Benchmarking: An International Journal

The mediating role of supply chain collaboration on the relationship between technology, trust and
operational performance: an empirical investigation
Mohammad Asif Salam
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Mohammad Asif Salam , (2017)," The mediating role of supply chain collaboration on the relationship between technology,
trust and operational performance: an empirical investigation ", Benchmarking: An International Journal, Vol. 24 Iss 2 pp. -
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 The Mediating Role of Supply Chain Collaboration on the Relationship between
Technology, Trust and Operational Performance: An Empirical Investigation

Abstract

Purpose
The purpose of this research is to understand the link between trust, technology and supply
chain collaboration and their impact on firms’ operational performances.
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Design/methodology/approach
Based on extant literature, a hypothesized model was developed and tested using structural
equation modelling (i.e., AMOS). A survey was conducted to collect data from the supply
chain managers of fast moving consumer goods (FMCG) companies (more precisely in the
food and beverage sector) in Thailand.

Findings
The study findings suggest that through an on-going relationship, trust evolves and is shaped
over time and can form a competitive capability that may not be easy for competitors to
replicate. Both trust and technology are found to have significant impact on supply chain
collaboration and on firms’ operational performances.

Research limitations/implications
One of the major limitations of the study is that the data was obtained from one single
economy, which restricts its generalizability across other economies. The study was a cross-
sectional and descriptive sample of the FMCG industry at a given point in time. A more
stringent test of the relationships between trust, technology, supply chain collaboration and
operational performance requires an in-depth case study or longitudinal study.

Practical implications
 The findings will enable supply chain managers in the fast-moving-consumer goods industry
to understand the strategic role of trust and technology in building supply chain collaboration
that leads to superior operational performance.

Originality/value
The paper clearly confirms that trust and technological capabilities are significantly
associated with supply chain collaboration and operational performance. Most of the earlier
supply chain collaboration research streams are based on developed economies where supply
chain collaboration challenges are predictable, while the current study conducted is based on
a developing economy setting. This study facilitates our understanding of the challenges in
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managing supply chain collaboration within a developing economy.

Keywords: Supply chain collaboration, trust, technology, operational performance, fast-

moving consumer goods, survey, structural equation modelling, Thailand.

Article Classification: Research Paper

1. Introduction
Manufacturing firms today are under constant pressure to deliver high quality products at
cheapest possible prices within the shortest possible time even under the most unpredictable
economic situations. Due to competitive forces like cost reduction and improved customer
service, firms are constantly looking for innovative ways to create sustained competitive
advantage. One such approach is supply chain collaboration. As Fawcett et al. (2012) have
argued, supply chain collaboration is a vital dynamic capability — one that can deliver
differential performance. Supply chain collaboration has been identified as one of the leading
game-changing trends for future supply chains (Autry, 2013). Forces that stimulate the need
for collaboration among firms within their supply chain are establishing global reach,
securing a company’s strategic position in the supply chain, focused on building a winning
team and improving financial performance (Fawcett et al., 2012; Wu et al., 2006). Very few
firms may possess all the required resources and capabilities to compete on a global scale and
the competitiveness of a supply chain will depend on access to those non-marketable
capabilities through collaboration.

1
 Autry et al. (2014) have argued that collaboration is the adoption of a purposeful cooperation
to maintain a exchange relationship. To date, scholars have focused on the dynamics of
supply chain collaboration (Fawcett et al., 2012), levels of supply chain collaboration and
performance outcomes (Zacharia et al., 2009), buyer-supplier collaboration in product
development (Hoegl and Wagner, 2005), information technology as an enabler of supply
chain collaboration (Fawcett et al., 2011) and an implementation model for supply chain
collaboration (Fawcett et al., 2008). Also, scholars agree about the benefits of collaboration
in that when firms collaborate effectively they can achieve significant results through
coordinated supply chain activities (Frankel, Goldsby, and Whipple, 2002). Although trust
has been identified as the key enabler of supply chain collaboration (Fawcett, 2012), the
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understanding of the drivers of successful collaboration is very limited. Yet a firm’s ability to
establish collaboration and to accommodate challenges in sustaining collaborative
relationships is critical to both its competitiveness and its long-term success (Aldrich, 1979;
Child, 1972).

Fawcett, McCarter, Fawcett, Webb, and Magnan (2015) have studied the resistors of supply
chain collaboration and argue that trust is considered a sociological resistor of collaboration
and technology is a structural resistor of collaboration. But these two resistors of
collaboration are nested and interconnected; they work together to obscure problems. In
another study, Ramanathan and Gunasekaran (2014) found that a successful collaborative
effort paves the path for more future collaborations. For collaboration between two firms to
succeed, mutual trust is essential. However, simply trusting the partner to act as expected is
risky. External forces, internal interests or a lack of commitment to the venture may disrupt
the best of collaborative intentions. The general agreement is that trust is important in a
number of ways: it enables cooperative behavior (Gambetta, 1988), it promotes adaptive
organizational forms, such as network relations (Miles and Snow, 1992), it reduces harmful
conflict, it decreases transaction costs, it facilitates rapid formulation of ad hoc work groups
(Meyerson, Weick, and Kramer, 1996) and it promotes effective responses to crises.
Accordingly, this study develops and tests a theoretical model that explains the relationship
between trust, technology and collaboration and their role in supporting firms’ operational
performances.

2
 This study addresses three important questions about the role of collaboration enablers and
their effective implementation to support effective collaboration in supply chain
management: First, do trust and technology have a significant impact on supply chain
collaboration? Second, how do trust and technology influence each other? Finally, does
successful implementation of supply chain collaboration have a positive effect on firms’
operational performances? An understanding of the synergies between these collaboration
enablers will help us to implement them successfully. In considering these two very critical
drivers of supply chain collaboration, there is no clear consensus among researchers about (1)
the interrelations between these two enablers; and (2) what essential factors and information
characteristics enhance collaboration. The central argument of this study is that collaboration
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enablers, such as trust and technology, are interrelated and they affect operational
performance through successful collaboration. The present study aims to combine the above
mentioned research questions that assume a positive and direct association between
successful collaboration and firms’ operational performances. Hence, we combine the impact
of two critical enablers of supply chain collaboration to ensure successful collaboration,
while taking into consideration the interrelationships between these two enablers and the
effects of collaboration on firms’ operational performances.

There have been numerous empirical studies that explain the relationships among enablers of
collaboration and successful collaboration and the impact on firms’ operational
performances. As such, this study adds to researchers’ and practitioners’ understanding of
collaboration and operational performance relationship through empirical findings from firms
operating in the fast-moving-consumer goods sectors in Thailand. Hence, this study analyzes
the mechanisms of trust and technology as critical drivers to develop and strengthen
successful supply chain collaboration through an empirical setting in an emerging economy
context. In the following section, a conceptual framework is developed from a review of the
literature and the research hypotheses are presented. This is followed by a discussion of the
methodology used to test the conceptual framework and the findings. Finally, the limitations
of the study and the implications of the study for managers and researchers are presented.

2. Theory and Hypotheses

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 Supply chain collaboration is defined as two or more chain members working together to
create a competitive advantage by sharing information, making joint decisions and sharing
benefits, which result from greater profitability gained by satisfying end customer needs
rather than acting alone (Simatupang and Sridharan, 2002). Bowersox (1990) argues that the
adoption of supply chain collaboration increases with the effects of globalization and
information technology. In a similar vein, Narus and Anderson (1996) state that supply chain
collaboration becomes a central tenet in creating an adaptive supply chain. Collaboration is
built on the integration of trading partners who share responsibilities, common goals and
exchange common planning, management, execution and performance measurement
information for the purpose of achieving a synchronized supply chain (Barratt and Oliveria,
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2001; Anthony, 2000; Bowersox, 2000; Anderson and Lee, 1999). Furthermore, in today’s
retailing and fast-moving-consumer-goods (FMCG) supply chain, collaboration takes the
form of practices, such as continuous replenishment programmes (CRP), vendor managed
inventory (VMI) and collaborative planning, forecasting and replenishment (CPFR) (Barratt
and Oliveira, 2001).

Supply chain management is built on a foundation of trust and commitment (Lee and
Billington, 1992). Trust exists when one party has confidence in an exchange partner’s
reliability and integrity (Morgan and Hunt, 1994). Prater et al. (2005) mention that
information technology has played an enabling role in all these collaborative practices and
that there is a clear development path in the capabilities and sophistication of the underlying
IT infrastructure supporting collaboration, such as RFID collaboration.

The importance of such enablers has also attracted some research attention. Myhr and
Spekman (2005) argue that collaboration can be achieved both through trust and through
electronic mediated exchange. Recently, strategy researchers have become interested in
possible performance outcomes, such as supply chain collaboration, and ultimately improved
buyer-supplier operational performance that may result from enhanced efficiency
(Wallenburg, 2009; Green et al., 2008).

Achieving superior operational performance requires a close and collaborative relationship

between a buyer and supplier. In other words, the higher the degree of dependence, the higher
the firm’s motivation to maintain collaboration. Similarly, the critical resources that create
4
 such a sense of interdependence are trust and technology (Makkonen and Vuori, 2014). These
are critical drivers that facilitate effective long-term supply chain collaboration between
exchange partners, both buyers and suppliers. Figure 1 below presents all the hypothesized
paths discussed:

Please Insert Figure 1

2.1 Trust and Supply Chain Collaboration

Trust is frequently defined as a willingness to take risks (Mayer et al., 1995) and a
willingness to rely on an exchange partner in whom one has confidence. Trust refers to the
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extent to which supply chain partners perceive each other as credible and benevolent
(Ganesan, 1994; Doney and Cannon, 1997). Morgan and Hunt (1994) argue that trust exists
when one party has confidence in an exchange partner’s reliability and credibility. Credibility
reflects the extent to which a firm in a relationship believes that the other party has the
required expertise to perform the expected task effectively, while benevolence reflects one
relationship partner’s intentions and motivations to benefit the relationship (Ganesan, 1994).
Trust is the glue that holds collaborative relationships together (Spekman and Carraway,
2006). Moreover, past studies suggest that trust is an important determinant of the success of
a relationship. In a study examining the relationship attributes that are critical to supplier
alliance success from a buying company perspective, Monczka et al. (1998) posit that
building trust with suppliers is most important. Whipple and Frankel (2000) examined factors
that influence the success of alliances and found that trust was rated as the most important
factor by buyer firms and the second most important factor by supplier firms. Zhao and
Cavusgil (2006) found trust was important for relationship continuity and enhancement.

Multiple studies have identified the role of trust in business relationships and found that trust
contributes to better cooperation, thus leading to open communication and information
sharing (Morgan and Hunt, 1994; Ring and Van de Ven, 1994; Cummings and Bromiley,
1996; Smith and Barclay, 1997). Ganesan (1994) posits that long-term orientation in buyer-
supplier relationships depends on the extent to which a retailer or vendor trusts the channel
partner and their perceptions of trustworthiness.

5
 In a collaborative relationship, asset specificity can play a major role in cultivating trust
between partners. The role of trust is addressed in the area of relational marketing, in which
investments in supplier relationships are established to minimize risk, involving activities
traditionally considered the exclusive domain of the other party. Such investments lead to a
significant increase in the quality and duration of relationships, which further increase the
likelihood that parties will be willing to investment in future transactions (Ring and Van de
Ven, 1994). In this sense, trust inevitably requires some sense of mutuality and reciprocal
loyalty (Doney and Cannon, 1997; Handy, 1995; Kamath and Liker, 1994). Transaction-
specific investments serve as security; under conditions of uncertainty, the redeployment of
assets committed to cooperative relationships will be inefficient (Dyer and Singh, 1998; Ring
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et al., 1994).

Trust, the degree to which partners perceive each other as credible and benevolent (Doney
and Cannon, 1997; Ganesan, 1994; Kumar et al., 1995), is expected to have a positive effect
on the degree of collaboration in supply chain relationships. If parties expect each other to be
both able and willing to perform necessary tasks, they are likely to collaborate (Myhr and
Spekman, 2005; Morgan and Hunt, 1994). Moreover, for supply chain partnerships to
become truly collaborative in nature, trust is not only a desired characteristic but a necessary
one (Spekman et al., 1998). Hendricks and Singhal (2008) argue that disruptions caused by
external sources (e.g., suppliers and customers) experience a higher penalty, which suggests
that these problems can be expensive and time consuming for a firm to fix. This may be due
to a firm’s limited control over an external partner’s operations to solve the problems. This
further underscores the need to form trusted and collaborative relationships with the various
links in the supply chain. A firm must make sure that its supply chain partners see the value
of working together. Fawcett et al. (2012) found building collaboration in a supply chain is
all about building trust. Due to the interdependent relationship among supply chain partners,
trust often plays an immense role in these relationships. Managers are not certain how the
partners will act, creating risk. Lack of trust leads to uncertainty, which causes barriers to
formation and sustainability of long-term relationships (Fawcett et al., 2015; Perez and
Cambar-Fierro, 2015). In particular, collaboration exposes managers to risk. They may be
therefore unwilling to make investments needed to create a positive, collaborative exchange
environment (e.g., Day et al., 2013). Hence, for this research, trust is a pre-requisite for a

6
 mutual, interdependent and beneficial relationship where both parties are committed to each
other’s long-term interests or benefits. Hence, the first hypothesis states:

H1: Trust in the buyer-supplier relationship is positively related to collaboration in the supply
chain.

2.2 Technology and Supply Chain Collaboration

Improved technological infrastructure in general facilitates the development of stable, close
relationships among channel partners (Clemons and Row, 1992; Kim et al., 2005, 2006;
Sanders, 2005). For supply chain relationships to achieve collaboration, electronic
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mechanisms must also be in place so that information can be readily exchanged among
partners. One such mechanism is technology for information sharing. Information technology
has played an important role in enabling supply chain collaboration based on elements like
EDI, the internet and so on. IT has also been demonstrated to support exchange among
trading partners (Pramatari, 2007). In general, IT has been widely recognized as a critical
factor in the supply chain because of the contribution it can make to improving the
performance of both the individual firm and the supply chain as a whole. However, research
on the direct impact of IT on specific performance measures has yielded inconsistent results
(Sanders, 2007).

Nohria and Eccles (1992) suggest that electronically mediated exchange contributes to
increased collaboration, because it empowers front-line workers with information, enables
direct communication among individuals at low levels in an organization across time and
space and blurs organizational boundaries. Electronically mediated exchange refers to the
degree to which partners communicate through electronic media, such as the internet,
intranets, electronic mail or electronic data interchange (EDI) systems (Kulchitsky, 1997). In
a supply chain context, integrated information flows often reduce uncertainty (Alliare and
Firsirotu, 1989), as well as the volatility induced by information delays (Towill, 1992).
Electronically mediated exchange supports inter-organizational collaboration by facilitating
interaction and dissemination of information on all organizational levels. Improvements in
technology lead to more active sharing of planning and strategies among partners (Armistead
and Mapes, 1993), a greater connectivity and integration (Clark et al., 2001) and improved
interorganizational communication and coordination (Mulligan and Gordon, 2002; Kim et al.,
7
 2005, 2006). In addition, technological resources have a positive effect on the degree of
integration of technical support functions in the value chain (Rasheed and Geiger, 2001).
Bharadwaj (2000) emphasizes the importance of appropriate IT, rather than just the existence
of IT, and that a firm with competent IT people is able to integrate IT systems.

Myhr and Spekman (2005) found that collaborative partnerships can be achieved on the basis
of either trust or electronically mediated exchange (e.g., information technology). Because
electronically mediated exchange helps people at the operational level who need up-to-date
information to carry out their roles effectively, electronically mediated exchange is likely to
have an immediate impact on collaboration. Technology needs to be integrated across
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collaborating firms to share real-time information. The value of inter-firm information

sharing in facilitating supply chain integration is well recognized. However, while technology
has become much easier to acquire and develop, it does not necessarily create value and
guarantee collaboration success. That is why Fawcett et al. (2015) argue that at times
technology is the biggest barrier. Not everyone has the capability to seamlessly communicate.
When partners are unable to support relational goals because they lack connectivity,
enthusiasm for the collaborative strategy dissipates. At times, despite having technology,
unwillingness to share information and information hoarding within an organization hinders
effective collaboration. An information sharing culture must be developed between partners
to get the best out of the technology. A collaborative relationship is likely to underperform if
partners are not open and transparent through their technological interface. A technological
interface can enhance collaboration capabilities through developing an information sharing
culture. Dubey and Ali (2015) found that technology has a strong impact on extended supply
chain performance. Hence, the second hypothesis states:

H2: The technology interface in buyer-supplier relationships is positively related to

collaboration in the supply chain.

2.3 Collaboration and Operational Performance

The desired outcome of all effective collaboration capability is differential performance
(Porter, 1991). Many earlier studies (Harrison et al., 2001; Fawcett et al., 2008; Mentzer et
al., 2008; Cantor et al., 2010) have demonstrated that the ability to identify and link
complementary capabilities through collaboration leads to superior performance.
8
 Furthermore, collaboration enables faster new product development, improved quality, lower
product and supply chain costs, shorter cycle times and improved customer service (Cachon
and Fisher, 2000; Frohlich, 2002; Ketchen et al., 2007; Rinehart et al., 2008). Above all,
collaborative advantages are especially difficult to replicate, since competitors must acquire
the complementary resources and duplicate their deployment (Holcomb et al., 2006). The
benefits of collaboration include revenue enhancements, cost reductions and operational
flexibility to cope with high demand uncertainties (Fisher, 1997). For example, Hewlett-
Packard, IBM, Dell and Procter and Gamble have worked closely with their partners and
have captured the advantages of collaboration (Barratt and Oliveira, 2001; Callioni and
Billington, 2001; Dell and Fredman, 1999).
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For collaborative relationships to succeed, it is important that partners work together to plan
and coordinate activities, as well as to resolve problems. Min et al. (2005) found that joint
efforts, such as planning, goal setting, performance measurement and problem solving, are
essential for successful collaborative relationships and are closely related to information
sharing. Several studies suggest that joint effort enables partners to align their operations and
processes, which enhances the relationship by building trust. When firms work together, they
are more likely to commit to the relationship (Jap and Ganesan, 2000). Joint decision making
provides an incentive for suppliers to commit (Subramani and Venkatraman, 2003), while a
joint effort is expected to enhance the performance of the supply chain as a whole.

Zhang et al. (2015) found that total integration requires supply chain partners to integrate
resource flows (material, information, knowledge and finance), processes and organization,
planning and control activities and strategies. Consistent with earlier research, recent studies
by Zhang and Huo (2013) and Qrunfleh and Tarafdar (2014) have argued that a positive
association between supply chain collaboration and a firm’s performance has been generally
supported. Therefore, this study’s final hypothesis states:

H3: Supply chain collaboration is positively related to operational performance.

3. Methodology
9
 To investigate this dynamic issue of supply chain collaboration, an exploratory multi-method
research approach was adopted. First, based on the literature, the key enablers and
consequences of supply chain collaboration were identified. Second, a series of preliminary,
informal managerial interviews was conducted to ensure the managerial relevance of the
constructs identified based on the literature review. Third, a team of advisors consisting of
practitioners and academics were contacted to provide feedback on the survey instrument.
Finally, a survey instrument was designed to test the hypothesized paths.

3.1 Research Instrument

In this study there are four latent constructs: Trust, technology, supply chain collaboration,
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and operational performance. For purposes of this study, scale of “trust” is specifically
conceptualized as “buyer’s trust of suppliers.” Trust was measured using the scale developed
by Carter and Jennings (2002), which was operationalized based on the work of Ganesan
(1994), Joshi and Stump (1999) and Morgan and Hunt (1994). Technology was measured
using the scale developed by Patterson (2003). Supply chain collaboration and operational
performance were measured using the scales developed by Fawcett et al. (2011). The items
used in the questionnaire and their corresponding sources can be found in Appendix A.

3.2 Sampling Procedures and Respondents

It was important to find respondents who knew about the issues involved in the study (i.e.,
trust and technology). The pre-survey interviews and discussions suggested that the
information needed was strategic in nature and respondents should be senior-level managers
with a broad experience of collaborative interaction, decision-making and organizational
accountability and access to overall operational level information. Phillips (l981) suggests
that high ranking informants tend to be more knowledgeable and reliable sources of
information than low ranking informants. Therefore, the respondents were selected from
senior managers and executives in fast moving consumer goods (FMCG) companies,
including both multinational and local firms based in Thailand. Due to the strategic location
of Thailand in South-East Asia and the Pacific, most of the participating firms have a
significant regional and global operation. Moreover, a vast majority of studies looking into
supply chain collaboration have been primarily based on developed economies. This current
study, however, focuses on one of the vibrant economies of Southeast Asia – Thailand.

10
 3.3 Data Collection Method
The survey process followed Dillman’s (2000) total design method; that is, three mailings
consisting of a cover letter, an instruction sheet and the survey. To increase the response rate,
pre-notification phone calls were made to invite managers and executives to participate in
this important study. Respondents were also offered a copy of the study findings. A
combination of mail, e-mail and telephone surveys was used for collecting the data.

The survey instrument was translated into Thai by a bilingual research associate and refined
and verified for its translation accuracy by two Logistics and Supply Chain professors and
two practitioners. They were asked to review the questionnaire for readability and ambiguity
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(Dillman, 2000). The Thai version was again examined by two supply chain managers for
content and face validity, resulting in some minor modifications to the wording of some
survey items. This technique is frequently applied by management researchers (Matsumoto,
1994; Hwang, Yan, and Scherer, 1996).

Finally, the firms were selected from a list of registered companies in the Thailand Business
Directory published by Teleinfo Media Public Co., Ltd. Respondents were asked to respond,
on a 5-point rating scale, to various items relating to their firms’ practices. Although the use
of single informants may result in method variance as well as informant bias, the logistics or
supply chain manager is most likely to be the most knowledgeable informant on the issue
(Huber and Power, 1985). Overall, 181 usable surveys were returned for a response rate of
24.73%, which is reasonable when compared to that of studies in operations management
(Tan, 2001) and in marketing. To attain this response rate, repeated contact was made by
phone and e-mail following the original distribution of the questionnaires. Table 1 provides a
sample profile by company size, years in business and size of business. The firm size was
measured by the number of employees. No significant differences were found.

Please Insert Table 1

3.4 Sample Profile

Table 1 shows that based on the Thai industrial classification, 48% of the firms are large,
with more than 500 employees. 20% of the firms’ participants are between 36 and more than
11
 70 years old, while a large number of firms (52%) have been in business between 16 to 35
years. Finally, 20% of the respondents’ income ranges from 501 to more than 1 billion Baht
per year. Almost 55% of the respondent firms had an annual turnover between 101 to 500
Million Baht.1 To summarize, based on the sample profile, it is evident that the sample of this
study is quite diverse and includes firms of varying sizes, ages and income ranges.

4. Analysis and Findings

4.1 Common Method Variance
To ensure a lack of a common method bias, procedural controls (Podsakoff, MacKenzie, Lee
and Podsakoff, 2003) were used: (1) use of mid-to-senior-level managers and leaders with
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high levels of relevant knowledge (Mitchell, 1994), (2) adoption of some survey items from
previous research to ensure quality scales (Lindell and Whitney, 2001), (3) use of back
translation to ‘‘improve comprehension’’ (Podsakoff et al., 2003), (4) assurance to
participants that their responses would be kept confidential (Fugate, Stank and Mentzer,
2009).

4.2 Non-Response Biases

Non-response bias was evaluated using two methods. First, a comparison of early versus late
responses was performed (Armstrong and Overton, 1977). Specifically, responses from the
first wave were compared with responses from the third wave. T-tests for each of the
constructs of interest were performed and no significant differences were found, suggesting
no response bias. Second, to confirm that respondents and non-respondents were not
significantly different, the demographic profiles of the two groups were compared. Non-
responding firms were contacted and asked to provide data on annual sales and company
assets. Respondent and non-respondent firms were compared for annual sales and company
assets to test for non-response bias. T-tests revealed no significant differences between
respondents and non-respondents for annual sales (t = 0.179, p>0.05) or for company assets (t
= 0.435, p>0.05). Thus, the tests show that non-response bias was not a problem in this study.

4.3 Construct Reliability and Validity

1
$US 1 is approximately equal to 29 Baht.
12
 After the data were collected, the measures were subjected to a purification process assessing
their dimensionality, reliability and validity. The psychometric properties of the four
constructs (Trust, Technology, Collaboration and Operational performance) were evaluated
in separate confirmatory factor models using AMOS (Maruyama, 1998). Because of the small
sample size (n = 181), this approach was selected rather than a single confirmatory factor
analysis model to fit the constraints of a five-to-one ratio of sample size to parameter
estimates (Bentler and Cho, 1988). The model fit was evaluated using GFI, AGFI, NFI
(Joreskog and Sorbom, 1993). The specific items were evaluated based on each item’s error
variance, modification index and residual covariation (Anderson and Gerbing, 1988; Fornell
and Larcker, 1981; Joreskog and Sorbom, 1993).
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Construct reliability was evaluated using the procedures suggested by Fornell and Larcker
(1981), including examining the parameter estimates and their associated t values and
assessing the average variance extracted for each construct (Anderson and Gerbing, 1988;
Bagozzi and Yi, 1988). Also, construct reliability was assessed using Cronbach’s Alpha and
all the constructs had a value of above 0.70 (Nunnally and Bernstein, 1994). Discriminant
validity was assessed in a two-step process. An initial level of discriminant validity was
established by calculating the shared variances between each pair of constructs and verifying
that it was lower than the average variance extracted for the individual constructs (Fornell
and Larcker, 1981). This was the case for each average variance extracted/shared variance in
both samples. Next, using a procedure recommended by Anderson (1987) and Bagozzi and
Phillips (1982), pairs of constructs were assessed in a series of two factor confirmatory factor
models using AMOS. Each model was run twice, once constraining the Phi coefficient to
unity and once freeing this parameter. A chi-square difference test was then performed on the
nested model to assess whether the chi-square values were significantly lower for the
unconstrained model (Anderson and Gerbing, 1988). The critical value (∆χ2[1] > 3.84) was
exceeded in all cases, indicating that discriminant validity exists between the scales used in
this study. Overall, the measurement suggested that the four scales employed were reliable
and valid in the context of this study. The results of the measurement analysis for each
construct are presented respectively in Tables 2, 3, 4 and 5, which include means, standard
deviations, construct reliabilities and fit indices.

Please Insert Tables 2, 3, 4 and 5

13
 4.4 Structural Model Testing
Table 6 reports the results of the hypothesis testing. Structural equation modelling with
AMOS was used to simultaneously test the relationships proposed in hypotheses 1 through 3
(Joreskog and Sorbom, 1993). The fit indices of GFI, AGFI, CFI and NFI range between 0.92
and 0.98. The relative ability of the hypothesized enablers (Trust and Technology) to explain
variation in collaboration, as measured by R2 value, was 97.9%. The relationship between
Collaboration and Operational performance had an associated R2 value of 37.1%. The
findings for each hypothesis are presented in Table 6.
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Please Insert Table 6

4.4.1 Enablers of Collaboration

The results suggest a positive relationship between Trust and Collaboration (loading = 0.88)
and between Technology and Collaboration (loading = 0.45). Hence, both hypotheses 1 and 2
are supported. Interestingly, an in-depth analysis of the path loadings and the associated t-
values suggests that the behavioural enabler, Trust [0.88, (2.396)], has a higher impact on
Collaboration than Technology [0.45, (2.229)]. That means technology is merely an enabler
to effective collaboration, while behavioural aspects of collaboration are much more
important in making collaboration a reality. The ability of a firm to maximize its use of
technological capabilities has a profound impact on its ability to collaborate within the supply
chain. This shows how the use of a particular resource is perhaps more important than the
mere existence of the resource itself. A firm's ability to maximize the use of IT and other
technological resources depends on an ability to exploit resources to the full to ensure
collaboration in the supply chain.

4.4.2 Outcomes of Collaboration

The achievement of a collaborative relationship refers to the extent to which the chain
members implement the collaborative practices that contribute to higher performance. The
results provided support for hypothesis 3. The relationship between Collaboration and
Operational performance had a loading of 0.60. Empirical investigation provides support for
the idea of collaboration as a mediating construct between trust, technology and operational
performance. The behavioural characteristic of the proposed construct, Trust, makes it
14
 instrumental in auditing collaboration and operational performance. In addition, collaboration
calls for managers to integrate a number of activities that may already be performed by their
organization but that often remain independent from one another. An example of this is the
type of technology used, e.g., EDI, fax, internet, intranet. Firms in the same supply chain are
more likely to reap mutual benefits if they create connectivity across these various
technological tools and monitor them as a whole.

5. Discussion and Research Implications

The purpose of this study was to test the link between trust, technology, supply chain
collaboration and operational performance. A number of important findings emerge that have
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both theoretical and managerial implications. A detailed discussion of findings follows.

5.1 Theoretical Implications

The study findings suggest that collaboration plays an essential role in achieving superior
operational performance. Previous studies investigated the role of trust (e.g., Fawcett et al.,
2015; Perez and Cambar-Fierro, 2015; Hendricks and Singhal, 2008; Day et al., 2013; Zhang
and Huo, 2013; Hoejmose et al., 2012; Laeequddin et al., 2012; Cai, 2010) and technology
(e.g., Makkonen and Vuori, 2014; Ceccagnoli and Jiang, 2013; Subramani, 2004) in isolation
and treated them as two different constructs in separate studies. But the current study has
analysed these two dynamic constructs, trust and technology, in one single study and
investigated their impact on collaboration and firms’ operational performances. Also, this
study addresses the need for rigorous study that will enhance our understanding of the
determinants of supply chain collaboration a research gap initiated by Autry et al. (2014).
The findings in the current study are in line with the earlier research. However, the current
study has been conducted in Thailand-a developing economy-while all previous studies were
conducted in a developed economy context. Hence, the current study contributes by
reinforcing the findings of the earlier studies.

The anecdotal evidence of the current study highlights innovation (especially “open
innovation”) as another benefit of collaboration in the supply chain beyond the achievement
of better performance. The importance of innovation has been identified in past research
(Ellegaard et al., 2003; Mikkola and Skjott-Larsen, 2006). The forms of open innovation are
a result of supply chain collaboration, i.e., new product and process development capabilities.
15
 Other novel findings of the current study indicate that jointly trust and technological
capabilities enhance the performance of collaborative efforts. However, cooperative
behaviour does not need to come at the expense of competitive values.

5.2 Managerial Implications

The findings of this study provide insight into the design of effective strategies for supply
chain collaboration in order to enhance operational performance in the FMCG industry.
These findings have a number of implications for managers. First, they underscore the
important role technology plays in enhancing supply chain collaboration. Based upon the
findings, technological efforts that promote SC collaboration should be given high priority.
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The proactive adoption, implementation and utilization of IT systems, such as electronic data
interchange (EDI), bar coding, enterprise resource planning (ERP), customer relationship
management (CRM) and decision support systems (DSS) and the alignment of IT
philosophies, patterns and practices among supply chain partners should result in better
collaboration. Second, although the findings that collaboration can best be improved by trust
among supply chain partners are not new, they validate the important role played by
collaboration. The significant impact of collaboration on operational performance suggests
that companies should invest in strategies that promote collaboration and integration across
members of the supply chain. Since IT implementation has been shown to promote
collaboration, companies should also consider implementing IT solutions. Third, the findings
suggest that IT is not an actual source of competitiveness but a source of competitive
necessity. SCM emphasizes the global and long-term benefits to all entities participating in
the chain through cooperation and information sharing. Efficient communication with
downstream and upstream business entities is a necessity, rather than a source of competitive
advantage. Today, more and more companies are deploying and utilizing IT to improve
communications and decrease the response time to market fluctuations. Implementing IT has
become a necessity, not a choice (Jin, 2006).

6. Conclusion and Study Limitations

The present study tested the link between trust, technology, collaboration and firms’
operational performances within the FMCG supply chain context in Thailand. The analysis
clearly demonstrates that trust and technological capabilities are systematically associated
with enhanced levels of collaboration. In turn, better collaboration among supply chain
16
 partners contributes to superior operational performance. In general, the outcomes of
collaboration can be classified as either intangible or tangible. Intangible outcomes are better
relationships and communication, long-term commitment, better visibility, greater levels of
trust, real-time information sharing, the emergence of a problem‐solving environment and
momentum for change. Intangible benefits are improved processes. However, SC
collaboration is a viable strategy despite the difficulty of tracing tangible benefits to the
bottom line.

Despite efforts to provide a meaningful conceptualization and measure of collaboration, the

study is not without limitations. First, the study relied entirely on the information provided by
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managers of firms operating within the FMCG industry that are listed in the Thailand
Business Directory. Thus, the data reflect managerial evaluations of collaboration and firms’
operational performances. Future research could address this by using multi-informant
research designs. Second, the current study provided an overall assessment of the
relationships considered, regardless of business size and industry type. There is some
evidence in previous research that business size and industry type may influence the
propensity of organizations to engage in collaborative efforts. Consequently, scholars
interested in examining the enablers and outcomes of collaboration may want to treat
business size and industry type as potential moderators. Finally, the research included only
two enablers of potential collaboration. This focus entails a limited depiction of the role of
collaboration. Future research should incorporate more comprehensive enablers of
collaboration. Other enablers could include the level of commitment displayed by managers.

Overall, this research constitutes a preliminary attempt to develop a holistic understanding of

collaboration. This empirical investigation suggests that sharing information with supply
chain members does not come at the expense of performance levels. Initiatives designed to
show a company’s commitment to collaboration may generate a sense of cooperation in both
buyers and suppliers. These findings highlight the need for further efforts to investigate how
internal and external collaboration can support operational performance.

Acknowledgements

17
 The author extends sincere gratitude to Professor Gunasekaran, the Editor-in-Chief of
Benchmarking: An International Journal and three anonymous reviewers for their valuable
and constructive comments which helped to improve the overall content of this manuscript.

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 APPENDIX A
Measurement Scales

TRUST (Source: Doney and Cannon (1997) and Carter and Jennings (2002)
To what extent do you agree with following statements regarding your business unit’s
relationship with this supply-chain partner? (1 = Strongly Disagree, 2 = Disagree, 3 =
Average, 4 = Agree, 5 = Strongly Agree)
1. Our suppliers are trustworthy (Doney and Cannon, 1997)
2. We trust that our supplier keeps our best interest in mind (Doney and Cannon, 1997)
3. Our supplier is genuinely concerned that our business succeeds (Doney and Cannon,
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1997)
4. When making important decisions, our suppliers are concerned about our welfare as
well as its own (Carter and Jennings, 2002)
5. When it comes to things that are important to us, we can depend on our suppliers’
support (Carter and Jennings, 2002)
6. Promises made by suppliers are reliable (Carter and Jennings, 2002)

TECHNOLOGY (Source: Patterson et al., 2003)

Please indicate and respond in relation to your level of agreement with each of the following
statements: (1 = Strongly Disagree, 2 = Disagree, 3 = Average, 4 = Agree, 5 = Strongly
Agree)
1. Technology is an important enabler in this relationship between suppliers and buyer
2. We are linked electronically so that we can share information of mutual interest
3. In this relationship, we emphasize integrated information systems
4. We frequently communicate through electronic media, such as the internet, intranets,
electronic mail or EDI systems
5. To make technology successful requires trust

COLLABORATION (Source: Fawcett et al., 2011)

Please indicate the extent to which you agree with each of the following statements as they
relate to your firm’s supply chain: (1 = Strongly Disagree; 5 = Strongly Agree)
1. My firm shares resources to help suppliers improve capabilities, e.g., innovation
2. Strategic objectives are jointly developed by supply chain partners
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 3. Supplier performance is monitored and is the basis for future business
4. The principle of shared rewards and risks governs SC relationships
5. Value-added resources are shared among supply chain members

OPERATIONAL PERFORMANCE (Source: Fawcett et al., 2011)

To what extent do the following improve collaboration between your firm and other supply
chain member? (1 = Does not improve, 5 = Greatly improves)
1. Cost of purchased items
2. Inventory performance (e.g., cost, levels, turns)
3. Overall product and supply chain costs (productivity)
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4. Responsiveness to customer requests

5. New product development capability (e.g., cost, time, uniqueness)

Figure 1 Conceptual Framework

Trust

H1 (+)
Supply Chain Operational
H3 (+)
Collaboration Performance
H2 (+)

Technology

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 Table 1 Sample Profile

Frequency

Characteristic (n = 181) Percentage (%)

Company Size (# of Employees)

<= 200 30 17

201-500 63 35

501-2,500 55 30
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2,500-10,000 20 11

>10,000 13 7

Age of Business

<5 years 16 9

5-15 years 35 19

16-35 years 95 52

36-70 years 23 13

over 70 years 12 7

Size of Business

< Million Baht 10/year 20 11

Million Baht 11-100/year 25 14

Million Baht 101-250/year 35 19

Million Baht 251-500/year 65 36

Million Baht 501-1,000/year 27 15

Over 1 Billion Baht /year 9 5

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 Table 2 Summary Statistics of the Measurement Analysis for Trust (N = 181)

Trust (Cronbach's Alpha = 0.842) Mean S.D χ2 df GFI AGFI NFI

Our suppliers are trustworthy 4.02 .836 11.19 5 .94 .89 .91

We believe that our supplier keeps our 3.93 .818

best interests in mind

Our supplier is genuinely concerned that 3.88 .765

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our business succeeds

When making important decisions, our 3.84 .887

suppliers are concerned about our welfare

When it comes to things that are 3.73 .775

important to us, we can depend on our

suppliers’ support

Promises made by suppliers are reliable 4.10 .800

Note: GFI = Goodness of Fit Index, AGFI = Adjusted Goodness of Fit Index, and NFI =

Normed Fit Index

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 Table 3 Summary Statistics of the Measurement Analysis for Technology (N = 181)

Technology (Cronbach's Alpha = 0.736) Mean S.D χ2 df GFI AGFI NFI

Technology is an important enabler in this 3.98 .806 3.91 5 .98 .94 .94

relationship

We are linked electronically so that we 4.10 .800

can share information of mutual interest

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In this relationship, we emphasize 4.12 .781

integrated information systems

We frequently communicate through 4.10 .957

electronic media, such as the internet,

intranets, electronic mail or EDI systems

To make technology a success, it requires 4.25 .751

trust

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 Table 4 Summary Statistics of the Measurement Analysis for Collaboration (N = 181)

Supply Chain Collaboration Mean S.D χ2 df GFI AGFI NFI

(Cronbach's Alpha = 0.703)

My firm shares resources to help suppliers 3.90 .735 4.09 5 .98 .94 .93

improve capabilities

Strategic objectives are jointly developed by 3.86 .848

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supply chain partners

Supplier performance is monitored and is the 3.57 .921

basis for future business

The principle of shared rewards and risks 3.41 .959

governs SC relationships

Value-added resources are shared among 3.69 .785

supply chain members

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 Table 5 Summary Statistics of the Measurement Analysis for Operational Performance (N =

181)

Operational Performance Mean S.D χ2 df GFI AGFI NFI

(Cronbach's Alpha = 0 .701)

Cost of purchased items 3.96 .993 3.24 5 .98 .95 .95

Inventory performance (e.g., cost, levels, 4.02 .866

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turns)

Overall product and supply chain costs 3.86 .802

(productivity)

Responsiveness to customer requests 3.86 .787

New product development capability (e.g., 4.81 .503

cost, time, uniqueness)

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 Table 6 Structural Equation Results of Hypothesized Model Testing

Path Loading t-Value Significance R2 Fit Indices

H1 (Trust → Collaboration) .88 2.396 P<.05 .97 χ2 = 271.987

H2 (Technology → .45 2.229 P<.05 df = 149

Collaboration) GFI = .98,

AGFI = .92
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H3 (Collaboration → .60 2.360 P<.05 .37

Performance) CFI = .97,

NFI = .92

Note: H = Hypothesis, GFI = Goodness of Fit Index, AGFI = Adjusted Goodness of Fit

Index, CFI = Comparative Fit Index, and NFI = Normed Fit Index

35