A macro-institutional perspective on supply chain environmental complexity

Abstract

Supply chain management is a practitioner-generated discipline, which has gained much popularity in the last two decades. Adopting a supply chain perspective also involves the address of structural decision criteria relating to capacity, size and location of supply chain activity, the “supply chain” typified by a network of independent firms. As a result, it becomes important to address macro-institutional constraints, especially in any supply chain perspective because of the inherent global scope of supply chain operations. This paper uses the environment–strategy–performance (E–S–P) paradigm as a means to understand the relevance of environment (complexity) facing supply chain operations, while proposing that an environmental analysis best represents a multi-criteria decision-making problem. Environmental complexity is translated using Guisinger's [2001. From OLI to OLMA: incorporating higher levels of environmental and structural complexity into the eclectic paradigm. International Journal of The Economics of Business 8(2), 257–272] proposed taxonomy of macro-institutions that are relevant and pose constraints to extended operations viz. with international or global outlook. Finally, this decision-making problem is illustrated by applying the analytic hierarchy process (AHP) approach to an illustrative site-location problem with generic constraints.