Effects of customer’s investment in ICT on partners’ decisions through the supply chain: an empirical study of the manufacturing industry in Thailand

Abstract

ABSTRACTInformation and communication technology (ICT) is considered as a determinant of innovation and enhances the efficiency of a manufacturer. A compatible and integrated ICT system among supply chain partners can enhance the effectiveness of the information sharing in a supply chain. This paper investigates how a customer’s investment in ICT and investment for product innovation affects the ICT investment of a manufacturer and its next-tier suppliers. We used 254 valid data samples obtained from the Thai manufacturers collected from November 2017 to March 2018. We use the structural equation modelling technique in hypothesis testing. The results show that the customer’s investment in ICT and for product innovation significantly impacts ICT investment of the manufacturer and pressures its next-tier suppliers to adopt compatible ICT systems. Manufacturers will invest in ICT systems if customers invest in ICT systems and product innovation. Furthermore, the manufacturers can put pressure on their suppliers to adopt compatible ICT systems, to develop an integrated and compatible system for smooth and efficient operations. The findings also suggest that customers dominate the decision process of ICT investment in a supply chain, including the next-tier suppliers.