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A Contingency Perspective on Centralization of Supply Chain Decision-making and its Role in the Transformation of Process R&D into Financial Performance

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  • Krotov, Konstantin V.
  • Germain, Richard N.

Abstract

The research examines whether centralized supply chain decisionmaking within the firm plays a role in how the firm transforms investments in process research and development (R&D) into financial performance. This transformation includes the process investment - financial performance chain, which consists of process R&D funds, applied supply chain knowledge, supply chain process variance, and financial performance. In addition, the model includes production technology routineness, size, and integration. The results, based on a sample of 204 manufacturers operating in the United States, suggest that centralization cleaves the process investment - financial performance chain at the connection of supply chain process variance and financial performance. The net effect is that firm scale, production technology routineness, integration, and process R&D investment predict financial performance only when supply chain decision-making is decentralized within the firm. Firm scale, production continuity, integration, and process R&D investment confer no performance advantage in centralized firms.

Suggested Citation

  • Krotov, Konstantin V. & Germain, Richard N., 2011. "A Contingency Perspective on Centralization of Supply Chain Decision-making and its Role in the Transformation of Process R&D into Financial Performance," Working Papers 811, Graduate School of Management, St. Petersburg State University.
    • Handle: RePEc:sps:wpaper:811
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    References listed on IDEAS

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    1. Cohen, Wesley M & Klepper, Steven, 1996. "Firm Size and the Nature of Innovation within Industries: The Case of Process and Product R&D," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 232-243, May.
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