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Theory of Supply Chain

Theory of Supply Chain

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Published by Arslan Shah

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Published by: Arslan Shah on May 04, 2011
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Journal of Operations Management 22 (2004) 119–150
Towards a theory of supply chain management:the constructs and measurements
Injazz J. Chen
, Antony Paulraj
1
 Department of Operations Management and Business Statistics, College of Business Administration,Cleveland State University, Cleveland, OH 44115, USA
Received 17 April 2003; received in revised form 12 September 2003; accepted 1 December 2003
Abstract
Risinginternationalcooperation,verticaldisintegration,alongwithafocusoncoreactivitieshaveledtothenotionthatfirmsare links in a networked supply chain. This novel perspective has created the challenge of designing and managing a network of interdependent relationships developed and fostered through strategic collaboration. Although research interests in supplychainmanagement(SCM)aregrowing,noresearchhasbeendirectedtowardsasystematicdevelopmentofSCMinstruments.ThisstudyidentifiesandconsolidatesvarioussupplychaininitiativesandfactorstodevelopkeySCMconstructsconducivetoadvancingthefield.Tothisend,weanalyzedover400articlesandsynthesizedthelarge,fragmentedbodyofworkdispersedacross many disciplines. The result of this study, through successive stages of measurement analysis and refinement, is a setof reliable, valid, and unidimensional measurements that can be subsequently used in different contexts to refine or extendconceptualization and measurements or to test various theoretical models, paving the way for theory building in SCM.© 2004 Elsevier B.V. All rights reserved.
Keywords:
Supply chain management; Constructs; Instrument development
1. Introduction
The origin of the supply chain concept has beeninspired by many fields including (1) the qualityrevolution (Dale et al., 1994), (2) notions of materi- als management and integrated logistics (Carter andPrice, 1993; Forrester, 1961),(3) a growing interest inindustrial markets and networks (Ford, 1990; Jarillo,1993),(4) the notion of increased focus (Porter, 1987; Snow et al., 1992),and (5) influential industry-specific
Corresponding author. Tel.:
+
1-216-687-4776;fax:
+
1-216-687-9343.
 E-mail addresses:
i.chen@csuohio.edu (I.J. Chen),apaulraj@hotmail.com (A. Paulraj).
1
Tel.:
+
1-614-875-3937; fax:
+
1-216-687-9343.
studies (Womack et al., 1990; Lamming, 1993). Re- searchers thus find themselves inundated with termi-nologies such as “supply chains”, “demand pipelines”(Farmer and Van Amstel, 1991), “value streams” (Womack and Jones, 1994), “support chains”, andmany others. The term supply chain management(SCM) was originally introduced by consultants inthe early 1980s (Oliver and Webber, 1992)and has subsequently gained tremendous attention (La Londe,1998).Analytically, a typical supply chain as showninFig. 1is a network of materials, information, and services processing links with the characteristics of supply, transformation, and demand.The term SCM has been used to explain the plan-ning and control of materials and information flowsas well as the logistics activities not only internally
0272-6963/$ – see front matter © 2004 Elsevier B.V. All rights reserved.doi:10.1016/j.jom.2003.12.007
 
120
I.J. Chen, A. Paulraj/Journal of Operations Management 22 (2004) 119–150
Fig. 1. An illustration of a company’s supply chain.
within a company but also externally between com-panies (Cooper et al., 1997b; Fisher, 1997). Re- searchers have also used it to describe strategic,inter-organizational issues (Harland et al., 1999), to discuss an alternative organizational form to verticalintegration (Thorelli, 1986; Hakansson and Snehota,1995), to identify and describe the relationship a com-pany develops with its suppliers (e.g.,Helper, 1991;Hines, 1994; Narus and Anderson, 1995), and toaddress the purchasing and supply perspective (e.g.,Morgan and Monczka, 1996; Farmer, 1997).A number of fields such as purchasing and supply,logistics and transportation, operations management,marketing, organizational theory, management infor-mation systems, and strategic management have con-tributed to the explosion of SCM literature. From themyriad of research, it can be seen that a great dealof progress has been made toward understanding theessence of SCM. The new orthodox of supply chainmanagement, however, is in danger of collapsing intoa discredited management fad unless a reliable con-ceptual base is developed (New, 1996),and many au- thors have highlighted the pressing need for clearlydefined constructs and conceptual frameworks to ad-vance the field (Saunders, 1995; Cooper et al., 1997a;Babbar and Prasad, 1998; Saunders, 1998).Recognizing that construct measurement develop-ment is at the core of theory building (Venkatraman,1989), we intend to contribute to the developmentof SCM constructs with an initial set of operationalmeasurements that exhibit sound psychometric prop-erties. Towards the journey of developing theoreticalconstructs in SCM, we examine over 400 articlesfrom the diverse disciplines noted above. Thus, thisstudy may be the most comprehensive analysis of the multidisciplinary, wide-ranging research on SCM.While the contributions from various works exist inisolation, they, when taken together, have many of thecritical elements necessary for successful manage-ment of supply chains. We first consolidate relevantfindings and integrate them into a tractable, meaning-ful research framework, as depicted inFig. 2. Throughsuccessive stages of measurement analysis and refine-ment, the result of this study is a set of reliable, valid,and unidimensional measurements that can be subse-quently used in different contexts to extend or refineconceptualization and the operational measures. Suchan exercise would reflect a cumulative theory-buildingperspective where progress is made by successivelytesting the efficacy of the measures in varying theo-retical networks (Cronbach, 1971). Thus, this studyrepresents a response to a call for theory buildingin operations management (Melnyk and Handfield,1998; Meredith, 1998). The conceptual framework and the instrument developed herein can help re-searchers better understand the scope of both theproblems and the opportunities associated with sup-ply chain management. It will also allow researchersto test different theoretical SCM models with varyingfoci, including the relationships among the variousconstructs, along with their individual or collectiveimpact on supply chain performance. It will be of value, therefore, not only to readers who desire to ex-pand their research into this exciting area, but also tothose who have already investigated this topic but inisolation or with limited scope. The rest of this articleis organized in the following order.Section 2presentsthe foundation and conceptualization of the proposedSCM constructs. Then, the research design includingdata collection is presented, followed by a sectiondescribing measurement development process and thetest of the measures along with their psychometric
 
 I.J. Chen, A. Paulraj/Journal of Operations Management 22 (2004) 119–150
121Fig. 2. A research framework of supply chain management.
properties.Section 5discusses limitations and direc-tions for future research. Finally, the paper concludeswith a summary and implications of the research.
2. Theoretical foundation and constructdevelopment
Drawing on a prodigious body of knowledge incross-enterprise and interdisciplinary literature, thissection presents constructs significant to SCM withinthe conceptual framework depicted inFig. 2.This framework is grounded on a paradigm of strategicmanagement theory that emphasizes the developmentof “collaborative advantage” (e.g.,Contractor andLorange, 1988; Nielsen, 1988; Kanter, 1994; Dyer,2000),as opposed to “competitive advantage” (e.g.,Porter, 1985). Within the collaborative paradigm,the business world is composed of a network of in-terdependent relationships developed and fosteredthrough strategic collaboration with the goal of deriv-ing mutual benefits (Miles and Snow, 1986; Thorelli,1986; Borys and Jemison, 1989; Lado et al., 1997;Madhok and Tallman, 1998; Ahuja, 2000; Chen andPaulraj, 2004). The framework also draws on the“relational view” of interorganizational competitiveadvantage (Dyer and Singh, 1998) in contrast tothe “resource-based view” (RBV) of the firm (e.g.,Barney, 1991,Teece et al., 1997). Although comple- mentary to the RBV, the relational view considers thedyad/network instead of individual firms as the unitof analysis and thus provides a more coherent supportfor our view of supply chain management.In identifying the numerous theoretical determi-nants of supply chain management, we have directedour attention to the buyer–supplier dyadic relation-ship. The buyer–supplier dyad, represented by link 1inFig. 1,is of paramount importance to the effective management of the supply chain (Anderson et al.,1994; Anderson and Narus, 1990). The relationshipaspect of this dyad is a widely recognized area thathas generated abundant scholarly works (e.g.,Carrand Pearson, 1999; Choi and Hartley, 1996; De Toniand Nassimbeni, 1999; Hahn et al., 1986; Heidiand John, 1990). Based on an extensive review of the literature, this framework incorporates some keyaspects of the buyer–supplier relationship includ-ing supply base reduction, long-term relationships,

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