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Enabling supply chain agility through process integration and supply

flexibility: Evidence from the fashion industry

Article  in  Asia Pacific Journal of Marketing and Logistics · October 2019

DOI: 10.1108/APJML-03-2019-0122

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Enabling
Enabling supply chain agility supply chain
through process integration and agility
through PI
supply flexibility
Evidence from the fashion industry
Muhammad Irfan Received 1 March 2019
Revised 5 June 2019
Dalian University of Technology, Dalian, China and 29 July 2019
University of Education, Lahore, Pakistan Accepted 30 August 2019

Mingzheng Wang
Zhejiang University School of Management, Hangzhou, China, and
Naeem Akhtar
University of International Business and Economics, Beijing, China

Abstract
Purpose – The purpose of this paper is to emphasize the underlying mechanism through which firms can
achieve supply chain agility and augment business performance from the vendor’s perspective.
Design/methodology/approach – Drawing on dynamic capability view and contingency theory, the study
conceptualizes a moderated mediation model to investigate the underlying influence of process integration
(PI), supply flexibility and product-related complexity on supply chain agility and the subsequent effect of
supply chain agility on firm’s business performance. Survey data from a sample of 148 firms, in the garment
manufacturing industry, in Pakistan were analyzed using partial least square methods.
Findings – The results revealed that supply flexibility (i.e. volume and mix) mediates the effect of PI on
supply chain agility. Supply chain agility, in turn, influences a firm’s business performance. Furthermore, the
competence‒capability framework is not consistent across the varying degrees of product complexity such as
product complexity hinders the effect of supply flexibility on supply chain agility, whereas it amplifies the
impact of PI on supply chain agility. The conditional indirect effects suggest that the indirect effect of PI on
supply chain agility through supply flexibility becomes stronger when product complexity is high.
Originality/value – The study is novel in the context of an emerging economy to educate fashion vendors to
tune their competencies and capabilities to regain the market share in the global market place.
Keywords Supply chain agility, Process integration, Dynamic capability view, Supply flexibility
Paper type Research paper

1. Introduction
Responsiveness to customers and markets is becoming imperative for business organizations,
in general, and fashion industries, in particular. The fashion industry is characterized by high
volatility, low sales predictability and seasoned demand (Christopher et al., 2004; Brusset and
Teller, 2017). In addition, globalization, removal of export quotas, rising labor cost and
tremendous growth in BRIC markets (Brazil, Russia, India and China) give reasons to fashion
buyers, around the world, to pass on their production to offshore markets through
outsourcing and offshoring (Moon et al., 2009). The global sourcing market amounted to
$85.6bn in 2018. The statistics show that 75 percent of world outsourcing revenue is
generated in the Asia Pacific region (source: www.statista.org). For example, Zara, a leading

The authors would like to thank the Editor, Professor Ian Phau and anonymous reviewers for their
honest, helpful and constructive comments. This work was supported in part by the NSFC under
Asia Pacific Journal of Marketing
Grants 71931009 and 71671023 and in part by the Foundation for Innovative Research Groups of NSFC and Logistics
under Grant 71421001, the development Foundation of teaching and scientific research for teachers of © Emerald Publishing Limited
1355-5855
Liberal Arts in Zhejiang University. DOI 10.1108/APJML-03-2019-0122
APJML Spanish brand, is successfully operating in 96 countries, with the flagship of 2,200 outlets
(Source: www.forbes.com). H&M, Zara and Walmart have incorporated agility into every
corner of their supply chain to guarantee responsiveness to dynamic supply and demand
through the modular design processes, agile manufacturing and improved inventory
management technologies (Lee, 2004). However, to fully take advantage of outsourcing, firms
should capitalize on the dynamic capabilities of their supply chain partners (Mendonça
Tachizawa and Giménez Thomsen, 2007). The existing debate in the realm of dynamic
capabilities revolves around buyer’s capabilities while ignoring the vendor side in bringing a
unique set of competitive advantage (Wagner et al., 2018; Chan et al., 2017; Huo et al., 2018).
Supply chain agility, during the past few years, has gained attention in research and
practice as a critical dynamic capability to satisfy the market needs (Braunscheidel and
Suresh, 2009; Lee and Wang, 2013). Supply chain agility is recognized as the ability of a firm
to sense, seize and respond to changing opportunities by exploiting internal and external
competencies to better meet the customer’s needs (Swafford et al., 2008). There is a plethora
of studies on flexibility and supply chain agility, articulating both as interlinked concepts,
with former as an antecedent to latter (Swafford et al., 2006; Chan et al., 2017; Braunscheidel
and Suresh, 2009). In addition, PI is also a key enabler of flexibility and supply chain agility,
which is deemed to coordinate, streamline and execute material, information and process
flow from supplier to end consumer (Braunscheidel and Suresh, 2009; Wagner et al., 2018;
Lee and Wang, 2013; Huo, 2014). Despite a large body of literature on supply chain agility,
there is still a need to address the following question: whether and how supply chain agility
affects business performance in an international business arena? Consistent with previous
studies of Zhou et al. (2018), Blome et al. (2014) and Chan et al. (2017), this study seeks to fill
this gap by positing the enabling role of PI and supply flexibility in supply chain agility,
keeping in view the contingency effects of product-related complexity.
Contrary to previous studies that merely shed light on the pathway through which
firms harness supply chain agility and associated outcomes, we argue that supply flexibility
(i.e. volume and mix) is an operational capability that fosters the effects of PI on supply
chain agility, and supply chain agility, in turn, accelerates business performance. In effect,
fashion is ascribed as an assortment of complex product attributes, and supply chain, in
fashion industries, is vulnerable to various product-related complexities. Grounded into
DCV, the study develops a competence‒capability framework, comprising of PI and supply
flexibility as the key enablers of firm’s supply chain agility. Further, the competence‒
capability framework is not consistent and is subject to varying degrees of product-related
complexities in the contextual environment in which the firm operates (Eckstein et al., 2015).
To get empirical evidence about our premise, we chose a sample of vendor firms in fashion
industries performing major operations in Pakistan. There are few reasons to choose this
market. First, Pakistan is the eighth largest textile exporter in the world after China and India.
Second, the firms in this industry are engaged in manufacturing for leading western brands,
such as Nike, Denim and Levies, and exporting fashion to Europe, Latin America, USA, Canada,
Turkey and Japan. Third, the industry is fragmented with a mix of domestic and multinational
firms that source synthetic fiber and customized material from China, Bangladesh and Vietnam.
Fourth, from the last few years, firms are facing severe fall in exports, mainly due to intense
competition from neighboring countries, such as China, India, Bangladesh and Vietnam,
exchange rate fluctuations, the rising cost of labor, poor level of integration, lack of digitalization
and supply chain complexities (Khan and Khan, 2010). All these issues signify the importance of
conducting an empirical investigation about the pathway through which firms can achieve
supply chain agility under the varying levels of product complexity. The study in this way
attempts to contend the following promising research questions: first, how does PI influence
supply flexibility and supply chain agility from a vendor’s perspective? Second, how does
supply chain agility impact a firm’s business performance? Third, how does product complexity
create contingency effects on the mediated relationship between PI and supply chain agility Enabling
through supply flexibility? These promising research questions were answered and supported supply chain
by empirical investigation using survey data from 148 firms in the garment manufacturing agility
industry in Pakistan. The study, in this way, contributes to the theory and practice by analyzing
the industry and context-specific themes of supply chain integration, flexibility and agility, through PI
keeping in view the contingency effects of product-related complexity.
The remainder of the paper is organized as follows. Section 2 discusses the theoretical
foundation and related literature. Section 3 elaborates hypotheses development. Section 4
presents the research methods, whereas Section 5 portrays the data analysis along with a
discussion of results. Section 6 sheds light on theoretical and managerial implications of the
study, followed by the limitations, future research directions and conclusion.

2. Theories and related literature

This section deals with theories and related literature, followed by a conceptual model
linking the key research questions.

2.1 Supply chain agility

Agility is a multidimensional construct that covers customer agility (Sambamurthy et al.,
2003), internal and external agility (Huo et al., 2018), partnering agility (Sambamurthy et al.,
2003) and supply chain agility (Braunscheidel and Suresh, 2009). Our study focuses on
supply chain agility, the ability of the firm to response in unpredictable environment and
succeed by exploiting business opportunities (Christopher et al., 2004; Li et al., 2009). In
practice, SCA is realized through customer effectiveness to deal with complexities and is
reflected in firm’s downstream operations (Chan et al., 2017; Zhu et al., 2017). SCA is the
firm’s capability, in conjunction with suppliers and other stakeholders, to confront market
challenges and respond in a timely fashion to disruptions in demand. SCA, in essence, is a
higher order dynamic capability through which firms can turn around and exploit
opportunities while confronting disruptions in the demand, thereby growing in the right
direction (Van Oosterhout et al., 2006; Eckstein et al., 2015). Gligor et al. (2016) emphasized
the flexibility with which firms redesign and launch new products and respond to customer
demands effectively. Despite the numerous benefits of SCA, there is scant literature to
analyze the antecedents of supply chain agility (Swafford et al., 2006) and the contextual
influence that may impede or succeed in its realization. Table I reports some of the key
definitions of agility and its enablers under different schools of thought.

2.2 Theoretical foundation

Our study is grounded into the dynamic capability perspective of the resource-based view
and contingency theory (CT) to address the key research question. In effect, the mechanisms
through which resources and capabilities are aligned across the supply chain enhance the
supply- and demand-side competency in changing market conditions (Blome et al., 2014).
For instance, the way IT as a resource is assimilated in firm’s core business processes
gives competitive advantage to firm and its supply chain partners (Lee and Wang, 2013).
The relational view (RV ), an offshoot of RBV, asserts that firms can heighten their ability to
exploit business opportunities and improve performance by investing in collaborative
relationships through supply chain integration with their value chain partners (Liu et al.,
2016). Chen et al. (2014) suggested that investment into relation-specific assets and
leveraging the internal competencies such as PI result in supply chain agility.
The dynamic capability view (DCV ) is more appropriate to explicate the firm’s
performance in an environment characterized by complexity and uncertainties (Wu, 2010;
Yu et al., 2018). DCV argues that firms can sense, seize, integrate and coordinate new
APJML Source Definition Theories

Swafford et al. (2008) Supply chain agility represents the ability of firm to respond to Resource-based view
market in timely fashion and represent strength of relationship
of firm with market
Braunscheidel and Ability of a firm, in conjunction with its key supply chain DCV , Organizational
Suresh (2009) partners, to adapt or respond to unexpected market changes in a cultural view
speedy manner
Mikalef and Pateli The degree to which a firm can sense and respond quickly to Dynamic capability
(2017) opportunities for innovation and competitive advantage view (DCV )
Ngai et al. (2011) SCA should be one of the essential ingredients for helping a firm Resource-based view
and its supply chain partners survive in turbulent environments
Chiang et al. (2012) The ability of a firm to cope with unexpected market DCV
opportunities and threats and is imperative to achieve
competitive advantage
Blome et al. (2014) Supply chain agility is a dynamic capability to revive and thrive Knowledge-based
responsively to face market disruptions view, DCV
Eckstein et al. (2015) The ability to sense short-term changes in the supply chain and Contingency theory,
Table I. swiftly responds to those changes DCV
Supply chain agility: Zhou et al. (2018) Marketing agility has been recognized as an indicator that DCV
definitions and enables firms to identify opportunities and respond rapidly to
theoretical lenses market changes in a dynamic environment

knowledge essential to capitalize on the internal and external competencies (Wu et al., 2017).
DCV posits that firms can perform better if they capitalize on the resources and practices of
their partners through effective internal and external integration (Liu et al., 2016). Also,
dynamic capabilities direct firms to acquire new knowledge and assimilate it in business
routine processes pivotal to capitalize on market trends and lead towards higher order
capabilities such as flexibility and agility (Wu, 2010; Blome et al., 2014). In effect, dynamic
capabilities make firms proactive to deal with future happenings and align with the external
environment, whereas operational capabilities enable firms to perform in the present (Helfat
and Winter, 2011; Cepeda and Vera, 2007). The question of whether and how dynamic
capabilities affect performance opens new avenues to do an empirical research on the
mediating effect of dynamic capabilities.
DCV argues that a firm’s performance is contingent on the resources and capabilities of
its value chain partners (Yu et al., 2018). Further, it posits that the potential benefits of
dynamic capabilities are heightened under higher complexities (Schilke, 2014). In practice,
through PI, firms leverage the resources and capabilities of their partners and develop
higher order capabilities such as flexibility and agility (Braunscheidel and Suresh, 2009;
Chan et al., 2017; Vanpoucke et al., 2014).
DCV underscores the significance of aligning firm’s internal and external resources by
changing market conditions (Wu, 2010). In effect, dynamic capabilities put forth their effect
in a hierarchal setting (Liu et al., 2013). However, the prior research merely looks into the
hierarchy of capabilities while elaborating the interrelationship between dynamic
capabilities and ordinal capabilities (Chan et al., 2017; Blome et al., 2014; Wagner et al.,
2018). The dynamic capability perspective grounded into RBV asserts that firms should
make use of the external resources and capabilities of their partners in realizing the value to
firm while confronting the environmental uncertainties (Huo et al., 2018). The firms in
developing countries suffer resource constraints and the ability to deploy resources
effectively in value delivery network. In this way, dynamic capabilities assist supply chain
and marketing practitioners to explore and exploit various opportunities in meeting the
firm’s objectives (Panda and Rath, 2018). In today contemporary business world, where the
competition lies between supply chains, firms must align their dynamic capabilities and
ordinal capabilities in realizing the business value (Liu et al., 2015; Lee and Whang, 2004). Enabling
Employing DCV, the study conceptualizes a competence‒capability framework through supply chain
which firms can leverage their competency of PI and augment higher order capabilities of agility
flexibility and agility, thereby deriving business performance (Chan et al., 2017; Vanpoucke
et al., 2014; Braunscheidel and Suresh, 2009; Gligor et al., 2015). through PI
Furthermore, the study seeks to look into contingency perspective of DCV by positing
that firms should acclimatize their processes to fit with their environment, thereby
augmenting ordinal capabilities and financial performance (Zhou et al., 2018). In practice, the
potential benefits of dynamic capabilities are heightened under a high degree of
complexities (Schilke, 2014). Moreover, firms need to adapt their internal operations
carefully to exploit new business opportunities while confronting environmental challenges
(Volberda et al., 2012). In general, CT is recognized as a source to analyze the contextual
conditions under which dynamic capabilities put forth their effect to achieve superior firm’s
performance (Eckstein et al., 2015).
From a vendor’s perspective, the benefits from outsourcing are contingent upon the extent
to which dynamic capabilities and operational capabilities are in line with the contextual sphere
in which firm do the business (Xu et al., 2014). Thus, the study is based on the premise that PI,
coupled with supply flexibility (i.e. volume and mix), results in supply chain agility(Zhang et al.,
2003), which, in turn, improves the business performance. However, product-related complexity
is a contingency factor in fashion industries that need to be critically addressed through a
subsequent empirical investigation of research hypotheses.

2.3 Enablers of supply chain agility

The intense competition, in the market place and rising customer expectations entail firms to
invest in collaborative relationship management with their supply chain partners (Lau et al.,
2010). The literature encompasses several underlying mechanisms through which supply
chain agility can be achieved, such as internal and external integration (Braunscheidel and
Suresh, 2009), information systems integration (Lee and Wang, 2013; Swafford et al., 2008),
sourcing flexibility (Wagner et al., 2018), enterpreniual orientation, resource management,
technology utilization (Malakouti et al., 2017) and supplier relationship management
(Malakouti et al., 2017; Lee et al., 2004). The present study underscores PI and supply
flexibility (i.e. volume and mix) as the key enablers of supply chain agility.
2.3.1 Process integration. The literature classifies supply chain integration into two
categories of internal and external integration, which are further subdivided into functional
mechanisms, such as information integration, PI, measurement integration, quality
integration, resource integration and relationship integration (Flynn et al., 2010; Stank et al.,
2001; Wu et al., 2006; Huo et al., 2014; Qi et al., 2017).
PI is a dynamic capability having a profound effect on supply chain flexibility and agility
(Chen et al., 2009). PI refers to the extent to which a firm designs, streamlines and executes its
supply chain processes with channel partners (Lee and Whang, 2004). PI critically aligns key
activities and strengthens the buyer‒supplier relationship. In effect, PI augments ordinal
capabilities such as flexibility and adaptability, thereby improving responsiveness
(Braunscheidel and Suresh, 2009). Organizations integrated with their supply chain partners
are adaptive, flexible, responsive and agile (Qi et al., 2017). PI is a broad concept entailing a
variety of activities such as inventory planning, demand forecasting, logistics integration and
customer services (Prajogo et al., 2016). Drawing on Bowersox and Daugherty’s (1987)
typology, a unified logistics strategy, coupled with process coordination and customer service
effectiveness, results in better competitive performance (Spillan et al., 2018). Nowadays, firms
are reviving their image from product orientation to process orientation, making PI a critical
success factor and a source of competitive advantage to the organizations.
APJML Supply chain integration and total quality management (TQM) practices are interlinked
and have profound effects on service quality and firm’s performance (Thai and Jie, 2018).
Logistics capability, constituted by PI and operations flexibility, is realized as a key
operational capability and plays a vital role to mitigate supply chain uncertainty and risk
through integrative processes (Wang et al., 2015).
Consistent with Huo (2012) and Stank et al. (2001), PI is a higher order dynamic capability
through which firms can leverage the resources and competencies of its value chain
partners to harness the operational capabilities and enable supply chain agility.
2.3.2 Supply flexibility. Flexibility is multidimensional concept including manufacturing
and strategic flexibility (Chan et al., 2017), supply chain flexibility (Lee and Wang, 2013;
Huo et al., 2018), IT flexibility (Han et al., 2017), sourcing flexibility(Wagner et al., 2018) and
external flexibility, that is volume and mix (Swafford et al., 2006; Gosling et al., 2010). Supply
chain flexibility is the firm’s ability to regulate operational activities according to internal and
external market conditions (Yi et al., 2011; Mendonça Tachizawa and Giménez Thomsen, 2007) .
Our study focuses on supply-side flexibility (i.e. volume and mix) from a vendor’s perspective
in the fashion industry. Supply-side flexibility, consistent with Zhang et al. (2003), in our study
context, realizes the ability of the vendor to manufacture flexibly in line with changing needs of
marketplace(Gosling et al., 2010). Supply chain agility and flexibility are interlinked concepts.
In effect, agility is realized through customer effectiveness and is reflected in customer
responsive practices, whereas flexibility is associated with the efficiency of internal operations
(Chan et al., 2017).
Zhang et al. (2003) defined mix flexibility as “The ability of an organization to make a
combination of products efficiently.” Conversely, volume flexibility is recognized as “The ability
of a firm to operate at a variety of output levels without compromising the quality of products
and service.” There are purported benefits of supply chain flexibility for firms operating in the
fashion industry such as meeting demand uncertainties, reducing lead times and supply chain
agility (Chan et al., 2017; Zhu et al., 2017). Supply-side flexibility is vital in restructuring
purchasing function in dynamic markets, thus improving the agility (Yi et al., 2011).

2.4 Product-related complexity – a contingency

The literature asserts that competence‒capability framework is not consistent in all
contexts, thereby needing further investigation about contingencies. The motive behind
fashion outsourcing is to expand the firm’s product portfolio and exploit new business
opportunities. However, such an expansion entails several supply chain complexities related
to product attributes. The fashion is an assortment of several product lines, and to exploit
emerging trends in products and processes, firms need to take advantage of their external
capabilities through effective PI (Zhou et al., 2018).
Blome et al. (2014) analyzed the contingency effects of product complexity on the
relationship between knowledge transfer and supply chain flexibility. Similarly, ownership
structure (Amoako-gyampah et al., 2019) and environmental uncertainty (Wong et al., 2011)
also signify the presence of contingencies, which can moderate the competence‒capability
framework. Although we can find a variety of contingencies in the realm of outsourcing in the
fashion industry, there are limited studies addressing the contingency effect of product-related
complexity on the pathway through which firm can achieve supply chain agility.
Fashion buyers, around the world, are striving to widen their product mix by sourcing
from offshore countries. The complexity may arise from product life cycle, several
suppliers, varying customer demands, changing fashion, the demographic profile of the
market and specific country laws and regulations (Khan and Khan, 2010). In this way,
complexities related to the product such as product design, modularity, product bundling
and style may obstruct the whole process and capability of vendors (Blome et al., 2014;
Eckstein et al., 2015).
2.5 Business performance Enabling
The literature reports the performance effects of various organizational capabilities such as IT supply chain
capabilities (Liu et al., 2013, 2016), supplier relationship management capabilities (Wagner agility
et al., 2018), supply chain integration (Huo et al., 2018; Li et al., 2016), supply chain flexibility
(Chan et al., 2017) and supply chain agility (Mikalef and Pateli, 2017; Chan et al., 2017). through PI
Business performance indicates the success of the firm on key financial and market
indicators. The prior studies report the performance effects of supply chain agility and its
enablers such as supply chain integration and flexibility on competitive performance, for
example operational and financial (Huo et al., 2014; Flynn et al., 2010; Qi et al., 2017; Li and
Whang, 2004). Supply chain agility is the firm’s ability reflected in downstream operations;
therefore, selection of business performance as an outcome of supply chain agility is
elemental to the context of the study. In essence, business performance is an indicator of
financial viability (Gligor et al., 2015) and an outcome of supply chain agility reflected into
market share, revenue growth and customer satisfaction (Rai et al., 2006).

3. Hypotheses development
Grounded into DCV and resource-based theory, we developed following hypotheses to
investigate the interrelationship among variables under consideration.

3.1 Effect of process integration on supply flexibility and supply chain agility
The prior literature underlines the effects of supply chain integration on ordinal capabilities and
firm performance (Demeter et al., 2016; Qi et al., 2017). PI herein is a critical dynamic capability
that influences the volume and mix flexibility, and subsequently firm can achieve supply chain
agility (Braunscheidel and Suresh, 2009). PI seeks to put into effect the inter-organizational
information systems to coordinate various operations (Flynn et al., 2010). Chen et al. (2009)
revealed that firm can materialize the benefits of developing supply chain capabilities, supply
flexibility herein, through supply chain PI. Thus, firms need to be integrated with their partners
to handle a variety of complexities during planning and execution of project (Roh et al., 2014).
In particular, PI conjectures to bridge the gap between buyer and supplier and facilitate the
whole supply process in a synergized way. Liu et al. (2015) realized that information sharing and
process coordination are crucial in harnessing flexibility in logistics outsourcing. Through
effective PI, firms can plan and streamline the production process, inventory management and
marketing operations in a competitive way (Huo et al., 2014; Wu et al., 2006). Employing a
knowledge-based view, external PI mediates the effect of supply chain learning on flexibility
(Willis et al., 2016).
Firms are automating their manufacturing and service process in line with customers
and market needs these days (Liu et al., 2016; Lee and Whang, 2004; Huo et al., 2014;
Yu et al., 2018). Based on this premise, firms in fashion industry should work on developing
PI capability across the value chain to improve their supply flexibility (Blome et al., 2014).
Summing up, through PI firms can achieve flexibility in volume and mix and can plan
production orders, forecast demand and design products as per demand in the market
(Swafford et al., 2006; Braunscheidel and Suresh, 2009).
Therefore, the following hypothesis is proposed:
H1. PI is positively related to supply flexibility.
PI makes sure that firms respond better in time of market disruptions (Cadden and Downes,
2013; Demeter et al., 2016). Several studies report the role of PI in developing higher order
capabilities such as flexibility, customer agility and relationship commitment (Cao and Zhang,
2011; Prajogo and Olhager, 2012). Kim and Chai (2017) suggested that supplier innovativeness,
information sharing and PI enhance supply chain agility. Chiang et al. (2015) revealed
that customer integration enhances customer response speed, which, in turn, influences
APJML manufacturing response speed. Further, the nature of the relationship between customer
integration and customer response speed directs firms to reduce manufacturing lead time.
In addition, through SCI, firms can mitigate the operational and market-specific risk ( Jajja et al.,
2018). Wu et al. (2017) posited that firms achieve competitive advantage through supply chain
agility, which is enabled by PI. Firms, through PI, can capitalize on external competencies and
capabilities and deliver value to end customers (Liu et al., 2018). The outsourcing in the fashion
industry involves an integrated set of activities such as demand forecasting, inventory
management, product design, material resource planning (MRP) and merchandising, and it
needs coordination and integration so as to achieve supply chain agility (Li et al., 2016). In sum,
firms can achieve the benefits of innovation, agility, flexibility and efficient operations through
PI (Chen et al., 2009). Hence, the following hypothesis is proposed:
H2. PI is positively related to supply chain agility.

3.2 Relationship between supply flexibility and supply chain agility

The literature recognizes flexibility as an operational capability and an antecedent of supply
chain agility (Lee and Wang, 2013). Supply flexibility (i.e. volume and mix) reconfigures
internal operations and market demand. Supply flexibility inculcates confidence in buyer‒
supplier relationships to adapt to the changes in product mix or volume (von Haartman and
Bengtsson, 2015). In essence, supply flexibility indicates the ability to foresee the changing
customer demands and adjust internal operations accordingly, which make firms capable of
responding swiftly (Swafford et al., 2008). The literature recognizes flexibility as a determinant
of agility (Swafford et al., 2008; Khan and Pillania, 2008). The prior studies focus on
firm-specific effects of flexibility, mainly from buyer’s perspectives (Agarwal et al., 2006;
Wagner et al., 2018). However, research is limited to explicate the effects of supply flexibility
(i.e. volume, and mix) on reducing process lead times and improving responsiveness from a
vendor’s perspective. The firms in the garment manufacturing industry confront tight product
schedules and short lead times. In this way, through supply flexibility (i.e. volume and mix),
firms can meet deadlines ( Zhang et al., 2003) and improve customer responsiveness (Čiarnienė
and Vienažindienė, 2014). In our study context, firms through supply flexibility develop the
capability to confront challenges such as fluctuations in demand, supply chain complexities,
rivals actions and cultural shifts (Christopher et al., 2004; Tang and Tomlin, 2008). In effect,
volume and mix flexibility, combined with supply chain integration, result in supply chain
agility (Braunscheidel and Suresh, 2009). Moreover, it gives control of operations to expedite
delivery process, thereby enhancing supply chain agility (Westbrook and Frohlich, 2001).
Therefore, the following hypothesis is proposed:
H3. Supply flexibility is positively related to supply chain agility.

3.3 The mediating role of supply flexibility

Supply flexibility fosters the effects of integration practices on supply chain agility while
enhancing the capability to face the unpredictable demand (Braunscheidel and Suresh,
2009). The competence‒capability framework posits that supply flexibility (i.e. volume and
mix) mediates the effect of PI on downstream capability, supply chain agility (Zhang et al.,
2003). In effect, PI, at the buyer‒supplier interface, purposefully influences supply-side
flexibility, which, in turn, augments supply chain agility (Westbrook and Frohlich, 2001).
Summing up, PI improves the quality of the buyer‒supplier relationships and leads towards
supply chain agility. Moreover, fast information flows and process coordination intensify
flexibility, leading to improved customer responsiveness (Orcao and Pérez, 2014). Therefore,
the following hypothesis is proposed:
H*. Supply flexibility mediates the effect of PI on supply chain agility.
3.4 Supply chain agility and firm’s business performance Enabling
Firms, through supply chain agility, respond swiftly to the market and substantially boost their supply chain
business performance. There are many studies underlying the mechanism through which supply agility
chain agility exerts its effect on firm’s competitive performance, that is operational and financial
(Chan et al., 2017; Mikalef and Pateli, 2017; Liu et al., 2013; Swafford et al., 2006). Likewise, Wagner through PI
et al. (2018) suggested that delivery performance positively influences firm’s financial viability.
However, in this study, we are concerned about the effect of supply chain agility on the business
performance of our target sample firms in the international business arena.
Zhou et al. (2018) investigated the impact of marketing agility on a firm’s financial
performance and posited that marketing agility directly affects financial performance. SCA
is the ability of a firm or business unit to respond to the market effectively under changing
circumstances (Eckstein et al., 2015). In effect, fashion is the collection of diverse product
lines with complex product attributes. Therefore, agility makes firms capable of delivering
to customers and thriving business value for firm and stakeholders. Moreover, through
agility, firms may generate profits and win customer loyalty (Gligor et al., 2015).
In practice, fashion retailers face the issue of decline in sales of existing SKUs with the
addition of new variants to the firm’s product mix portfolio. The challenge for marketers
and fashion planners is to make a balanced strategy for sales and growth of existing and
new SKUs. In this way, through agility, firms can handle demand fluctuations while
deriving financial returns (Song et al., 2011).
The ability to manage the product repertoire (i.e. volume and mix) enhances business
performance (Wu et al., 2017; Chan et al., 2017). Supply chain agility develops capability of
responding to market demands quickly, resulting in higher market share and customer
satisfaction ( Jacobs et al., 2011; Roberts and Grover, 2012).
Thus, the following hypothesis is proposed:
H4. Supply chain agility is positively related to a firm’s business performance.

3.5 Moderating effect of product complexity

Based on the contingency perspective of DCV, our study seeks to investigate the moderating
effect of product complexity on the pathway through which supply chain agility can be
achieved (Eckstein et al., 2015; Lee et al., 2004). Therefore, we hypothesize that product
complexity moderates the competence‒capability framework in a bi-directional way. On the
one hand, it influences the relationship between PI and agility, whereas on the other hand,
it hampers the effect of supply flexibility on supply chain agility. The premise about the
positive direct and indirect effect of PI on supply chain agility is contingent upon the degree
of product complexity in the fashion marketplace.
The prior literature merely explains the moderating effect of product-related complexity on
the competency‒capability relationship (Blome et al., 2014). These studies affirm the direct
effects of product complexity by arguing that higher product intricacy obstructs operational
performance (Hu et al., 2008). For instance, fabric quality, design, variety in style, features and
bundling may slow down the volume and mix flexibility, thereby intruding the positive
relationship between supply flexibility and agility. The literature reports that the more
complex the product architecture, the less it is adaptable (Hu et al., 2008). Yi et al. (2011)
suggested that the flexibility strategies, in the textile and clothing sector, should match a
firm’s business environment and that improved supply chain responsiveness can be achieved
by controlling complexities and improving supply chain flexibility. The relationship between
flexibility and supply chain agility is contingent upon the level of product complexity. Thus,
the following hypothesis is proposed:
H5a. The positive association between supply flexibility and supply chain agility
becomes weaker when product complexity is high.
APJML Normally, one might expect that product complexities impede the effect of PI on supply
chain agility. However, keenly observing the industry norms, we propose that product
complexity motivates firms to invest in external PI to get control of internal and external
competencies. In practice, a firm’s integrative practices are largely guided by the degree of
product complexity. Higher product complexity realizes firms to invest in PI across the
value chain. Moreover, product complexity instigates fashion enterprises to heighten their
collaborative relationships with customers (van Donk and van der Vaart, 2005) and
associate unique value proposition to products. For instance, product bundling, customized
design and quality may disrupt logistics and supply chain process. Therefore, effective
monitoring and integration of processes lead towards quick response to market
(Braunscheidel and Suresh, 2009). Hence, the following hypothesis is proposed:
H5b. The positive association between PI and supply chain agility becomes stronger
when product complexity is high.
The prior work on contingency effects of complexities is inadequate and needs further
investigation about conditional effects of complexities under high and low degree
(Wong et al., 2011; Eckstein et al., 2015).
Considering the above hypotheses together, a moderated mediation model is suggested
where a mediation effect is being moderated, across the varying degrees of the moderator
(Preacher et al., 2007). In our study, supply flexibility mediates the effect of PI on supply
chain agility and this mediated relationship depends upon the height of product complexity.
Thus, we may hypothesize that the mediated relationship between PI and supply chain
agility is moderated by product complexity. In addition to direct effects, the conditional
indirect effect is suggested, and we may propose an integrative hypothesis:
H6. The indirect effect of PI on supply chain agility via supply flexibility becomes
stronger when product complexity is high.
Bringing all hypotheses together, the study conceptualizes the research model, as given
in Figure 1.

4. Research method
4.1 Context – garment manufacturing industry in Pakistan
The textile sector is the mainstream industry in the Asia Pacific region. About 80‒90 percent
of the fashion apparel production, in Asia, is driven by global buyers, mainly from Europe,
USA, Latin America, Canada and Turkey. We sought to include only those vendor firms
whose 80‒90 percent production is in Pakistan to export in offshore markets. Pakistan is the
eight largest fashion exporting country wherein garments export contributes 60 percent to the

Volume flexibility Mix flexibility

Supply
flexibility
H3(+)
H1(+)

Process H5(–) Supply chain H4(+) Business

integration agility performance
Product
complexity
Figure 1.
H5(+)
Conceptual model
H2(+)
total export of the country. The country is a lucrative hub for outsourcing fashion, mainly due Enabling
to its quality yarn production, devaluating currency against the dollar and skilled labor. The supply chain
gradual decline in China’s exports to the USA and the EU has opened opportunities for other agility
countries in South Asia. Pakistan has world-class manufacturing facilities for high-quality
denim production. Moreover, the labor cost of Denim production in Pakistan is less than India, through PI
China, and Bangladesh. However, the country is facing decline in exports, from past few years,
due to rising production cost, energy crises, supply chain complexities, outdated machinery,
the high tariff on imports and stiff competition from neighboring countries of India, China,
Vietnam and Bangladesh. The industry is also lacking R&D to come on winning track in the
international market. Besides, small-sized firms have a poor level of integration with their
value chain partners due to poor IT infrastructure, lack of information sharing and cultural
barriers in an organizational workplace setting (Khan and Khan, 2010). Lead time in the textile
and fashion industries is shrinking day by day. Particularly, in many developing countries
like Pakistan, apparel industries are mismanaged and under developed. In general, firms in
developing countries like Pakistan confront cultural barriers that impede managerial trust
and motivation to adopt technology and thereby obstruct integration with external partners
and buyers in offshore markets (Khan and Khan, 2010). The domestic firms, in garment
industry in Pakistan, lack market and learning orientation due to traditional bureaucratic
organizational structure. All these issues signify to pave a path through which firms can
achieve supply chain agility under varying degrees of product-related complexities while
optimizing business performance.

4.2 Sampling and data collection

To test the above hypotheses and rigor in data collection, we opted to collect survey data
from vendors in the garment manufacturing industry in Pakistan. We did not convert
questionnaire into local or national language, because our target respondents were
professionals and their official language was English. To ensure content validity, we first
discussed the measures with eight procurement managers having extensive procurement
and project management experience in their organizations. Initially, our survey comprised
of measures on SCI (i.e. information integration and PI), supply chain flexibility, product
complexity and supply chain agility. However, after discussion with industry experts and
considering methodological limitations, we finalized PI, supply flexibility (i.e. volume and
mix), product complexity and supply chain agility to design research framework. Similarly,
we focused on business performance as an outcome of supply chain agility relevant to our
study objectives. Next, we did pilot testing and mailed the revised questionnaire to 20 other
professionals. Their feedback refined the measures and improved content validity for
subsequent data collection. To find out contact information, we consulted company
databases, Pakistan apparel, fashion and textile industry guide, Securities & Exchange
Commission website (SECP.gov.pk), Textile Commissioner Office (TCO.org.pk) and industry
yellow pages. We also consulted local chamber of commerce and garment manufacturers
associations to approach key respondents. We employed random sampling by carefully
selecting firms from the list of manufacturing associations and stock exchanges.
First, we targeted key industrial zones with a large number of garment units and buying
houses engaged in manufacturing and distribution to offshore buyers. In collecting data, we
mailed the survey to key informants, followed by repeated emails and telephone calls to
obtain their willingness to participate in the survey.
Initially, we mailed a survey to 548 respondents in 224 firms. We assured that informants
should be knowledgeable about their job and purpose of the survey. Finally, with two to three
rounds of reminders, we received 175 returned questionnaires, 27 of which were incomplete.
The data collection took about seven months, starting in the first quarter of the year 2018 and
ending in the third quarter. A total of 148 questionnaires were complete, giving a response rate
APJML of 27 percent, which is sufficient in similar studies (Flynn et al., 2010; Huo et al., 2014).
The detailed demographic profile of sample firms and respondents is given in Table II.
Since our sample size was relatively small than other similar studies, PLS-SEM was
preferred over CB SEM (Ringle et al., 2013).
The potential for non-response bias was checked by analyzing the χ2 of responses of early
and late respondents by choosing the first 20 percent and the last 20 percent of respondents.
The results suggested that there was no significant difference between responses of early and
late respondents on key measures. We also conducted an independent sample t-test on
responding and non-responding firms to analyze the issue of non-response bias. In this way,
we randomly selected 30 non-responding firms from both samples. The results revealed that
there was no significant difference between the two groups in their demographics such as firm
age (t ¼ 0.269, p ¼ 0.789), size (t ¼ −1.034, p ¼ 0.302) and ownership structure (t ¼ 1.266,
p ¼ 0.206), indicating no issue of non-response bias.

4.3 Common method variance

Common method variance (CMV ) might be a possible threat in survey studies where a
single respondent answers all the questions (Schwarz et al., 2017). Thus, we used different
approaches to deal with the issue of common method bias (CMB). First, Harman one-factor
(single-factor) method and test of common method biasness using principal component
analysis with varimax rotation were applied to assess the presence of CMV. The results
extracted six different factors from twenty-eight items in the measurement model. The
maximum variance explained by a single factor was 34.07, which was less than 40 percent,
indicating that CMB was not the issue (Podsakoff et al., 2003).

Attributes Distribution n %

Ownership type State owned –

Private owned 68 45.9
Joint venture 24 16.2
Public limited 35 23.7
MNCS 21 14.2
Business/production T-shirts and jeans 62 41.8
Fabric supplier 32 21.6
Trim supplier 26 17.7
Bedding and Lenin 28 18.9
Firm size/No of employees 500 ⩽1000 38 25.6
1000 ⩽ 2000 63 42.7
W 2000 47 31.7
Firm age 1⩽5 years 32 21.6
W 5⩽10 years 69 46.6
W 10 years 47 31.8
Gender Male 102 68.9
Female 46 31.1
Education level Undergraduate 20 13.5
Graduate 76 51.4
Postgraduate 52 35.1
Job/designation Procurement 34 22.9
Merchandising 24 16.4
Export operations 34 22.9
Production 25 16.9
Supply chain/logistics 31 20.9
Table II. Job experience ⩽ 5 years 37 25.1
Profile of survey W 5 ⩽ 10 years 67 45.2
sample (n ¼ 148) W 10 years 44 29.7
Second, following Podsakoff et al. (2003), we injected a common method factor in our PLS Enabling
model, and all factors of principal constructs were loaded on it. Next, we estimated each supply chain
factor’s substantive variance explained by the principal construct and by the method. The agility
results given in Table III indicate that the average substantive variance of all the factors
was 0.61, whereas the average method based variance was 0.013. The ratio of substantive through PI
variance to method variance was about 47:1. Also, most factor loadings were not significant.
Given the small magnitude and insignificance of method variance, we contend that the
method is unlikely to be a serious concern for this study.
Third, following Kock (2015), a full collinearity assessment test was performed in
Smart PLS, and values of variance inflation factors (VIF) were assessed. All the values
were under the threshold value of 3.3, indicating that the model does not have any CMB
issue (Kock, 2015). In addition, to reduce the chances of social desirability bias, we took
several measures and assured the respondents about the study purpose and anonymity of
their feedback.

4.4 Measures
We followed valid studies from existing literature and adopted five-point Likert scale for the
survey. Table IV indicates the constructs, measures and their source of reference. We
included control variables such as firm size, firm age and ownership type in our model to
minimize the confounding effects of any possible undesirable variation (Huo et al., 2014;
Chan et al., 2017). Ownership type was taken as dummy variable by referring 1 to foreign-
owned and 2 to domestic-owned firm. Firm size was assessed by number of employees, and
age was determined by years of experience. We also included operational risk as a control

Construct Items Substantive factor loading R1 (R1)2 Method factor loading R2 (R2)2

Process integration PI1 0.73** 0.54 0.088 0.0077

PI2 0.78** 0.61 −0.074 0.0055
PI3 0.69** 0.48 −0.095 0.0090
PI4 0.77** 0.59 −0.027 0.0007
PI5 0.69** 0.48 −0.1 0.0100
PI6 0.81** 0.66 0.176 0.0310
PI7 0.89** 0.79 0.038 0.0014
Supply flexibility SF1 0.87** 0.76 0.092 0.0085
SF2 0.94** 0.88 0.179 0.0320
SF3 0.72** 0.52 −0.083 0.0069
SF4 0.82** 0.67 −0.034 0.0012
SF5 0.76** 0.58 −0.162 0.0262
Supply chain agility SCA1 0.65** 0.42 −0.094 0.0088
SCA2 0.84** 0.71 0.149 0.0222
SCA3 0.84** 0.71 0.098 0.0096
SCA4 0.64** 0.41 −0.19 0.0361
SCA5 0.69** 0.47 −0.084 0.0071
SCA6 0.86** 0.74 0.159 0.0253
SCA7 0.79** 0.62 0.098 0.0096
Product complexity PC1 0.51* 0.26 −0.186 0.0346
PC2 0.92** 0.85 0.153 0.0234
PC3 0.81** 0.66 0.004 0.0000
Business performance BP1 0.72** 0.52 −0.039 0.0015
BP2 0.89** 0.79 0.111 0.0123
BP3 0.79** 0.62 −0.038 0.0014
BP4 0.72** 0.52 −0.083 0.0069 Table III.
BP5 0.75** 0.56 0.058 0.0034 Testing common
Average 0.77 0.61 0.0042 0.0127 method bias
APJML Construct and measures Reference

Process integration Stank et al. (2001), Wu et al. (2006), Huo et al. (2016) and
Working with clients to improve product Qi et al. (2017); Braunscheidel and Suresh (2009);
development Irfan et al. (2019)
Aligned performance indicators with partner
Jointly involving in agreements for lead time and
delivery frequency for sourcing/supplies of goods
Synchronizing production capacity with internal
operations and customer demand
Collaboration with buyers to improve inter-
organizational process
Establishing strategic partnership with buyers
Working closely with clients during sourcing
process and offering support to resolve problems
Supply flexibility Swafford et al. (2006), Braunscheidel and
Volume flexibility Suresh (2009)
Ability to operate at different levels of output
Frequent change of volume allocation among
existing clients
Mix flexibility
Ability to change product mix quickly
Ability to produce wide variety of products
Ability to changeover from one product type to
other
Supply chain agility Mikalef and Pateli (2017), Rai and Tang (2010),
Capable of forecasting and meeting global market Chan et al. (2017), Li et al. (2009)
demand
Responding to shorter lead times and delivery cycle
Worldwide deliveries without overstocks and lost
sales
Increasing frequencies of new product introductions
Speed in increasing frequency of customized
product offerings
Speed in improving worldwide delivery reliability
Speed in improving customer service
Product complexity Blome et al. (2014), Saeed et al. (2019)
Offering customers diverse add-ons and the option
of product bundling
Products consist of a high number of components/
fabrics
Frequently offering new product variants within
existing product lines.
Products can be decomposed into modules
Business performance Wagner et al.(2018), Chan et al. (2017), Huo et al. (2014),
Sales growth rate Flynn et al. (2010)
Market share
Return on sale
Operating profit
Customer satisfaction
Operational risk Jajja et al. (2018), Ho et al. (2015)
Cutthroat competition and rival actions
Failure of logistics affecting supplies
Table IV. Failure of supplies affecting operations
Measures Demand disruption due to seasonal factors
variable in our study. Operational risk is a predictor of any possible disruption or failure in Enabling
internal or external operations. The measures on operational risk were taken from Jajja et al. supply chain
(2018) and Ho et al. (2015). agility
5. Data analysis and results
through PI
This study used a two-step statistical analysis approach to test measurement and structural
model for analyzing the whole research framework. Variance-based PLS-SEM approach was
followed because it is effective in handling measurement and structural models altogether
(Ringle et al., 2013).

5.1 Testing measurement model

Before examining the hypothesized relationships, the quality of the outer measurement
model was assessed through reliability and validity analysis.
5.1.1 Measure validation. The results of confirmatory factor analysis (CFA) revealed
that most of the standardized factor loadings (SFL) values were from 0.50 to 0.90 and
significant (Hair et al., 2017). The average variance extracted (AVE) values were higher than
the minimum benchmark of 0.50. Furthermore, all constructs’ Cronbach’s α and composite
reliability (CR) values were within the desirable range, indicating presence of reliability and
convergent validity.
Moreover, all reflective measures had significant outer weights with t-values falling
between 4.44 and 17.47. Further, we tested discriminant validity in our measurement model
through several means. First, we checked the Pearson correlation coefficients for all latent
variables. The results given in Table V indicate that the square root of AVEs for all latent
constructs were higher than corresponding correlations with other latent constructs,
suggesting that there was no issue of discriminant validity in our measurement model
(Fornell and Larcker, 1981).
Second, we observed outer and inner VIF values to assess the discriminant validity in
our measurement model. The highest outer VIF value was 3.24, whereas the highest inner
VIF value was 1.45, which was less than the cut-off value of 5.0, indicating that there was no
issue of multi-collinearity in our data (Henseler et al., 2014).
Third, we assessed the heterotrait‒monotrait (HTMT) ratio of correlations. The results
suggested that all HTMT values were well below the threshold level of 0.85, indicating no
issue of multi-collinearity (Henseler et al., 2014).
Fourth, we evaluated all cross-loading values of reflective items in their cross-loading
table. The results indicated that all items had a higher loading value on their respective
latent construct, as compared to loading on any other construct in the model. Hence, we
suggest that our measurement model perfectly fits on all criteria of reliability and validity.
Finally, the SRMR value of 0.076, χ2 value of 1,116.08 and normalized fit index (NFI) score of
0.71 indicate good model fitness (Hair et al., 2017).

Variables α CR 1 2 3 4 5 6 7

1. Process integration 0.89 0.91 0.77

2. Volume flexibility 0.85 0.86 0.59** 0.82
3. Mix flexibility 0.86 0.87 0.58** 0.29** 0.77
4. Supply chain agility 0.83 0.85 0.68** 0.69** 0.51** 0.75
5. Business performance 0.88 0.88 0.59** 0.36** 0.25** 0.51** 0.77 Table V.
6. Product complexity 0.75 0.78 0.44** 0.27** 0.51** 0.42** 0.51** 0.75 Discriminant validity
7. Operational risk 0.72 0.74 0.07 0.06 0.02 −0.14 0.019 −0.05 0.63 (Fornell‒Larcker
Notes: **Correlations are significant at 0.01 levels (two tailed); CR, Composite reliability criterion)
APJML 5.1.2 Predictive power and predictive relevance of the model. The explanatory power of
constructs was assessed through R2 value. The results indicate that supply flexibility and
supply chain agility had R2 values of 0.45(45 percent) and 0.78 (78 percent), indicating good
explanatory power for the exogenous variable. Next, the effect size was calculated for all
exogenous variables (Hair et al., 2017). The results given in Table VI indicate that all
hypothesized relationships have moderate and high effect size.
Further, Stone‒Geisser’s Q2 test was used to assess the predictive relevance of
endogenous variables in the structural model. The Q2 values for supply flexibility, supply
chain agility and business performance were 0.698, 0.335 and 0.122, respectively, indicating
good predictive relevance of endogenous construct in the structural model.

5.2 Structural model analysis

The regression analysis was performed to test the proposed hypotheses. Table VI and
Figure 2 summarize the findings of simultaneous models applied through bootstrap analysis
in PLS. The results indicate significant direct effects of PI (β ¼ 0.538, t-value ¼ 9.856,
po0.001) on supply chain agility, supporting H2. In Model 2, the mediating effect of supply
flexibility was added to assess whether the direct effect was reduced or not by adding
mediator. The results indicated that the direct effect of PI on supply chain agility was reduced
to (β ¼ 0.370, t-value ¼ 6.041, po0.001) with the addition of mediator. Moreover, the effects of
the exogenous variable on the mediator and the subsequent effect of the mediator on supply
chain agility were found significant, supporting H1 and H3. The results given in Table VI
revealed that product complexity has a significant direct effect on supply chain agility
(β ¼ 0.127, t-value ¼ 62.169, po0.05). Further, product complexity was found to negatively
moderate the relationship between supply flexibility and supply chain agility (β ¼ −0.279,
t-value ¼ 3.666, po0.001), whereas it was found to positively moderate the effects of PI on
supply chain agility (β ¼ 0.201, t-value ¼ 2.945, po0.01).
5.2.1 Assessing mediation. We assessed the mediation and degree of mediation through
Sobel z-test, testing indirect effects and value of variance accounted for (VAF). The results
given in Table VII indicate that the relationship between PI and supply chain agility is
significantly mediated by supply flexibility.

Model 1 Model 2 Model 3

β t-value Β t-value β t-value Effect size

Control variables Supply chain agility

Ownership type −0.05 0.76 −0.05 0.75 −0.04 0.73
Firm age −0.08 1.31 −0.08 1.24 −0.06 0.95
Firm size 0.02 0.23 0.02 0.40 0.02 0.26
Operational risk −0.17* 2.21 −0.l8* 2.53 −0.16* 2.05
Structural paths
PI 0.54*** 9.85 0.37*** 6.04 0.33*** 4.76 0.26
PI → SF 0.48*** 8.61 0.48*** 8.43 0.46
SF 0.34*** 4.30 0.36*** 4.87 0.23
SCA → BP 0.44*** 6.54 0.350
PC 0.13* 2.17 0.11
PC × SF −0.28*** 3.66 0.47
PC × PI 0.20** 2.945 0.36
2
R 0.61 0.68 0.71
Table VI. Adjusted R2 0.59 0.67 0.70
Results of hypotheses Notes: PI, process integration; SF, supply flexibility; SCA, supply chain agility; BP, business performance;
testing PC, product complexity. *p o0.05; **p o0.01; ***p o0.001
 Mix flexibility
Enabling
Volume flexibility supply chain
0.69***
0.56***
agility
2
R = 0.45 through PI
Supply
flexibility
H3(0.36***)
H1(0.48***)
2
R = 0.71 R 2 = 0.38

Process H5a(–0.28***) Supply chain H4(0.44***) Business

integration agility performance
Product
complexity

H5b(0.20**)

H2(0.33***)

Notes: The hypothesized results do not change in direction and significance when following
control variables are included: Firm’s age ( = –0.06, T = 0.95), Firm’s size ( = –0.02, T = 0.26), Figure 2.
Moderated mediation
Ownership ( = –0.04, T = 0.73) and Operational risk ( = –0.16, T = 2.05). *p < 0.05; **p < 0.01; analysis
***p < 0.001

Direct effect Mediated paths Sobel z Significance

Process integration → Supply chain agility PI → SF → SCA 4.226 Yes*** Table VII.
Process integration → Business performance PI → SCA → BP 3.863 Yes*** Significance of
Note: ***p o0.001 mediated paths

Moreover, the significance of the indirect effect was assessed through their specific estimates and
p-values. Table VIII summarizes that the indirect effect of PI on supply chain agility was positive
and significant. Further, we also checked the total effects to validate the significance of
mediation. The results indicate that the total effect of PI on supply chain agility (β ¼ 0.509,
po0.001) and business performance (β ¼ 0.243, po0.001) was positive and significant. Figure 3
indicates the total effect of PI on business performance through subsequent paths. Similarly, the
direct effect of PI on business performance (β ¼ 0.549, t ¼ 9.1, po0.001) was reduced to
(β ¼ 0.101, t ¼ 3.765, po0.001), indicating the significance of mediation in our model.

Indirect path β t-value p

Process integration → Supply flexibility → Supply chain agility 0.176 4.187 0.000
Process integration → Supply chain agility → Business performance 0.142 3.297 0.001 Table VIII.
Process integration → Supply flexibility → Supply chain agility → Business 0.101 3.765 0.000 Significance of specific
performance indirect effects

c = 0.243*** Business
Process integration performance Figure 3.
R 2 = 0.38 Model with total effect
APJML Next, the degree of mediation was assessed through VAF value. The results given
in Table IX suggest that supply flexibility partially mediates the relationship between PI
and supply chain agility. Similarly, flexibility and supply chain agility also partially mediate
the link between PI and business performance.
5.2.2 Analysis of conditional indirect effects. Our study indicates a moderated mediation
model and suggests assessing the conditional indirect effects for the varying degrees of the
moderator (Preacher and Hayes, 2008). Table X summarizes the conditional indirect effects
for varying degrees of the moderator. When product complexity is high, PI has a significant
indirect effect on supply chain agility (b ¼ 0.154, boot SE ¼ 0.071, 95% bias-corrected and
p o0.05 CI ¼ [0.011, 0.291]). When product complexity is low, the indirect effect of PI on
supply chain agility becomes non-significant (b ¼ 0.033, boot SE ¼ 0.049, 95% bias-
corrected and p o0.05 CI ¼ [−0.071, 0.129]). These results indicate that indirect and positive
effect of PI on supply chain agility, through supply flexibility, is found when product
complexity is high. Thus, H6 is supported.
To further exhibit the patterns of moderating effects, we draw the interactions. As shown
in (Figure 4), the positive effect of supply flexibility on supply chain agility is reduced when
product complexity is high. Conversely, the positive link between PI and supply chain agility
becomes stronger when product complexity is high (Figure 5), supporting H4 and H5.

Direct path
Mediated paths Indirect path I ¼ (a×b×c) (D ¼ T−I) Total effect (T ) VAF (I/T) (%) Mediation
Table IX.
Degree of mediation PI→SF→SCA 0.176 0.333 0.509 34.57 Partial
through VAF PI→SF→SCA→BP 0.101 0.549 0.243 41.74 Partial

Table X. Boot effect Boot SE Boot LLCI Boot ULCI

Conditional indirect
effect of X on Y: with −1.000 0.0329 0.0499 −0.0707 0.1297
moderator 0.000 0.0932 0.0445 0.0037 0.1798
(PI→SF→SCA) 1.000 0.1535 0.0704 0.0110 0.2910

M1(SF-SCA)
0.75
0.50
0.25
Supply chain agility

0.00
–0.25
–0.50
–0.75
–1.00
Figure 4. –1.25
Supply flexibility and –1.1 –1.0 –0.9 –0.8 –0.7 –0.6 –0.5 –0.4 –0.3 –0.2 –0.1 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1
supply chain agility at
Supply flexibility
varying levels of
product complexity
Product complexity at –1 SD Product complexity at Mean Product complexity at +1 SD
 1.1
M2(PI-SCA) Enabling
1.0
0.9 supply chain
0.8
0.7 agility
Supply chain agility

0.6
0.5
0.4
through PI
0.3
0.2
0.1
0.0
–0.1
–0.2
–0.3
–0.4 Figure 5.
–0.5 Process integration
–0.6
and supply chain
–1.1 –1.0 –0.9 –0.8 –0.7 –0.6 –0.5 –0.4 –0.3 –0.2 –0.1 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1
agility at varying
Process integration levels of product
complexity
Product complexity at –1 SD Product complexity at Mean Product complexity at +1 SD

5.3 The goodness of fit (GOF)

GOF is an effective tool to evaluate model fitness through PLS-SEM (Henseler, 2016).
The estimated GOF ¼ 0.55 value suggests a good model fit, as given in Table XI.

5.4 Importance–performance map analysis (IPMA)

Importance‒performance map analysis is an effective tool in PLS-SEM, which graphically
portrays a contrast of importance (i.e. the total effect of enablers in predicting an outcome
construct) and performance (i.e. average latent construct scores). The objective of IPMA is to
spot enablers having a relatively low performance but high importance for outcome variable
(Ringle and Sarstedt, 2016).
The results given in Table XII and Figure 6 indicate that supply chain agility has a relatively
low performance but the highest importance in predicting the business performance, whereas PI
has the highest performance but low importance in predicting the business performance.

Constructs AVE R2

Process integration 0.59

Supply flexibility 0.68 0.45
Supply chain agility 0.57 0.71
Business performance 0.60 0.38
Product complexity 0.56
Average scores 0.60 0.51
AVE × r R2ffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi 0.31
  0.55
GOF ¼ AVE  R2 Table XI.
Godness of fit (GOF)

Business performance
Latent constructs Importance Performance

Process integration 0.25 65.46

Supply flexibility 0.18 53.82
Supply chain agility 0.47 62.93
Table XII.
Product complexity 0.07 58.75 Importance‒
Notes: All total effects (importance) greater than 0.10 are significant at theo0.10 level. The values in italics performance map
denote the highest importance (total effect) and highest performance analysis
APJML 100
Importance–Performance Map

90

80
Process
70 integration
Product Supply chain
complexity agility
Business perf

60
Supply
50 flexibility
40

30

20

10
Figure 6.
Importance‒ 0
0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45
performance map
analysis (IPMA) ‒ Total Effects
business performance
Process integration Product complexity Supply chain agility Flexibility

5.5 Discussion
Our results validate our premise that PI is a key enabler of supply flexibility and is, directly
and indirectly, related to supply chain agility through supply flexibility.
Further, investigation into their weights indicates that PI is critical to the responsiveness
and supply chain agility. Higher weights associated with PI imply that to handle product-
related complexities, in global market, firms should invest in enhancing resource capability
through PI across the value chain. The results of hypotheses testing are given in a summary
table in Table XIII.
Fashion products are short life products having a seasonal demand. In effect, IT is a
critical resource and provides several mechanisms such as IOS integration and E-commerce,
which assist firms to plan and execute an integrated and coordinated supply chain and
retailing process (Lee and Wang, 2013; Oh et al., 2012). Therefore, through IT-enabled PI,
firms can adjust their internal operations flexibly and ensure sale of right product mix in the
market in a timely fashion (Moon et al., 2014).
The importance‒performance map analysis validates results by mapping PI on higher
ranks in performance, whereas supply chain agility is highest in importance in predicting
business performance. Prior research has merely discussed the mediating effect of ordinal
capabilities on the relationship between PI and supply chain agility. The study is consistent
with the previous studies of Swafford et al. (2006) and Braunscheidel and Suresh (2009),
extending their scope to vendors, and validates the notion that external flexibility (i.e. volume
and mix) fosters the effect of external PI on supply chain agility, which, in turn, affects

Hypotheses Path in the PLS model Outcome

H1 Process integration→Supply flexibility Supported

H2 Process integration→Supply chain agility Supported
H3 Supply flexibility→Supply chain agility Supported
H* Process integration→Supply flexibility→Supply chain agility Supported
Table XIII. H4 Supply chain agility→Business performance Supported
Summary of H5a Supply flexibility × Product complexity→Supply chain agility Supported
hypotheses testing H5b Process integration × Product complexity→Supply chain agility Supported
business performance. Consistent with previous studies of Braunscheidel and Suresh (2009), Enabling
Mikhelf et al. (2017), Chan et al. (2017) and Liu et al. (2015), we emphasize business-specific supply chain
performance effects of SCA. In effect, SCA is a dynamic capability reflected in downstream agility
operations, whereas flexibility is an operational capability reflected in the internal operations.
The high importance score of SCA for business performance also reveals that to enjoy through PI
business returns in the fashion industry, firms need to consider SCA. More precisely, PI is an
organization-wide capability through which firms can coordinate and streamline operations,
thereby enhancing agility.
Furthermore, the moderated mediation analysis reveals the double-edged effects of
product complexity on the pathway through which supply chain agility can be achieved.
Our results support the argument that product complexity positively moderates the link
between PI and supply chain agility. In practice, the fashion industry is dynamic and subject
to several complexities in its supply chain. Fashion is an assortment of products with short
life and seasonal demand. In essence, fashion is not a set of simple routines, but a complex
set of integrated activities. Therefore, complex product attributes stimulate vendors to come
on board with enriched, dynamic capabilities and integrated practices. Conversely, product
complexity impedes the positive association between supply flexibility and supply chain
agility. In practice, flexibility is a higher order capability that makes firms capable of
adapting operations in accordance with changing market circumstances. The firms, in our
study context, lack the PI and customer responsiveness. The firms, in this market, are
specialized in yarn-based manufacturing. However, the modern trend is shifting from yarn-
based manufacturing to fiber-based or mixed manufacturing. This phenomenon may cause
impeding effects when product attributes are complex and the firm cannot derive agility and
reach the desired level of business outcome. The complex product attributes need strong
coordination between buyer and supplier, throughout the sourcing process, to bring a
unique set of product in the market. Overall, product complexity positively moderates the
mediated relationship between PI and supply chain agility through supply flexibility.

6. Research implications, limitations and conclusion

This section gives a brief discussion about the theoretical and managerial implications of
the study, followed by limitations, future research directions and a conclusion.

6.1 Theoretical implications

In this study, we combine the dynamic capabilities and ordinal capabilities in a more
nuanced way to provide evidence that PI and supply flexibility constitute higher order
capabilities that can contribute to cope with product-related complexities according to
market demand and supply, thereby realizing supply chain agility (Eckstein et al., 2015).
Our study contributes to mainstream literature on DCV and CT in three ways. First, it is one
of the first studies in a developing country context that theoretically aligns dynamic
capabilities and operational capabilities together to handle the issues of product complexity
in the global fashion marketplace. Second, prior studies on themes of supply chain flexibility
and agility lacked integration of DCV and CT in a moderated mediation framework
(Blome et al., 2014; Eckstein et al., 2015). Our study is novel in context and method to develop
a competence‒capability framework, which is subsequently investigated through a
moderated mediation analysis to underscore the contingency effects of product-related
complexity on the said relationship.
Third, this study is the first to exemplify the mediating effect of supply chain flexibility
on the relationship between PI and supply chain agility. Furthermore, it is also unique
to investigate the said relationship between PI and business performance through
serial mediation.
APJML The study also contributes to a more nuanced understanding of CT by providing the
double-edged effect of product-related complexity on the link between PI and supply chain
agility through supply flexibility (i.e. volume and mix). On the one hand, it deters the effects
of supply flexibility on supply chain agility. On the other hand, it strengths the effect of PI
on supply chain agility.
The existing literature on dynamic capabilities and CT lacks empirical investigation
from a vendor’s perspective (Chan et al., 2017; Eckstein et al., 2015; Blome et al., 2014) in a
developing country context. Through this study, we seek to comprehend how PI and supply
flexibility (i.e. volume and mix) jointly affect the supply chain agility under complex product
attributes. Our study also contributes to the RV of the firm, suggesting that firms should
develop strong ties and bonds with their value chain partners. Firms in today’s marketplace
cannot respond efficiently unless they capitalize on relational benefits of their partners.
Therefore, we imply that firms invigorate themselves to create a seamless customer
experience if they are integrated with their downstream partners. The study enlarges the
scope of DCV by supporting the notion that the performance effect of dynamic capabilities is
heightened when uncertainty is high (Eckstein et al., 2015; Blome et al., 2014). In our study
context, reducing product complexity may increase short-term operational efficiencies; its
continuous reduction may deter the firm’s overall competitiveness. In effect, widespread
adoption of information and communication technologies (ICTs) have transformed the way
businesses plan, execute and react to their environment (Lee and Wang, 2013; Mikalef and
Pateli, 2017). Fashion industries are largely guided by the emerging trends in the market.
Therefore, to successfully launch a product in the market, there should be a close
coordination and PI between buyer and seller throughout the product development process.
Therefore, flexibility and agility are critical dynamic capabilities assisting firms to make
customized offerings and get financial rewards in return (Blome et al., 2014). Hence, our
results validate the premise that firms need to realize the moderating effects of product-
related complexities and develop their competencies and capabilities accordingly
(Christopher and Towill, 2002).

6.2 Managerial implications

In practice, firms in fashion industries are increasingly looking to outsource their production
in developing countries to reduce their cost and gain benefits from the vendor’s strengths. For
instance, a large number of firms, in the textile industry in Pakistan, are getting supplies of
synthetic fiber from China and Vietnam. Firms need close collaboration and integration of
resources and capabilities between buyers and suppliers to launch new products successfully.
Firms in the garment manufacturing industry in Pakistan are facing a decline in their
export in international Denim market due to intense competition from China, India,
Bangladesh and Vietnam. Also, firms in this market are facing several challenges such as
energy crises, currency devaluation, rising production cost and complexities related to
product and process design (Khan and Khan, 2010). Particularly, vendors from neighboring
countries of China, Korea, Taiwan and Vietnam have better stake due to agile production,
reduced lead times, sustainable design and increasing reliance on synthetic fiber in their
production. The textile industry, in Pakistan, largely relies on yarn-based manufacturing;
therefore, the study implies that firms in Pakistan should develop sourcing relationships
with counterparts in neighboring Asian countries and come on board with unique product
offerings. This can be realized through customized product offerings (e.g. a mix of synthetic
fiber and yarn) and effective PI in a multi-echelon supply chain.
Besides industrial inhibitors, there are also cultural forces that may influence the
integration practices and organizational capabilities. For example, market orientation and
learning orientation are two critical cultural drivers that influence supply chain integration
and flexibility in organizations (Braunscheidel and Suresh, 2009). Our study implies that
vendors should work on improving integration practices and developing supply chain Enabling
flexibility, that is volume and mix, to meet the uncertainty in demand and supply due to supply chain
supply chain complexities (Mendonça Tachizawa and Giménez Thomsen, 2007). In this way, agility
firms can develop their learning capability and market orientation through PI and manage
volume and mix by the changing need of the market. through PI
Similarly, to achieve flexibility and agility in products and offerings, the vendors must
integrate with buyers during the sourcing process. The vendors, in our target market, are
striving to regain market share in the international market. However, there are several
complexities on the road map to reach high levels of agility. The study has implications for
managers of firms in other allied industries. Wang (2018) investigated the effects of supply
chain uncertainty and risk on logistics performance of firms in Australian courier industry
and revealed that both have negative impact on logistics performance mainly in firm’s
external environment. PI is a critical integration capability to deal with the issues such as
shorter life cycle, reduced lead times, operational risks, logistics integration, complex
product attributes, customized design and agile market structures. Our results imply that to
succeed in international business, firms must strategize their thinking, keeping in view the
double-edge effect of product complexity. Product complexity hampers the effect of supply
flexibility on agility. However, this effect can be neutralized if firms intensively integrate
with their buyers during the sourcing process. Thus, PI has a critical role in revitalizing
firm’s supply chain and achieving supply chain agility under complex product attributes.
In practice, marketing and supply chain practitioners continually monitor sourcing
process and invest in PI inside and outside the organization to achieve flexibility and supply
chain agility. Thus, it may lead to a pathway through which firms can provide a unique
value proposition to their product and offerings, thereby multiplying their profits.
Our study has implications for firms to look into their flexibility strategies, keeping in
view the product complexity. Firms with low supply chain flexibility should either increase
the level of flexibility or decrease the level of product complexity (Eckstein et al., 2015).
However, to stay competitive, firms should continually work on improving levels of their PI
and supply chain flexibility to cope with product-related complexities and get a financial
reward in return. This pertains to firms competing in markets with volatile demand and
having customers with more choice and knowledge about customized product offerings.
The study has implications for marketing managers to handle issues of “product
cannibalization,” as abnormal expansion in product line length and depth may cause a
reduction in profits and a decline in sales of existing SKUs. However, carefully monitoring
the product and service design process and integrating all channels with firm’s core
business strategy may curb the potential of losing sales.
This is imperative for Pakistan’s fashion industry to focus on enhancing the capability of
the apparel sector to raise the export revenue from the textile and apparel business. The
sector has huge potential to come out of global recession and optimize business profits by
providing the right mix of products to customers at the right time through effective PI and
supply chain flexibility (Source: www.pakistantoday.com.pk/2019/03/13/supply-chain-risk-
factors-in-the-fashion-industry/).

6.3 Limitations and future research

We faced certain limitations regarding the survey from our target sample firms. We could
not collect objective data on firm’s performance due to time and resource constraints. In the
future, objective data can be collected on a firm’s operational and financial indicators.
Flexibility is a multi-faceted concept; therefore, in the future, researchers can cover more
dimensions of flexibility other than volume and mix flexibility. In the future, other
constructs of supply chain integration such as relationship integration, measurement
integration and technology integration can also be investigated empirically. In the future,
APJML contingency effects of other factors such as supply base structure, supplier’s innovative
capabilities, supplier learning capabilities and operational risk can be investigated on the
link between organizational capabilities and performance. In the future, the scope can be
extended to a mix of countries from Asia and other continents to generalize the findings of
the research and explore differences based on their specific cultural and business
environments. Moreover, cultural inhibitor can also be investigated as an enabler of
organizational capabilities in the context of developing countries. Lastly, future research can
be conducted on buyer‒supplier dyad for further extension of the knowledge.

6.4 Conclusion
Currently, with increased customer expectations and heightened competition, the
importance of managing complexities in global fashion industries has increased. The
present study suggests that to deal with the product-related complexities and to achieve
supply chain agility, firms can benefit through PI and supply flexibility.
The textile sector is the main pillar of the economy and a major contributor to exports of the
country. However, the sector is confronting challenges such as buyer’s changing preferences,
short lead times, complex product design and increasing production cost. Therefore, our study
is valuable for vendors to revitalize their strategic thinking and come up with a new mindset in
the global market place. The thirst for global presence is on the top of the agenda for firms in
the fashion industry and for competing in the global marketplace; it is unavoidable for firms to
achieve the supply chain agility to meet changing customer requirements.
Our study has stepped forward to contribute to theory and practice by critically
analyzing the double-edge interaction effect of product complexity. The choice of enablers
also gives plausible benefits to literature on supply chain agility. Particularly, the choice of
PI and supply flexibility is remarkable in the industry context.

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Corresponding author
Mingzheng Wang can be contacted at: wangmzh@zju.edu.cn

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