A triadic longitudinal assessment of multiple supply chain participants’ performance and the extended enterprise concept

Abstract

PurposeSupply chain management (SCM) proficiency is generally associated with superior business performance. Yet, SCM research continues to focus predominantly on the performance of individual firms, rather than on the collective performance of multiple supply chain participants as espoused by the extended enterprise (EE) concept. In response to calls for quantitative studies that examine the collective performance of multiple supply chain participants, this research study compares the combined performance of triads comprising focal firms recognized for their relative SCM proficiency and their upstream (supplier) and downstream (customer) supply chain partners with that of their close industry competitors' triads.Design/methodology/approachThe triadic, longitudinal examination of multiple supply chain participants' collective performance utilized archival financial data of the period 2007–2017 from the Compustat database and the supply chain (SPLC) function of Bloomberg.FindingsFindings of this study indicated that supply chain triads that included focal firms recognized for their relative SCM proficiency experienced significantly lower sales and general administrative expenses and significantly higher productivity, return on assets and profitability over time than their close industry competitors' triads. However, contrary to expectations, the performance advantages identified did not extend to revenue growth.Research limitations/implicationsSupply chain triads cannot fully represent entire supply chains or EEs. However, this study’s triadic analysis can be viewed as a practically achievable proxy for further validating the EE concept. Moreover, based on assertions that triadic studies are suitable for SCM research and on empirical studies that consistently show individual firms recognized for their relative SCM proficiency outperform competitors, the authors contend that the study’s findings appropriately corroborate the value of the EE concept.Practical implicationsBecause such empirical evidence is so rare, the consistent, collective performance advantages identified in this study should be highly significant to managers.Originality/valueRobust, longitudinal evidence that supply chain triads which include focal firms recognized for relative SCM proficiency collectively outperform their close industry competitors' triads extends generally accepted associations between SCM proficiency and business performance, suggesting that the application of extended resource-based view (ERBV) in supply chain contexts warrants further examination and further substantiates the efficacy of the EE concept.