-tier suppliers.

KEYWORDS:

• ICT investment
• ICT adoption
• customer pressure
• customer-supplier relationship
• supply chain

Acknowledgment

This work was supported by the Economic Research Institute of ASEAN and East Asia (ERIA), the Institute of Developing Economies (IDE-JETRO), the Logistics and Supply Chain Systems Engineering (LogEn) Research Unit, and the Sirindhorn International Institute of Technology, Thammasat University. The authors would like to express our gratitude to Dr. Yasushi Ueki for his guidance and the Thai manufacturing industry for providing support and valuable information.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes on contributors

Nuchjarin Intalar is a Ph.D. student at the School of Management Technology, Sirindhorn International Institute of Technology (SIIT), Thammasat University. She received a B.S. degree in Management Technology, and M. Eng. in Logistics and Supply Chain Systems Engineering from Sirindhorn International Institute of Technology (SIIT), Thammasat University. Her research interests are in the areas of supply chain management, quality management, knowledge management, innovation, and organization performance.

Chawalit Jeenanunta is an associate professor of School of Management Technology (MT), Sirindhorn International Institute of Technology, Thammasat University, Thailand. He received a B.S. degree in Mathematics and Computer Science, and M.Sc. in Management Science from the University of Maryland and he received his Ph.D. in Industrial and Systems Engineering from Virginia Polytechnic Institute and State University. His research interests are in the area of applications of operations research, simulation, large-scaled optimization and supply chain management.

Additional information

Funding

This work was supported by The Economic Research Institute for ASEAN and East Asia (ERIA) and Institute of Developing Economies Japan External Trade Organization (IDE-JETRO): [grant number ERIA2017].