Abstract
Drawing on the Transaction Cost Economics (TCE) and taking the perspective of a developing economy, the study examined the impacts of governance mechanisms (GM-formal control and social control) on supply chain (SC) performance (operational efficiency and service & market performance). Data were collected using questionnaires from 152 firms operating in the most industrialized regions of Ghana. Structural equation modelling technique (using LISREL 8.5) was employed in estimating the study’s model. The study finds significant positive associations between formal control and operational efficiency; and between social control and service & market performance. The study also finds that within the research context, social control is antecedent of (adherence to) formal control; and that the effect of social control on operational efficiency is fully channelled via formal control. These findings imply that firms’ ability to institute and implement GMs would present them opportunities to enhance the performance of their SCs. Theoretically, the results suggest the potential mediating role of formal control in the link between social control and SC performance; which means that having in place formal controls is necessary for firms in this part of the world (who mostly rely on social control) to better experience benefits arising out of social relationships.
Highlights
Developing economies play important role in the global supply chain (SC) in terms of competitive material prices and reduced labour costs
In model 1, all items were loaded on a single latent factor: χ2(DF)= 548.95(90); χ2/DF= 6.099; root mean square error of approximation (RMSEA)= .184; non-normed fit index (NNFI)= .396; comparative fit index (CFI)= .482; and SRMR= .131; model 2 had items loaded on their respective constructs: χ2(DF)= 183.59(84); χ2/DF= 2.186; RMSEA= .089; NNFI= .835; CFI=.868; and SRMR=.079; while model 3 included a common factor linking all items in model 2: χ2(DF)= 150.81(65); χ2/DF= 2.320; RMSEA= .094; NNFI= .800; CFI= .876; and SRMR=
(TCE), we model the effects of social control and formal control on two supply chain performance dimensions: operational efficiency and service & market performance, and a path from social control to formal control mechanism
Summary
Developing economies play important role in the global supply chain (SC) in terms of competitive material prices and reduced labour costs. This reflects in some leading firms being tempted to locate their manufacturing units in these economies. Firms in the developing economies are participating in the global business networks through such relationship and connection with others across the globe to create wealth. Their socio-cultural idiosyncrasies may influence the type of relationship governance mechanism they adopt. Reduce transaction costs (Dyer, 1997; Hamisi, 2011)
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
