JIEMS (Journal of Industrial Engineering and Management Systems)

The purpose of this paper is to empirically test a framework which identifies the relationships between supply chain management (SCM) practices, operational performance and innovation performance of manufacturing and service firms. Data for the study were collected from a sample of 256 manufacturing and service firms. The research model was tested using structural equation modeling. The results show that SCM practices in both the upstream and downstream supply chain have a direct and significant impact on organizational and innovation performance of firms. Innovation improvement caused by SCM also results in better organizational performance. The findings also reveal that manufacturing and service firms do not have a significant difference in their SCM practices. The time sequence of the association between the variables could not be concluded given that cross-sectional data were used. This study shows the importance of SCM practices and how they directly influence organizational and innovation performance. This result will be encouraging to firms. This study has developed and validated a multi-dimensional construct of SCM practices, and this tool can assist decision makers of firms to evaluate the efficiency of their current SCM practices. The paper presents one of the few studies which empirically validates the relationships between SCM practices and organizational and innovation performances. The study also focuses on a developing country which is in transition from being manufacturing focused to service focused.

Keywords: Supply Chain Management, Organizational Innovation, Organizational Performance

Alvarado, U. Y. and Kotzab, H. (2001). Supply chain management: the integration of logistics in marketing, Industrial Marketing Management, Vol. 30 No. 2, pp. 183-98.

Bagozzi, R. P. and Yi, Y. (1988). On the evaluation of structural equation models, Journal of the Academy of Marketing Science, Vol. 16 No. 1, pp. 74-94.

Ballou, R.H., Gilbert, S.M. and Mukherjee, A. (2000). New managerial challenges from supply chain opportunities, Industrial Marketing Management, Vol. 29 No. 1, pp. 7-18.

Carter, J.R. and Ferrin, B. G. (1995). The impact of transportation costs on supply chain management, Journal of Business Logistics, Vol. 16 No. 1, pp. 189-212.

Chen, J. and Tsou, H. (2007). Information technology adoption for service innovation practices and competitive advantage: the case of financial firms, Information Research, Vol. 12 No. 3, pp. 1368-613.

Chong, A.Y.L. and Ooi, K. B. (2008a). Adoption of interorganizational system standards in supply chains, Industrial Management & Data Systems, Vol. 108 No. 4, pp. 529-47.

Chong, A.Y.L. and Ooi, K. B. (2008b). Collaborative commerce in supply chain management: a study of adoption status in Malaysian electrical and electronics industry, Journal of Applied Sciences, Vol. 8 No. 21, pp. 3836-44.

Chong, A.Y.L., Ooi, K. B. and Sohal, A. (2009a). The relationship between supply chain factors and adoption of e-collaboration tools: an empirical examination, International Journal of Production Economics, Vol. 122 No. 1, pp. 150-60.

Chong, A.Y.L., Ooi, K.B., Lin, B. and Raman, M. (2009b). Factors affecting the adoption level of c-commerce: an empirical study, Journal of Computer Information Systems, Vol. 50 No. 2, pp. 13-22.

Chong, A. Y. L., Chan, Felix T. S., Ooi, K. B. & Sim, J. J. (2010). Can Malaysian Firms Improve Organizational/Innovation Performance via SCM? Industrial Management & Data Systems. Vol. 111 No. 3, pp. 410-431.

Donlon, J.P. (1996). Maximizing value in the supply chain, Chief Executive, Vol. 117, October, pp. 54-63.

Fisher, M. L. (1997). What is the right supply chain for your product?, Harvard Business Review, Vol. 75 No. 2, pp. 105-16.

Flynn, B. B. (1994). The relationship between quality management practices, infrastructure and fast product innovation, Benchmarking for Quality Management & Technology, Vol. 1 No. 1, pp. 48-64.

Frohlich, M. T. and Westbrook, R. (2002). Demand chain management in manufacturing and services: web-based integration, drivers and performance, Journal of Operations Management, Vol. 20 No. 6, pp. 729-45.

Gobeli, D. and Brown, W. (1994). Technological innovation strategies, Engineering Management Journal, Vol. 6 No. 1, pp. 17-24.

Gopalakrishnan, S. (2000). Unraveling the links between dimensions of innovation andorganizational performance, The Journal of High Technology Management Research, Vol. 11 No. 1, pp. 137-53.

Hair, J.F., Anderson, R.E., Tatham, R.L. and Black, W.C. (2009).Multivariate Data Analysis, Prentice-Hall, Englewood Cliffs, NJ.

Hart, P.M. (1994). Teacher quality ofwork life: integrating work experiences, psychological distress and morale, Journal of Occupational & Organizational Psychology, Vol. 67 No. 2, pp. 109-32.

Hoover, W.E., Eloranta, E., Holmstrom, J. and Huttunen, K. (2001).Managing the Demand-Supply Chain: Value Innovations for Customer Satisfaction, Wiley, New York, NY.

Katos, A. V. (2010). The influence of information and communication technologies on enabling trade: a cross-country investigation, Journal of Information Technology Impact, Vol. 10 No. 1, pp. 15-24.

Kaynak, H. (2003). The relationship between total quality management practices and their effects on firm performance, Journal of Operations Management, Vol. 21 No. 4, pp. 405-36.

Khang, T.S., Arumugam, V., Chong, A.Y.L. and Chan, F.T.S. (2010). Relationship between supply chain management practices and organisation performance: a case study in the Malaysian service industry, International Journal of Modelling in Operations Management, Vol. 1 No. 1, pp. 84-106.

Koh, S., Demirbag, M., Bayraktar, E., Tatoglu, E. and Zaim, S. (2007). The impact of supply chain management practices on performance of SMEs, Industrial Management & Data Systems, Vol. 107 No. 1, p. 103.

Kotzab, H. and Schnedlitz, P. (1999). Retailing, don’t forget it in your supply chain management concept, Journal fu¨ r Betriebswirtschaftm, Vol. 4, pp. 140-53.

Lamb, J. J. (1995). An evolutionary idea, World Trade, Vol. 8 No. 7, pp. 40-6.

Li, S., Rao, S.S., Ragu-Nathan, T. and Ragu-Nathan, B. (2005).Development and validation of a measurement instrument for studying supply chain management practices, Journal of Operations Management, Vol. 23 No. 6, pp. 618-41.

Li, S., Ragu-Nathan, B., Ragu-Nathan, T. and Subba Rao, S. (2006). The impact of supply chain management practices on competitive advantage and organizational performance, Omega, Vol. 34 No. 2, pp. 107-24.

Lin, H.F. and Lee, G. G. (2005). Impact of organizational learning and knowledge management factors on e-business adoption, Management Decision, Vol. 43 No. 2, pp. 171-88.

Loong, A.C. Y. (2010).Case study on the implementation of RosettaNet standards, available at: http://cits.intimal.edu.my/resource_files/case_study.pdf (accessed 8 August 2010).

Min, S. and Mentzer, J. T. (2004). Developing and measuring supply chain concepts, Journal of Business Logistics, Vol. 25 No. 1, pp. 63-99.

Nunnally, J. C. (1978).Psychometric Theory, 2nd ed., McGraw-Hill, New York, NY.

Park, D.and Krishnan, D. (2001). Supplier selection practicesamongsmall firmsin theUnited States: testing three models, Journal of Small Business Management, Vol. 39 No. 3, pp. 259-71.

Perry, M. and Sohal, A.S. (2000). Quick response practices and technologies in developing supply chains, Management, Vol. 30 Nos 7/8, pp. 627-39.

Petrovic-Lazarevic, S., Sohal, A. and Baihaiqi, I. (2007).Supply chain management performance the Australian manufacturing industry, available at:

www.buseco.monash.edu.au/mgt/research/workingpapers/2007/wp21-07.pdf (accessed 14 August 2010).

Prajogo, D.I. and Sohal, A.S. (2001). TQM and innovation: a literature review and research framework, Technovation, Vol. 21 No. 9, pp. 539-58.

Prajogo, D.I. and Sohal, A. S. (2003). The relationship between TQM practices, quality performance, and innovation performance, International Journal of Quality & Reliability Management, Vol. 20 No. 8, pp. 901-18.

Prajogo, D.I. and Sohal, A. S. (2004). The multidimensionality of TQM practices in determining quality and innovation performance – an empirical examination, Technovation, Vol. 24 No. 6, pp. 443-53.

Reck, R.F. and Long, B. G. (1988). Purchasing: a competitive weapon, Journal of Purchasing and Materials Management, Vol. 24 No. 3, pp. 1-12.

Segars, A.H. and Grover,V. (1998). Strategic information systems planning success: an investigation of the construct and its measurement, MIS Quarterly, Vol. 22 No. 2, pp. 139-63.

Selen, W. and Soliman, F. (2002). Operations in today’s demand chain management framework, Journal of Operations Management, Vol. 20 No. 6, pp. 667-73.

Shimchi-Levi, D., Kaminsky, P. and Shimchi-Levi, E. (2000).Designing and Managing the Supply Chain: Concepts, Strategies, and Case Studies, McGraw-Hill, Singapore.

Singh, P.J. and Smith, A.J. R. (2004). Relationship between TQM and innovation: an empirical study, Journal of Manufacturing Technology Management, Vol. 15 No. 5, pp. 394-401.

Soosay, C.A., Hyland, P. W. and Ferrer, M. (2008). Supply chain collaboration: capabilities for continuous innovation, Supply Chain Management: An International Journal, Vol. 13 No. 2, pp. 160-9.

Subramanian, S. (1996). Organizational innovativeness: exploring the relationship between organizational determinants of innovation, types of innovations, and measures of organizational performance, Omega, Vol. 24 No. 6, pp. 631-47.

Tan, K.C., Kannan, V.R. and Handfield, R. B. (1998). Supply chain management: supplier performance and firm performance, International Journal of Purchasing and Materials Management, Vol. 34 No. 3, pp. 2-9.

Tan, K.C., Kannan, V.R., Handfield, R.B. and Ghosh, S. (1999). Supply chain management: an empirical study of its impact on performance, International Journal of Operations &Production Management, Vol. 19, pp. 1034-52.

Tan, K.C., Lyman, S.B. and Wisner, J. D. (2002). Supply chain management: a strategic perspective, International Journal of Operations & Production Management, Vol. 22 Nos 5/6, pp. 614-31.

Vanichchinchai, A. and Igel, B. (2009). Total quality management and supply chain management: similarities and differences, The TQM Magazine, Vol. 21 No. 3, pp. 249-60.

Wisner, J.D. and Tan, K. C. (2000). Supply chain management and its impact on purchasing, Journal of Supply Chain Management, Vol. 36 No. 4, pp. 33-42.

Yamin, S., Mavondo, F., Gunasekaran, A. and Sarros, J.C. (1997). A study of competitive strategy, organisational innovation and organisational performance among Australian manufacturing companies, International Journal of Production Economics, Vol. 52 Nos 1/2, pp. 161-72.