A co-ordination theory approach to restructuring the supply chain: an empirical study from the focal company perspective

Abstract

In the wake of the global financial crisis, a growing number of firms have begun to reassess their strategic goals and subsequently restructure their global supply chains. Since supply chain restructuring often leads to dramatic changes in the business paradigm, there is a need to examine whether or not it affects the way that firms co-ordinate their business activities and integrate product innovations across the supply chain. Nevertheless, little has been known about the antecedents of supply chain restructuring and the impact of supply chain restructuring on manufacturing practices. To fill the void in this line of research, we propose co-ordination theory that can explain causal links between supply chain restructuring and key strategic variables essential for the supply chain success from focal company perspectives. These strategic variables may include the extent of co-ordination with suppliers, the degree of information sharing with suppliers, and the level of organisational integration. Our empirical analysis, based on the International Manufacturing Strategy Survey IV, confirms the validity of co-ordination theory in that business initiatives intended for greater co-ordination and information sharing with suppliers turned out to be a major driving force behind supply chain restructuring, which facilitates organisational integration.

Keywords:

• supply chain restructuring
• co-ordination theory
• structural equation model
• focal company perspective