A structural model of supply chain management on firm performance

Abstract

PurposeThe purpose of this paper is to examine the relationships among supply chain management (SCM) practices and their impacts on firm financial and non‐financial performance. This paper contributes to SCM literature by exploring a structural model connecting the relationships among external customer‐firm‐supplier integration, internal SCM contextual factors, and various dimensions of firm performance.Design/methodology/approachIn order to understand the interactions between SCM practices and firm performance, this paper considers four internal contextual factors, namely: human resource management, quality data and reporting, design management, and process management. Three levels of firm performance are also examined in this paper, including internal operational performance, external customer satisfaction, and firm financial performance. A structural model was further constructed by integrating external SCM, internal SCM contextual factors, and firm performance. The sample data were collected from Taiwan information‐related industries, where firms are facing increased global competitive pressure and heavily utilize SCM to retain their competitive advantages.FindingsThe results presented in this paper show that external customer‐firm‐supplier relation management positively impacts firm internal contextual factors, which in turn have positive effects on firm performance. This finding suggests that a successful implementation of SCM not only directly improves operational performance, but also indirectly enhances customer satisfaction and financial performance. In addition, higher financial performance is also attributable to better customer value resulting from the achievement of better customer satisfaction.Originality/valueThis paper provides empirical evidence on the relationships among SCM practices and how they affect various levels of firm performance, which in turn, provides strategic insights on the relationship between SCM practices and firm performance.