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Supply management capabilities, routine bundles and their impact on firm performance

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  • Day, Marc
  • Lichtenstein, Scott
  • Samouel, Phillip

Abstract

Despite the generally positive contribution of supply management capabilities to firm performance their respective routines require more depth of assessment. Using the resource-based view we examine four routines bundles comprising ostensive and performative aspects of supply management capability – supply management integration, coordinated sourcing, collaboration management and performance assessment. Using structural equation modelling we measure supply management capability empirically as a second-order latent variable and estimate its effect on a series of financial and operational performance measures. The routines-based approach allows us to demonstrate a different, more fine-grained approach for assessing consistent bundles of homogeneous patterns of activity across firms. The results suggest supply management capability is formed of internally consistent routine bundles, which are significantly related to financial performance, mediated by operational performance. Our results confirm an indirect effect of firm performance for ‘core’ routines forming the architecture of a supply management capability. Supply management capability primarily improves the operational performance of the business, which is subsequently translated into improved financial performance. The study is significant for practice as it offers a different view about the face-valid rationale of supply management directly influencing firm financial performance. We confound this assumption, prompting caution when placing too much importance on directly assessing supply management capability using financial performance of the business.

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  • Day, Marc & Lichtenstein, Scott & Samouel, Phillip, 2015. "Supply management capabilities, routine bundles and their impact on firm performance," International Journal of Production Economics, Elsevier, vol. 164(C), pages 1-13.
    • Handle: RePEc:eee:proeco:v:164:y:2015:i:c:p:1-13
    DOI: 10.1016/j.ijpe.2015.02.023
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    3. Täks, Viire & Vadi, Maaja, 2019. "Who and how do participate strategic planning?," Discourses in Social Market Economy 2019-03, OrdnungsPolitisches Portal (OPO).
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    5. Graça Miranda Silva & Paulo J. Gomes & Helena Carvalho & Vera Geraldes, 2021. "Sustainable development in small and medium enterprises: The role of entrepreneurial orientation in supply chain management," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 3804-3820, December.
    6. Sreedevi, R. & Saranga, Haritha, 2017. "Uncertainty and supply chain risk: The moderating role of supply chain flexibility in risk mitigation," International Journal of Production Economics, Elsevier, vol. 193(C), pages 332-342.

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