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JFMPC
26,1 Linking supply chain disruptions
with organisational performance
of construction firms: the
158 moderating role of innovation
Received 2 December 2019 Ernest Kissi and Kofi Agyekum
Revised 15 June 2020
Accepted 27 October 2020
Department of Construction Technology and Management,
Kwame Nkrumah University of Science and Technology, Kumasi, Ghana
Labaran Musah
Kwadaso Estate Y2, Kumasi, Ghana, and
De-Graft Owusu-Manu and Caleb Debrah
Department of Construction Technology and Management,
Kwame Nkrumah University of Science and Technology, Kumasi, Ghana

Abstract
Purpose – Supply chain (SC) disruption, whether demand sided or supply sided, is conversely perceived to affect
organisational performance of construction firms. This paper, therefore, aims to examine the linkage of supply
chain disruptions with organisational performance of construction firms through the moderating role of innovation.
Design/methodology/approach – Using a quantitative research, approach the views of 84 construction
professionals were elicited using a structured questionnaire. Ordinary least squares were utilised to validate
the hypotheses set.
Findings – The study proved that there is a negative relationship between demand-related disruption and
business performance as well as project performance. Also, it was clear from the study that supply-related
disruptions had a significant impact on both project performance and business performance. Although SC
innovation was seen to impact business performance, it had no relationship with project performance.
Generally, innovation was seen to have a moderating effect of demand and supply disruption of project
performance, but it played no moderating role in business performance.
Practical implications – The findings suggest that business firms must be innovative with the supply
chain, as it moderated project success. The supply chain of a construction firm plays a very critical role on
projects; hence, this study recommends that a supply chain manager ought to be innovative in their
operations due to the moderating role SC innovation has on project performance and largely business
performance.
Originality/value – Various studies on supply chain has been done on different sectors in the economy;
however, little can be said about the construction industry on how supply chain disruptions affects business
and project performance and how innovation moderates such effects.
Keywords Disruption, Innovation, Organisation, Moderating, Performance, Supply chains
Paper type Research paper

Journal of Financial Management


of Property and Construction
1. Introduction
Vol. 26 No. 1, 2021
pp. 158-180
In the modern business world, firms are constantly looking out for probable means of
© Emerald Publishing Limited
1366-4387
harmonising activities to take advantage of human, material and capital resources that are
DOI 10.1108/JFMPC-11-2019-0084 often heterogeneously distributed across multiple businesses (Manuj and Mentzer, 2008).
Ofori (2000) stressed that slow economic growth, construction industry restructuring and Linking
high competition have put much pressure on construction firms to consistently enhance supply chain
their performance leading to improved productivity. Both practitioners and academicians
are, therefore, paying particular attention to issues associated with risk and continuity in the
disruptions in
supply chain (Zsidisin and Ellram, 2003) for improved performance in the construction construction
industry. The supply chain constitutes organisations’ activities and processes related to the
flow of capital, information, products and services from the production centre to the final
consumer (Butilca et al., 2011). According to Papadopoulos et al. (2016), in a very competitive 159
and complex industry like the construction industry with demands for the delivery of top-
quality projects at very competitive prices, a momentous prerequisite for effective
management of construction supply chain is cogent.
Supply chain disruptions are indicative if a firm is incapable of matching demand to
supply (Rimiene and Bernatonyte, 2013). Schmidt and Raman (2012) described supply chain
disruption as accidental occurrences that unfavourably affect a company’s usual activities.
The disruptions to supply and demand sides of the supply chain encompasses things that
happen naturally (pandemic, flooding, hurricane, fire outbreaks, tsunami, etc.), accidental
(loss of key supply chain personnel, IT system breakdown, etc). to intentional (Ageron et al.,
2013). According to Schmidt and Raman (2012), the key demand-side risks to supply chain
include insufficient information from customers (clients) about orders, distorted information
from customers about orders and volatile demand among others. Supply chain disruptions
are costly and can have a lasting impact on construction businesses (Waters, 2011). Lavastre
et al. (2012) agree that supply chain disruptions can negatively impact the performance of
the entire chain. It is in this vein that Ageron et al. (2013) suggested that all firms require
innovative strategies that rise above the traditional supply chain management strategies to
manage the impact of supply chain disruptions. Supply chain disruption, whether demand
sided or supply sided, is conversely perceived to affect supply chain performance. Studies
have shown that disruptions increase share price volatility and had the tendency to
undermine investor confidence as well as raise the cost of capital for firms (Singhry et al.,
2014). Notwithstanding these enormous effects of supply chain disruption on performance,
many firms worldwide lack clear contingency plans and innovative strategies for managing
disruptions (Hillman and Keltz, 2007). More so, not all risks are the same, as they do not
necessarily produce a similar impact on performance. Thus, demand-sided disruptions and
supply-sided disruptions require separate assessment for more efficient management
strategies. However, the enormous volume of studies on supply chain disruption had largely
concentrated on the demand side leaving the supply side less attended (Nelson et al., 2012).
Despite the conventional belief that supply–demand mismatches have adverse
performance consequences, there is very little rigorous evidence in literature on the
magnitude and severity of the financial consequences. Also, the many studies on supply
chain disruption have failed to integrate innovation (Arlbjørn et al., 2011; Schmidt and
Raman, 2012; Lavastre et al., 2014), and so, has the many studies on innovation failed to
integrate supply chain disruption (Singhry, 2015). The limited studies that attempted to
integrate supply chain and innovation also failed to investigate the moderating role in the
interaction between supply chain disruption and supply chain performance (Lavastre et al.,
2014). The few pieces of research that incorporate supply chain and innovation are centred
on the developed world with limiting attention to the developing countries (Li and Wang,
2017). There is barely any study in existing literature that attempts to scrutinize the
moderating action of innovation in the association between supply chain disruption and
supply chain performance. It is evident that extant literature exits on managing supply
chain disruptions from manufacturing, retail automotive and oil and gas sector but a
JFMPC paucity of studies exist on supply chain disruptions in the construction industry (Oke and
26,1 Gopalakrishnan, 2009; Li, and Wang, 2017; Abidin and Ingirige, 2018). In furtherance, a
study focussed on the Ghanaian context is lacking. This study consequently seeks to narrow
these gaps in research by integrating innovation in the relationship between supply chain
disruptions and organizational performance from an African perspective in the construction
industry by focusing on Ghana.
160
1.1 Supply chain disruption
The construction industry plays a significant role in the construction market competition
(Al-Werikat, 2017). Construction supply chain management aids firms to improve their
competitive advantage, increase profits and have more control over the different factors and
variables within the project (Al-Werikat, 2015). According to Briscoe and Dainty (2005), the
construction industry seems to be faced with challenges in obtaining the recommended
integration in the construction process. It is thus conclusive that the construction industry is
lagging in terms of supply chain practices and efficiency. For a company and its
stakeholders, disruptions to the supply chain process can be very costly (Hendricks and
Singhal, 2005). According to Kleindorfer and Saa (2015), demand-related and supply-related
disruptions are the two broad categories of disruptions affecting supply chain disruptions. It
is cogent for managers and businesses to identify the types of disruptions and the
organisational factors that lead to the worst outcomes. Disruption risks result from natural
and man-made disasters, strikes, severe legal disputes and the likes (Ivanov et al., 2017).
Macdonald and Corsi (2013) posited that disruptions usually result in lost sales, large
financial loses and influences the shareholder wealth and operating performance negatively
despite managers’ best efforts. Abidin and Ingirige (2018) in a study in the Malaysian
construction industry, asserted that there is enough evidence to suggest that supply chain
disruptions have caused a noticeable impact on the construction in various developing
countries including performance deficiencies like cost and time overruns of severe
magnitude and stressed that disruptions could emanate from one party in the supply chain
and could be precarious to other parties (Table 5).
Demand-related disruptions describe disruptions that affect the demand side of the
supply chain process. From the perspective of Kleindorfer and Van Wassenhove (2004),
natural hazards such as earthquakes, hurricanes, storms, terrorism and political instability
trigger a higher level of demand-sided disruption just like the supply-sided disruption.
Accidental events like fire outbreaks are key triggers of supply chain disruption
(Kleindorfer and Saa, 2015). Other disruptions are diseases like SARS in 2003, avian flu in
2005, swine flu in 2009 (Wagner and Neshat, 2012) and now SARS CoV-2 (Coronavirus 2019)
pandemic in 2020 (Deloitte, 2020).
Supply disruptions branches from a wide range of risk avenues and can occur within the
supply chain or external activities (Zsidisin and Ellram, 2003). Supply-related disruptions
describe disruptions that affect the supply side of the supply chain process. Terrorism and
political instability are among the common factors that often disrupts the supply chain
process (Robb and Bailey, 2002). Risks that predominantly affect production are also related
to equipment failure and procurement issues (Vikulov and Butrin, 2014). Failure in the
performance of supplier’s logistics, failure in the performance of logistics service providers
and supply market failure in the form of shortages or fluctuations in a firm’s capacity are
non-natural events that disrupt the supply side of the supply chain process (Wagner and
Bode, 2008).
These disruptions are innate in the construction industry like other industries. However,
Business Continuity Institute (2014) opinionated that the main difference between the
construction industry from other industries is that it deals with temporary supply chains Linking
that work on different start and end dates in several phases of one-off projects. This makes it supply chain
problematic to fully assimilate the operations of the supply chain and its accompanying risk,
making it highly susceptible to disruptions in demand and supply. Such disruptions lead to
disruptions in
issues like poor project delivery, late delivery, cost overruns, non-conformance to work construction
specifications, low quality and wastage (Riazi et al., 2011; Abidin and Ingirige, 2018).

1.2 Innovation
161
Manmade disruptions and natural disasters tend to hinder supply chain operations. Supply
chain innovations are the system by which companies reconfigure and integrate their
internal and external structures or processes and infrastructure or humanware with the aim
of sensing and grabbing new opportunities that smoothen information management,
sourcing, production and delivery of products in a responsive, cost-efficient and timely
manner to the end consumer (Singhry et al., 2014). A firm’s innovativeness is integral to its
competitive advantage and superior business performance (Zhou and Li, 2012). Chandy et al.
(2006) described innovativeness as the degree to which the firm consistently develops new
products and/or incremental value to existing products. Innovation in the construction
supply chain can thus be defined as the introduction of alternatives to key materials, tools,
and equipment and labour as an exigency to supply chain disruption. Innovation should
incorporate incremental value to existent construction practices and processes to reduce
wastage and excessive demand on the supply chain.

1.3 Performance
Performance has been defined traditionally with concepts like effectiveness, efficiency,
growth, improvement and success, as researchers use these terms interchangeably (Hove
and Banjo, 2015). Performance is the accomplishment of a given task measured against
predetermined or known standards of accuracy, completeness, cost and speed (Rathore,
2016). According to Ali et al. (2013), several research works have been undertaken on
performance measurement at the project level. Recent studies now concentrate on
performance evaluation and management at the company level (Tajuddin et al., 2015; Ali
et al., 2015). To achieve organisational goals, most firms have tried to improve their
efficiency to enhance their performance (Rathore, 2016). Tajuddin et al. (2015), posited that
globalisation offers both opportunities and challenges in which organisations are compelled
to make drastic enhancements not just to compete but to survive. Sonson et al. (2017) in their
studies affirmed that the dynamism and competition associated with the business
environment have motivated and forced construction firms to enforce modern performance
measurement and management systems and structures to create more comprehensive
information on their performance.
Numerous researchers claim that the construction industry suffers from poor
performance (Kissi et al., 2020; Owusu-Manu et al., 2019). Highly competitive and reflective
alterations in the construction industry have compelled construction executives to
incessantly augment the performance of their firms. To measure the performance of a
company, there is a need to establish appropriate key performance indicators (KPI). KPIs are
accumulations of data measures used to analyse the performance of a construction operation
(Ali et al., 2013). Hove and Banjo (2015) avowed that although the three traditional measures
in construction being cost, time and quality offer an idea of the performance of a contracting
firm, they do not independently provide a balanced assessment of the performance of the
firm. Tajuddin et al. (2015) postulated that performance should be reflected by both financial
and non-financial performance. For financial performance, they indicated market share, new
JFMPC customers, return on investment, return on capital employed and many new customers as
26,1 the indicators. The non-financial performance indicators were clients’ features, the
performance of products and the process. According to Hove and Banjo (2015), there is a
universal agreement for those involved in the business of construction who see performance
as the accomplishment of some pre-set objectives against the public who perceive
performance on user satisfaction.
162 Clients’ interpretation of performance is based on the level of satisfaction from the project in
respect to cost, time and quality. Employees perceive performance from the point of job
descriptions, wages and salaries, working hours, investment in training, career plans and good
bonus policies. Employment creation, income generation, contribution towards the national
gross domestic product, compliance with health and safety regulations, adherence to
environmental policies and a positive contribution to the quality of local life are the indicators
governments and societies use to assess the performance of construction organisations.
Tajuddin et al. (2015) grouped the various indicators of organisational performance into two
categories, being project performance and business performance. Also, Rathore (2016)
categorised performance indicators into seven frameworks being cost (estimated, actual and
predicted), time (estimated, actual and predicted), quality (levels of client satisfaction), safety
(incidents and loss of time), innovation (procurement, management, technology) and
sustainability (design and construction).
Based on an exhaustive review of extant literature and assuming a quantitative research
approach, the identified variables from the literature review were purposefully compounded
into close-ended questionnaires. The population comprised top management and senior staff
in construction, architectural, supplying and consultancy firms in Ghana were used for the
study.

2. Development of hypotheses
Several studies have established an adverse relationship between supply chain disruption
and performance (Schmidt and Raman, 2012; Vikulov and Butrin, 2014; Lu et al., 2017).
Disruptions in the supply chain, whether demand or supply related, are reported to have
several negative consequences on firm performance such as short- and long-term
profitability, market share, lower sales price, poor customer service, bad firm reputation and
credibility. Theoretically, managers of firms are required to ensure innovative mechanisms
to improve supply chain performance. Innovation in the supply chain process has been
empirically reported to stimulate a higher level of supply chain performance (Singhry, 2015).
Supply chain innovation aids in cost reduction improves market performance (Stank et al.,
2015), improves customer responsiveness (Butner, 2010), enhances competitive advantage
and supply chain performance (Tan et al., 2015). The dimensions of supply chain innovation
which are perceived as having the tendency to reduce the negative consequences of
disruptions on supply chain performance include technology, collaboration, innovation
capability and managerial role (Figure 1).

2.1 Relationship between demand disruptions and performance


Researchers have provided empirical literature establishing the relationship between
demand-related disruptions and supply chain performance (Wagner and Neshat, 2012;
Vikulov and Butrin, 2014; Lu et al., 2017). Wagner and Bode (2008) in their study indicated
that the demand-side disruptions adversely affect performance in the form of quality
problems, customers’ complaints, delays and mismatch of supply and demand. Wagner and
Neshat (2012) further asserted the negative relationship between the demand-related
disruptions and the performance of organizations. Wright and Datskovska (2012) in a study
to address supply chain risks reported an adverse relationship between demand disruptions Linking
and supply chain performance. Vikulov and Butrin (2014) in a study also confirmed the supply chain
negative relationship between demand-related disruptions in the supply chain process and
the supply chain performances of organisations. Hendricks et al. (2009) in an earlier study
disruptions in
reported that there were lower returns on company stock when disruptions are attributed to construction
customers. Natural disasters also tend to reduce the purchasing abilities of consumers and
hence disrupt demand. Inevitably, the adverse effect of demand disruptions on supply chain
performance would also adversely affect project performance and overall business 163
performance in the construction industry. Based on this reviewed literature, the study
hypothesizes that:

H1a. Demand-related disruption negatively affects project performance.


H1b. Demand-related disruption negatively affects business performance.

2.2 Relationship between supply-related disruptions and performance


Supply chain disruptions indicate a mismatch between supply and demand (Hendricks and
Singhal, 2003). Many earlier researchers have provided evidence of the negative
consequence of disruption on supply chain performance (Simchi-Levi et al., 2015). These
studies showed that supply chain disruptions negatively influence the short and long haul
benefit of the firm and further prompts both short and long haul misfortune in the overall
industry, bring down deals cost because of markdowns of overabundance inventories and
could keep the firm from gaining solid market request because of inaccessibility of items.
Interruptions can likewise adversely affect client benefit as could prevent customers from
acquiring the amount of desired product and at the desired time. Disruptions also adversely
affect the reputation and credibility of the firm (Hendricks and Singhal, 2003). There is
bottomless proof that supply interruptions can have a material and negative effect on
organization execution (Hendricks and Singhal, 2003; Hendricks and Singhal, 2005; Schmidt
and Raman, 2012). Schmidt and Raman (2012) in the examination of 500 disruptions in the
supply chain reported an adverse relationship between the supply-sided disruptions in
the supply chain and supply chain performance. Tang (2006) theorizes that vulnerability to
supply disruptions adversely affects supply chain performance. Carvalho et al. (2016)
performed comparative analyses of the impact of various natural disasters and reported
adverse effects between supply-side disruptions and supply chain performance. Simchi-Levi

Supply Chain Innovation


• Innovation Capacity

H3

H5
Project
H4
Performance

H2
Supply Chain Disruption H6 Figure 1.
• Demand- related Business Conceptual
Disruptiona
Performance moderating role of
• Supply- related Disruptionb
H1
innovation in supply
chain disruptions
Source: Adapted from Ali et al. (2013)
JFMPC et al. (2015) in their study asserted that supply-side disruptions adversely affect the
26,1 production process. Based on this reviewed literature on supply-related disruption and
performance, the study hypothesizes that:

H2a. Supply-related disruption negatively affects project performance.


H2b. Supply-related disruption negatively affects business performance.
164
2.3 Relationship between innovation and performance
Innovation is essential for both short-term and long-term business success (Tidd and
Bessant, 2018). Buyer–seller collaboration and capabilities have been suggested as
instrumental in supply chain innovation (Golgeci and Ponomarov, 2013). Adopting this in
the construction supply chain, it can be inferred that innovation in contractor–supplier
collaboration and capabilities is instrumental to project performance. Several previous
studies have provided evidence of the positive effect of innovation on supply chain
performance (Singhry, 2015; Tan et al., 2015). Studies also indicate that supply chain
innovation aids in cost reduction (Stank et al., 2011), improve customer responsiveness
(Butner, 2010), enhances competitive advantage (Tan et al., 2015) and improves market
performance (Stank et al., 2015). Lee et al. (2011) reported that supply chain innovation tends
to improve supplier cooperation, supply chain efficiency and quality of products. Ageron
et al. (2013) argue that operational processes, information systems/information technology
and managerial processes improve supply chain management performance. Golgeci and
Ponomarov (2013) found a positive association between “innovativeness” and innovation
magnitude with supply chain (SC) resilience. Oke et al. (2013) found supply chain partner
innovativeness to influence product innovation strategy. They also show that the impact of
supply chain partner innovativeness on innovation strategy is improved with a stronger
strategic relationship with key partners. Chong et al. (2011) found that supply chain
practices of Malaysian firms improve firms’ innovation and organizational performance. Lee
et al. (2011) found that supply chain innovation reduces operational cost, lead time, create
superior operational strategies, enhance quality and provide visibility and flexibility for
dealing with rapid changes in customer demand. Given this, the study argues that the
integration of technology, collaboration, top management support and innovation capability
might enhance the supply chain performance of construction firms. Based on the reviewed
literature, the study hypothesized that:

H3. SC innovation positively affects project performance.


H4. SC innovation positively affects business performance.

2.4 Moderating role of innovation in the relationship between supply disruptions and
performance
Previous literature provides evidence of the negative consequences of supply-related
disruptions on supply chain performance in varying industries (Hendricks and Singhal,
2005; Schmidt and Raman, 2012). Thus, the firm could reduce the level of consequences of
supply-related disruptions in the supply chain process by being innovative in procurement,
production and delivery to consumers. Suppliers could employ more efficient technologies,
be more collaborative efficiently and effectively, ensure effective innovation capability and
improve managerial role in the innovative process. Segerstedt et al. (2010) stressed that
improving construction supply chain collaboration and performance is critical to achieving
short-term business objectives as well as a long-term competitive advantage. Managers Linking
generally are required to use all resources at their disposal throughout the supply chain to supply chain
reduce the consequences of disruptions. The common approaches towards disruptions
perceived as potential innovative ideas include sourcing and pricing strategies, providing
disruptions in
financial subsidies, encouraging information sharing and incentive alignment between construction
supply chain partners – to tackle supply disruptions (Marley et al., 2014). The discussed
analogy provides evidence of the possibility of innovation as a moderator in the relationship
between supply-related disruptions and supply chain performance. Based on this assertion, 165
the current study hypothesizes that:

H5a. Innovation moderates the effect of supply-related disruption on project


performance.
H5b. Innovation moderates the effect of supply-related disruption on business
performance.

2.5 Moderating role of innovation in the relationship between demand disruptions and
performance
Previous literature provide evidence of negative consequences of demand-related
disruptions on supply chain performance in varying industries (Wagner and Neshat, 2012;
Vikulov and Butrin, 2014; Lu et al., 2017). Therefore, for construction firms to be competitive
in the industry, there is the need to be more innovative in the phase of disruptions in the
supply chain process. This is because the construction supply chain is typified by
instability, fragmentation and especially by the separation between the design and the
construction of the built object (Vrijhoef and Koskela, 2000). Thus, a firm could reduce the
level of consequences of demand-related disruptions in the supply chain process by being
innovative. Thus, in the phase of adequate information, consumers can adjust their
purchasing plan to reduce the impact of demand-related disruptions on supply chain
performance. Based on this analogy, the study hypothesizes that:

H6a. Innovation moderates the effect of demand disruption on project performance.


H6b. Innovation moderates the effect of demand disruption on business performance.

3. Research methodology
There are three common approaches to research or research strategies, namely: qualitative,
quantitative and mixed methods (Williams, 2007). This research is extensively regarded as
quantitative, as it principally relies on the positivist paradigm, deductive reasoning and
structured questionnaires in the collection of data and analysis (Debrah et al., 2020). Thus, in
this study two approaches were followed leading to the research outcomes.
The first approach was the review of comprehensive literature on the phenomena and
testing the same through the development of a pilot survey with professionals in the field.
This piloted survey was conducted to elicit views of some selected professionals (a selected
professional must have more than ten years of experiences in the field of construction and
working knowledge on the supply chain and innovation of the construction industry) on the
identified variables from literature. In all, ten professionals were considered; they were to
delete, add up and check the soundness of all the identified variables and its relation to the
construction industry. The second approach was the modification of the results of the first
approach to develop a survey (questionnaire). The survey was developed based on the
JFMPC Likert scale of 1 to 5 for both the supply and demand disruptions using the level of
26,1 agreement (where 1: strongly disagree to 5: strongly agree) whereas the performance of the
business and project was ranked based on the level of performance also using the Likert
Scale of 1 to 5 (where 1 = worse to 5 = better). A survey is a systematic method for gathering
information from a sample (entities) to construct quantitative descriptors of the attributes of
the larger population of which the sample belongs (Avedian, 2014).
166 According to Khalid et al. (2012), population refers to the total collection of elements that
one would like to study or make inferences to. The population of the study was the top
management and staff in construction, architectural, supplying and consultancy firms
operating in the Ghanaian construction industry. A convenience sampling approach was
used in the selection of the respondents. Due to the challenges encountered in evaluating the
population size, the study adopted this non-probability sampling technique as adopted in
Owusu-Manu et al. (2019) in the determination of their sample size. It is described in Fugar
and Agyakwah-Baah (2010) that convenient and available sampling is used when the
researcher uses cases that are most convenient and available. According to Etikan et al.
(2016), convenient sampling is made up of whoever is willing to participate. A sample size of
120 top management and senior staff in construction, architectural, supplying and
consultancy firms in Ghana were used for the study. A total of 84 valid surveys were
obtained from the study. The primary source of data was obtained from the questionnaires
answered by the target population. Lau (2017) stressed that a questionnaire survey is most
broadly adopted approach in a quantitative research. Descriptive statistics were employed
to analyse the demographic distribution and the level of disruption and performance. The
relationship between the main constructs was evaluated using correlation and ordinary least
square regression analysis.
The demographic background of the responds revealed that 57.1% of the respondents
were top executives of construction firms, 28.6% were from consulting firms, 10.7% were
from architectural firms and 3.6% belonged to the supplying firms. To be able to help
predict the effects of supply disruptions on organisational performance, the respondent
needed to have some sort of experience in the industry. Results showed that 32.1% of the
respondents had been in operation for 11–15; 25% had operated for 6–10 years, 17.9% had
been in existence for over 20 years, 14.3% had operated for, 1–5 and 10.7% had existed for
16–20 years, making them potent to predict the effects of supply disruptions on
organisational performance.

3.1 Data Analysis


The data were analysed using mean score ranking and ordinary partial least regression with
the aid of the IBM SPSS Statistics Version 20. The main analysis of the study, mean score
analysis, was conducted to determine the importance of each variable relative to the other.
For this study, a variable that obtained a mean score greater than or equal to a hypothesized
mean of 3.0 was considered significant based on the one-sample t-test analysis at 95%
confidence level (Ahadzie et al., 2008, Owusu-Manu et al., 2020a). Table 1 shows the mean
scores of demand-related disruptions, supply-related disruption, innovation capability,
project performance and business performance based on their rankings. From the mean
score, all the variables obtained mean scores of greater than the hypothesized mean of 3.0. It
can, be deduced that construction professionals understand and give more importance to the
obtained variables. Furthermore, the standard deviation in each of the three main constructs
recorded values less than 1, indicating a high level of uniformity among the respondents and
little variability in the data set (Field, 2005, Kissi et al., 2020).
Test value 3.0
Linking
Demand-related disruptions (DRD) Mean SD Sign Rank supply chain
disruptions in
The customers’ demand for the products of this firm is highly fluctuating 3.46 0.656 0.000 1st
This firm has a small network to avail products to customers 3.29 0.740 0.000 2nd construction
The promotion strategy of this firm sometimes does not yield the right result 3.25 0.821 0.000 3rd
There is also often wrong information on orders from customers 3.07 0.887 0.000 4th
This firm is ill-equipped to provide enough information to customers about orders 3.03 0.898 0.000 5th 167
The demand-side of products of this firm is easily disrupted by natural disasters 3.01 0.966 0.000 6th
Supply-related disruption (SRD)
The production activities of this firm are susceptible to price fluctuations 4.00 0.657 0.000 1st
The production activities of this firm are affected by fluctuating raw material 3.82 0.701 0.000 2nd
supply
The production side of this firm is sometimes affected by political instability 3.36 0.765 0.000 4th
Insufficient flow of information within the supply chain affect production 3.64 0.779 0.000 3rd
Transportation difficulties sometimes affect the supply of products 3.57 0.810 0.000 5th
This firm is inadequately equipped logistically to smoothen the supply 3.04 0.969 0.000 6th
The production side of this firm is often affected by sudden strikes 2.68 736 0.000 7th
The production of this firm is sometimes affected by terrorism 1.71 0.730 0.000 8th
Innovation capability (IC)
We make many innovations in our inter-organizational practices 4.79 0.668 0.000 1st
Employees are encouraged to think about future business opportunities 3.86 0.742 0.000 2nd
The company is good at integrating technology and business development 3.68 0.763 0.000 3rd
The strategy for innovation is well understood throughout the company 3.61 0.853 0.000 5th
We have competent personnel to handle innovation within this firm 3.61 0.842 0.000 4th
We have a wide resource base in our organisation as it relates to innovation 3.43 0.845 0.000 6th
We are accustomed to deploying Innovative Supply Chain Practices (ISCP) 3.39 0.865 0.000 7th
The company has a well-articulated strategy for innovation 3.18 0.943 0.000 8th
We have structured tools and methodologies to support the deployment of an ISCP 3.14 0.972 0.000 9th
We have set up a joint organizational structure with our dedicated partner in the 3.01 0.982 0.000 10th
ISCP
Project performance (PP)
Quality of work done 4.29 0.593 0.000 1st
Scope of projects executed 4.04 0.783 0.000 2nd
Client’s/User satisfaction 4.00 0.800 0.000 3rd
The overall success of the organisation 3.96 0.802 0.000 4th
Value of projects 3.93 0.803 0.000 5th
Employee satisfaction 3.79 0.819 0.000 6th
Project delivered on time (timeliness) 3.71 0.851 0.000 7th
The health and safety policy of the organisation 3.68 0.874 0.000 8th
Cost variation and performance of projects 3.64 0.900 0.000 9th
Environmental impact 3.54 0.992 0.000 10th
Business performance (BP)
Overall reputation 4.21 0.622 0.000 1st
Level of customer satisfaction 4.07 0.757 0.000 2nd
Employment creation 4.00 0.659 0.000 3rd
New clients/customers 3.93 0.597 0.000 4th
Turnover growth of an organisation 3.89 0.728 0.000 5th
Innovation (procurement, management and technology) 3.86 0.747 0.000 6th
Cashflow 3.86 0.920 0.000 8th
Repeat of business 3.86 0.838 0.000 7th Table 1.
Profit growth of the organisation 3.75 0.834 0.000 9th Mean score ranking
Market share of the organisation 3.50 0.951 0.000 10th of parameters
JFMPC 3.2 Testing the hypotheses
26,1 In testing the hypothesis, the first rotation matrix was conducted to eliminate variables that
were redundant in the model. Following this, the hypothesis was further evaluated using
linear regression. The various means score of each construct (DRD, SRD, IC, PP, and BP)
was calculated and the various means obtained were used to conduct a regression analysis
to determine the relationship among the elements (Table 2).
168 Following this, correlation analysis was conducted to determine the strength of the
relationship between the constructs (Owusu-Manu et al., 2020b). The bivariate correlational
analysis was essential to test the constructs or variables to be included in the multivariate
analysis. The result is presented in Table 3. Table 3 shows that demand disruption
negatively correlated with the project performance of the construction firms (r = 0.224, P<
0.01). Thus, increasing disruptions in the supply chain of the construction industry due to
demand-related factors is associated with decreasing project performance of the
construction firms. The supply disruptions in the supply chain of the construction industry
also negatively correlated with project performance (r = 0.336, P< 0.01). Thus, increasing
disruptions in the supply chain of the construction industry due to supply-related factors is
associated with decreasing project performance of the construction firms. However, the
innovation capability of the construction firms positively correlated with project
performance (r = 0.218, P < 0.01). Thus, increasing the innovation capability of the
construction firms is associated with project performance.
Also, demand disruption negatively correlated with the business performance of the
construction firms (r = 0.250, P < 0.01). Thus, increasing disruptions in the supply chain of the
construction industry due to demand-related factors is associated with decreasing the business
performance of the construction firms. The supply disruptions in the supply chain of the
construction industry also negatively correlated with business performance (r = 0.274, P < 0.01).
Thus, increasing disruptions in the supply chain of the construction industry due to supply-related

Description of statistics
Constructs Minimum Maximum Mean SD

Demand disruption (DRD) 2.00 5.00 3.27 0.936


Supply disruption (SRD) 1.00 5.00 3.52 1.073
Table 2. Innovation capability (IC) 2.00 5.00 3.40 0.858
Means score of each Project performance (PP) 2.00 5.00 3.79 0.869
construct Business performance (BP) 2.00 5.00 3.83 0.619

Constructs 1 2 3 4 5

1 Demand disruption 1.000


2 Supply disruption 0.190 1.000
3 Innovation capability 0.083 0.214* 1.000
4 Project performance 0.224** 0.366** 0.218** 1.000
Table 3. 5 Business performance 0.250** 0.274** 0.478** 0.512** 1.000
Correlation analysis
**
of constructs Notes: Correlation is significant at the 0.01 level (2-tailed). *Correlation is significant at the 0.05 level (2-tailed)
factors is associated with decreasing the business performance of the construction Linking
firms. However, the innovation capability of construction firms positively correlated supply chain
with business performance (r = 0.478, P < 0.01). Thus, increasing the innovation
capability of construction firms is associated with business performance.
disruptions in
The next stage was the testing of the hypothesis based on the ordinary least square construction
(OLS) regression. The linear regression analysis was computed following this formula:
y ¼ b ο þ b 1 x þ « , where y is the value on the dependent variable; b ο is the value of y if
all x = 0, the y intercept; x are the independent variables; b 1 the coefficient ascribed to the 169
independent variables during the regression; and « the standard error.
3.2.1 Demand disruption, supply disruption, innovation capability and performance. The
multivariate relationships of the main constructs were tested using multiple regression
analysis. From Table 4, the summary of the Model 1 reported an R-Square of 0.123 that
signifies that about 12% of the variations in the business performance of the construction firms
are explained by disruption related factors of the firms. Statistically, the independent variables
together adequately explained the changes in the dependent variable (F = 5.688, P < 0.01).
Model 2 reported an R-Square of 0.267 which signifies that about 27% of the variations in the
business performance of the construction firms is explained by disruption related factors and
innovation capability of the firms. The change in R-Square of 0.144 indicates that about 14% of
the variation in the business performance of the construction firms is explained by their
innovation capabilities. Statistically, the independent variables together adequately explained
the changes in the dependent variable (F = 9.733, P < 0.01). The statistical significance of the
change F-statistics indicates the significant influence of innovation capability on business
performance. Model 3 reported an R-Square of 0.279 that signifies that about 28% of the
variations in the business performance of the construction firms are explained by disruption
related factors, innovation capability and the interactive variables. The change in R-Square of
0.011 indicates that about 1% of the variation in the business performance of the construction
firms is explained by the interactions between disruptions and innovation capability.
Statistically, the independent variables together adequately explained the changes in the
dependent variable (F = 6.030, P < 0.01). Statistically, the change F-statistics was not
significant, and this indicates that the interactive variables had no statistical influence on
business performance.
The summary of the model 4 reported an R-Square of 0.252 that signifies that about 25% of
the variations in the project performance of the construction firms are explained by disruption
related factors of the firms. Statistically, the independent variables together adequately explained
the changes in the dependent variable (F = 13.628, P < 0.01). Model 5 reported an R-Square of
0.264 which signifies that about 26% of the variations in the project performance of the
construction firms is explained by disruption related factors and innovation capability. The
change in R-Square of 0.013 indicates that about 1% of the variation in the project performance of
the construction firms is explained by their innovation capabilities. Statistically, the independent
variables together adequately explained the changes in the dependent variable (F = 9.588, P < 0.01).
Model 6 reported an R-Square of 0.268 that signifies that about 27% of the variations in the project
performance of the construction firms are explained by disruption related factors, innovation
capability and the interactive variables. The change in R-Square of 0.003 indicates that about 0.3%
of the variation in the project performance of the construction firms is explained by the interactive
variables. Statistically, the independent variables together adequately explained the changes in the
dependent variable (F = 5.702, P < 0.01). The specified models exhibited no sign of the presence of
autocorrelation as indicated by Durbin-Watson values of approximately 2.0. The variance inflation
factors (VIFs) of the predictors of the models were below the threshold of 10 which indicates the
absence of multicollinearity in the estimated models.
26,1

result
170

Table 4.
JFMPC

OLS regression
Business performance Project performance
Constructs Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 VIF
*** *** *** *** *** ***
(Constant) 3.157(10.564) 2.266(6.387) 2.337(6.255) 2.500(6.457) 2.870(5.512) 2.910(5.512)
Demand disruption 0.019(0.179) 0.057(0.592) 0.048(0.465) 0.051(0.529) 0.040(0.409) 0.060(0.572) 1.158
Supply disruption 0.353(3.365) *** 0.370(3.835) *** 0.352(3.209) *** 0.505(5.220) *** 0.500(5.173) *** 0.530(4.792) *** 1.302
Innovation capability 0.382(3.969) *** 0.362(3.274) *** 0.113(1.175) 0.134(1.203) 1.322
DMIN 0.099(0.796) 0.070(0.561) 1.658
SDIN 0.021(0.150) 0.066(0.465) 2.115
R 0.351 0.517 0.528 0.502 0.514 0.517
R2 0.123 0.267 0.279 0.252 0.264 0.268
Adj. R2 0.101 0.240 0.233 0.233 0.237 0.221
DR2 0.144 0.011 0.013 0.003
F-Statistics (df) 5.688(2) *** 9.733(3) *** 6.030(5) *** 13.628(2) *** 9.588(3) *** 5.702(5) ***
DF-Statistics 15.752*** 0.616 1.381 0.171
Durbin-Watson 2.089 2.047 1.948 2.028 2.049 2.073

Notes: DM = demand disruption; SD = supply disruption; IN = innovation capability. Coefficients are standardized, t-values are in the parenthesis; *p < 0.1, **p < 0.05; ***p
<
3.2.2 Disruption, innovation capability and business performance. The model 1 of the Table Linking
4 shows that supply related disruptions in the supply chain of the construction industry supply chain
negatively and significantly influenced the business performance of the construction firms
( b = 0.353, P < 0.01). This result indicates that a statistically significant unit increase in
disruptions in
the supply-related disruptions in the supply chain of the construction industry is associated construction
with a 0.353 unit decrease in the business performance of the construction firms. The Model
2 result also shows that supply related disruptions in the supply chain of the construction
industry negatively and significantly influenced the business performance of the
171
construction firms ( b = 0.370, P < 0.01). This result indicates that a statistically
significant unit increase in the supply-related disruptions in the supply chain of the
construction industry is associated with a 0.370 unit decrease in the business performance of
the construction firms. The Model 3 result also shows that supply-related disruptions in the
supply chain of the construction industry negatively and significantly influenced the
business performance of the construction firms ( b = 0.352, P < 0.01). This result indicates
that a statistically significant unit increase in the supply-related disruptions in the supply
chain of the construction industry is associated with a 0.352-unit decrease in the business
performance of the construction firms.
Model 2 of Table 4 shows that the innovation capability of the firms in the construction
industry positively and significantly influenced the business performances of the
construction firms ( b = 0.382, P < 0.01). Thus, a statistically significant unit increase in
the innovation capability of the construction firms is associated with a 0.382-unit
increase in the business performance of the firms. Model 3 also shows that the
innovation capability of the firms in the construction industry positively and
significantly influenced the business performances of the construction firms ( b = 0.362,
P < 0.01). Thus, a statistically significant unit increase in the innovation capability of
the construction firms is associated with a 0.362-unit increase in the business
performance of the firms.
Model 3 of Table 4 shows that innovation capability failed to interact with demand
disruption; the predicting variable but is related to business performance, the criterion or the
outcome variable of the specified Model 3 ( b = 0.362, P < 0.01). This result implies that
innovation capability plays the role of an antecedent or intervening variable in the nexus
between demand disruption and business performance of the construction firms. Model 3
also shows that innovation capability failed to interact with supply disruption; the
predicting variable but is related to business performance, the criterion or the outcome
variable of the specified Model 3 ( b = 0.362, P < 0.01). This result implies that innovation

Hypothesis Statement Results

H1a Demand-related disruption negatively affects project performance Rejected


H1b Demand-related disruption negatively affects business performance Rejected
H2a Supply-related disruption negatively affects project performance Accepted
H2b Supply-related disruption negatively affects business performance Accepted
H3 SC innovation positively affects project performance Rejected
H4 SC innovation positively affects business performance Accepted
H5a Innovation moderates the effect of demand disruption on project performance Accepted
H5b Innovation moderates the effect of supply disruption on project performance Accepted Table 5.
H6a Innovation moderates the effect of demand disruption on business performance Rejected Summary of results
H6b Innovation moderates the effect of supply disruption on business performance Rejected from the hypotheses
JFMPC capability plays the role of an antecedent or intervening variable in the nexus between
26,1 supply disruption and business performance of the construction firms. These relationships
are asserted by Sharma et al. (1981) in their typology of the specification of variables that
reported that constructs that fail to interact with predictors but relate to the criterion or
outcome variable of a model are termed as an intervening or exogenous, or antecedent or
suppressor in the model. Thus, innovation capability is neither a moderator in the
172 relationship between demand disruption and business performance nor a moderator in the
relationship between supply disruption and business performance.
3.2.3 Disruption, innovation capability and project performance. Model 4 of Table 4
shows that supply-related disruptions in the supply chain of the construction industry
negatively and significantly influenced the project performance of the construction
firms ( b = 0.505, P < 0.01). This result indicates that a statistically significant unit
increase in the supply-related disruptions in the supply chain of the construction industry is
associated with a 0.505 unit decrease in the project performance of the construction firms. The
Model 5 result also shows that supply related disruptions in the supply chain of the construction
industry negatively and significantly influenced the project performance of the construction firms
(b = 0.500, P < 0.01). This result indicates that a statistically significant unit increase in the
supply-related disruptions in the supply chain of the construction industry is associated with a
0.500 unit decrease in the project performance of the construction firms. The Model 6 result also
shows that supply related disruptions in the supply chain of the construction industry
negatively and significantly influenced the project performance of the construction
firms ( b = 0.530, P < 0.01). This result indicates that a statistically significant unit
increase in the supply-related disruptions in the supply chain of the construction
industry is associated with a 0.530-unit decrease in the project performance of the
construction firms.
Model 6 of Table 4 shows that innovation capability failed to interact with demand
disruption, the predicting variable, and is also not related to project performance, the
criterion or the outcome variable of the specified Model 6. This result implies that innovation
capability plays the role of a homologizing moderator in the nexus between demand
disruption and project performance of the construction firms. Model 6 also shows that
innovation capability failed to interact with supply disruption, the predicting variable, and
is also not related to project performance, the criterion or the outcome variable of the
specified Model 6. This result implies that innovation capability plays the role of a
homologizing moderator in the nexus between supply disruption and project performance of
the construction firms. These relationships are asserted by Sharma et al. (1981) in their
typology of the specification of variables that reported that constructs or variables that fail
to interact with predictors and are also not related to the criterion or outcome variable of a
model are termed as homologizing moderators in the model. However, it should be
emphasized that this form of moderation is neither pure nor quasi that requires interaction
with the predicting variables.
From Figure 2, the innovation capability of the construction firms moderates the
relationship between demand disruption and project performance in such a way that at low
levels of innovation capability, the relationship is less negative than when it is high. Thus, a
low level of innovation capability reduces the impact of demand disruption on project
performance relative to the high level of innovation capability of construction firms.
From Figure 3, the innovation capability of the construction firms moderates the
relationship between supply disruption and project performance in such a way that at high
levels of innovation capability, the relationship is less negative than when it is low. Thus, a
Linking
supply chain
disruptions in
construction

173

Figure 2.
Innovation as a
moderator in the DD–
project performance
nexus

Figure 3.
Innovation as a
moderator in the SD–
project performance
nexus

higher level of innovation capability reduces the impact of supply disruption on project
performance relative to the low level of innovation capability of construction firms.

4. Discussion
The results from the regression analysis depict that demand-related disruption has no
impact on the project performance and business performance of construction firms. This
clearly shows that when the demand for construction material on site is disrupted, it has no
negative impact on the performance of a project. The overall impact of demand
inconsistencies on business performance indicators in the construction industry is negative.
JFMPC This study eventually rejected the hypothesis that demand-related disruption negatively
26,1 affects project performance and demand-related disruption negatively affects business
performance. This agrees with Wagner and Bode (2008) who indicated in their study that
the demand-side disruptions adversely affect performance in the form of quality problems,
customers’ complaints, delays and mismatch of supply and demand. Wagner and Neshat
(2012) further asserted the negative relationship between the demand-related disruptions
174 and the performance of organizations.
The results of the study further depict that supply-related disruptions negatively
impacts project performance and business performance. When the supply of material or
other inputs does not flow as demanded, the performance of projects or the success of
projects can be affected. This is clear in the study of Altay and Ramirez (2010) who were of
the view that failure to manage supply chain risks effectively may lead to a significant
negative impact on organisations. Such impacts, according to Khan and Burnes (2007),
include not only financial losses but also other aspects of a project like quality, loss of
reputation and damage to assets. Deloitte (2020) reports that supply chain disruptions as a result
of natural disasters like the Coronavirus has impacts on contracts and leads to project delays.
Disruptions lead to issues like poor project delivery, late delivery, cost overruns, non-conformance
to work specifications, low quality and wastage (Riazi et al., 2011; Abidin and Ingirige, 2018).
Supply chain innovation was seen from the study results to positively affect business
performance; however, its impact on project performance was negative. The hypothesis, SC
innovation positively affects project performance, was rejected. However, SC innovation
positively affects business performance was accepted as a hypothesis when the study
results were presented. In a study by Sandanayake et al. (2018), it was revealed that in the
wake of catastrophic happenings, construction supply chain (CSC) vulnerability has become
a primary issue in the industry. Construction organisations today focus on measures to
minimize the effects of catastrophic events and manage risk by creating more resilient
supply chains. It is in this vein that Marley (2006) positioned that there is a need to develop
strategies to mitigate supply chain disruptions due to the complexity and vulnerability of
the supply chain in the construction industry. Mentzer et al. (2001) averred that managing
supply chain aims at enhancing the performance of individual companies in the long term as
well as improving the overall supply chain performance.
With regard to a supply disruption, the study showed that innovation moderated supply
disruption on project performance. However, innovation did not affect demand disruption
moderating business performance. For supply disruption on business performance,
innovation had no moderating effect. As a hypothesis, innovation moderates the effect of
supply disruption on business performance was rejected. Also, innovation moderates the
effect of demand disruption on business performance was rejected as a hypothesis.
Innovation moderates the effect of supply disruption on project performance and innovation
moderates the effect of supply disruption on the project performance were accepted as
hypotheses for the study. Innovation or supply chain management according to Al-Werikat
(2017) helps improve competitiveness, increase profits and have more control over the
different factors and variables within the project. Vrijhoef and Koskela (2000) contributed
that SC innovation and roles are vital and important to the construction industry. Other
authors agreed that supply chain innovation reduces operational cost, lead time, create
superior operational strategies, enhance quality and provide visibility and flexibility for
dealing with rapid changes in customer demand and improves organisational performance
(Chong et al., 2011; Lee et al., 2011; Oke et al., 2013). Therefore, for construction firms to be
competitive in the industry there is the need to be more innovative in the phase of
disruptions in the supply chain process. This is because the construction supply chain is
typified by instability, fragmentation, and especially by the separation between the design Linking
and the construction of the built object (Vrijhoef and Koskela, 2000). supply chain
disruptions in
5. Conclusions and implications
Construction is not only concerned with undertaking and completing a project but operates
construction
as a business. The owners of construction firms want to succeed in the performance of their
project and want to see such performance translated in their businesses as well. Supply 175
chain disruption throughout literature has contributed to the poor performance of both
business operations as well as project performance in the construction industry. Supply
chain innovation must always be explored by construction firms to enhance their project
and business performance. Demand and supply in the construction industry were seen as
critical to the success of the industry hence the call for innovation in the construction supply
chain. This paper critiques the effects of demand-side or supply sided disruptions on the
organisational performance of construction firms and the moderation role supply chain
innovation plays on the effects. The study revealed that demand-related disruption has no
significant impact on both project and business performance. However, it was clear from the
analysis that supply-side disruption affected the operation of a business and led to poor
project performance. Significantly made clear by the study was that SC innovation
positively affected business performance although it had no impact on project performance.
To a larger extent, SC innovation was seen to have an overall impact on business operations.
Innovation was seen throughout the study to have a moderating effect of demand and
supply sided disruptions on project performance but had a negative relationship with
business performance. These findings suggest that business firms must be innovative with
the supply chain, as it moderated project performance. This will largely translate into
business performance. The supply chain of a construction firm plays a very critical role in
projects; hence, this study recommends that the supply chain ought to be innovative in
operation due to the moderating role SC innovation has on project performance and largely
business performance (Figure 4).
This study made significant contributions to the supply chain sector of the Architecture,
Engineering and Construction (AEC) industry through the improvements in the supply chain
through innovation to avert the precarious impact of supply chain disruptions on construction
project performance. Knowledge of supply chain disruptions will help stakeholders in the
construction supply chain (clients, suppliers, contractors and sub-contractors) to monitor the

Supply Chain
Innovation
• Innovation Capacity

Project Performance

Supply chain Disruption Figure 4.


• Demand- related Disruption
Business Performance Final framework of
• Supply- related Disruption
the interaction effect
JFMPC end-to-end supply chain and how it can negatively impact project performance in agreement
26,1 with Deloitte (2020). This will help industry players to devise exigency plans and look for
alternative key materials, tools, and equipment as well as labour. Furthermore, practically, this
study puts the AEC industry in a strong capacity to avert the negativities associated with
supply chain disruption by building resilience to maintain competitiveness (Ambulkar, 2015).
This study provides insights into the construction industry supply chain disruptions and
176 measures to enhance project performance. The main implication for practice is the
identification of the latent supply chain disruptions (demand side and supply side) and
measures to deal with it through planning. Despite the major contributions of this study to the
construction supply chain, this study was purely quantitative and based on the views of
construction stakeholders in Ghana. However, the findings of this study do not limit
generalisability since it can be used as a lesson by other developing countries. Further studies
could also explore the literal perspectives of construction supply chain stakeholders on the
supply chain disruptions and strategies to mitigate its impact on the industry qualitatively.

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Further reading
Carvalho, V.M., Nirei, M., Saito, Y. and Tahbaz-Salehi, A. (2016), “Supply chain disruptions: evidence
from the great east Japan earthquake”, Columbia Business School Research Paper, pp. 17-15.
Segerstedt, A. and Olofsson, T. (2010), “Supply chains in the construction industry”, Supply Chain
Management: An International Journal, Vol. 15 No. 5, pp. 347-353.

Corresponding author
Ernest Kissi can be contacted at: kisernest@gmail.com

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