Examining the Effect of Trust on Supply Chain Performance: The Mediating Role of Process Innovation

Abstract

This paper assesses the effect of trust on the practice of supply chain performance. The paper also examines the mediating role of process innovation in the relationship between trust and supply chain performance in Tanzania. Drawing from social exchange theory and relational exchange theory, the research posits that, there is a crucial link between trust and supply chain performance. The paper is hence guided by four hypotheses: H1, there is a positive and significant relationship between trust and supply chain performance. H2, there is a positive and significant relationship between process innovation and supply chain performance. H3, there is a positive and significant relationship between trust and process innovation. H4, process innovation mediates the relationship between trust and supply chain performance. The study collected survey data from 262 top managers of 128 companies involved in exporting agricultural products in Tanzania. Inferential statistics were used to assess the relationship between the variables. The findings suggest that both trust and process innovation have a positive and significant effect on supply chain performance. Additionally, the study found that process innovation mediates the relationship between trust and supply chain performance. The current study is unique in its analysis of the influence of group trust on supply chain performance and the mediation role of process innovation, which has received little attention in previous studies.