Journal of Operations Management 29 (2011) 163180

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Journal of Operations Management

journa l homepage: www.e lsev ier .co

Supply ratperform

Mei Caoa

a Department o d Statb Department o tate U

a r t i c l

Article history:Received 1 JanReceived in reAccepted 16 DAvailable onlin

Keywords:Supply chain cCollaborative aSurvey researcStructural equ

haveeir sun annd vae colods u

ts indine ins supe moships the

2010 Elsevier B.V. All rights reserved.

1. Introduction

In the poutside thepartners toto dynamicsupply chaiedge of theiLejeune andor more ausupply chaideliver subset al., 2000& Gamble htheir supplicompetitiveSohi, 2003;rms share(Park et alductivity (Kperformanc2000).

CorresponE-mail add

Despite the popularity and benets of supply chain collab-

0272-6963/$ doi:10.1016/j.ast decades, there has been a need for rms to lookir organizations for opportunities to collaborate withensure that the supply chain is efcient and responsivemarket needs. Firms have strived to achieve greatern collaboration to leverage the resources and knowl-r suppliers and customers (Fawcett and Magnan, 2004;Yakova, 2005). Supply chain collaboration means two

tonomous rms working jointly to plan and executen operations (Simatupang and Sridharan, 2002). It cantantial benets and advantages to its partners (Mentzer). Firms such as HewlettPackard, IBM, Dell, Procterave forged long-term, collaborative relationships withers to reduce transaction costs and achieve a strongerposition (Handeld and Bechtel, 2002; Johnson and

Sheu et al., 2006). Collaborative relationships can helprisks (Kogut, 1988), access complementary resources

., 2004), reduce transaction costs and enhance pro-alwani and Narayandas, 1995), and enhance prote and competitive advantage over time (Mentzer et al.,

ding author.resses:mcao1@uwsuper.edu (M. Cao), qzhang@astate.edu (Q. Zhang).

oration, many partner relationships fall short of meeting theparticipants expectations (Doz and Hamel, 1998; Barringer andHarrison, 2000). Fewrmshave truly capitalized on the potential ofsupply chain collaboration (Min et al., 2005; Barratt and Oliveira,2001). Supply chain collaboration seems to have great potential,but further investigation is needed to recognize its value (Gofnet al., 2006).

First, supply chain collaboration (SCC) and supply chain integra-tion (SCI) sometimes have been used interchangeably since bothrefer to a tight coupling process between supply chain partners.However, the term integration means the unied control (or own-ership) of several successive or similar process formerly carried onindependently (Webster, 1966; Flynn et al., 2010). So it puts moreemphasis on central control, ownership, or process integrationgov-erned by contract means. According to transaction cost economics(TCE) theory, between the two ends of governance continuumof vertical integration and market exchange, collaboration is anintermediate form of hybrid governance. Collaboration is attrac-tive since it puts more emphasis on governance through relationalmeans in addition to governance through contract means (Nyagaet al., 2010).Although thereare someoverlapsbetweenSCCandSCI,SCC is a better construct to capture the joint relationship betweenautonomous supply chain partners.

Knowledge of supply chain collaboration has been obscured bythe vague term of integration (Gofn et al., 2006). In the exitingSCI literature, most studies do not focus on the conceptualiza-

see front matter 2010 Elsevier B.V. All rights reserved.jom.2010.12.008chain collaboration: Impact on collaboance

, Qingyu Zhangb,

f Business and Economics, University of Wisconsin-Superior, Superior, WI 54880, Unitef Computer & Information Technology, College of Business, Arkansas State University, S

e i n f o

uary 2010vised form 20 October 2010ecember 2010e 29 December 2010

ollaborationdvantagehation modeling

a b s t r a c t

Facing uncertain environments, rmsage the resources andknowledge of ththe nature of supply chain collaboratioof collaborative advantage. Reliable arigorous empirical analysis. Data wervarious industries. The statisticalmethtion modeling (i.e., LISREL). The resuladvantage and indeed has a bottom-lan intermediate variable that enableperformance. A further analysis of thtage completely mediates the relationsmall rms while it partially mediatem/locate / jom

ive advantage and rm

esniversity, AR 72467, United States

strived to achieve greater supply chain collaboration to lever-ppliers and customers. The objective of the study is to uncoverd explore its impact on rmperformance based on a paradigmlid instruments of these constructs were developed throughlected through a Web survey of U.S. manufacturing rms insed include conrmatory factor analysis and structural equa-icate that supply chain collaboration improves collaborativeuence on rm performance, and collaborative advantage isply chain partners to achieve synergies and create superiorderation effect of rm size reveals that collaborative advan-between supply chain collaboration and rm performance forrelationship for medium and large rms.

164 M. Cao, Q. Zhang / Journal of Operations Management 29 (2011) 163180

tion of integration, but focus on operationalizing the individualcomponent of supply chain integration, e.g., customer integra-tion, supplier integration, and internal integration (Frohlich andWestbrook, 2001; Narasimhan and Kim, 2002; Chen and Paulraj,2004; PeterZhao et al.,detailed revet al. (2010izations of Sconceptuali

A signiopment ofunderstandWestbrook,Deveraj etVan der Valacking is achain collabsupply chaition and lesknowledgemunicationsupply chairation failurthat holds sway, multil1990; Chenply chain pinformationable compe

Second,collaboratioadvantagetage is aadvantage (from relatiotive partnerof idiosyncrpetitive advrelationshipmon goals aby acting alet al., 2004;resource baappropriatibenets) anprivate ben

The concthe literatuKanter, 199tionalizatioin the extanimplicationbe made badvantage)There are mbetween SCNarasimhanVanderVaaprovided emagement prperformanc2010); howon collabor

The objeacteristics

on collaborative advantage and rm performance by answeringthe following research questions? What are the key dimensionsof supply chain collaboration? What is the performance implica-tion of supply chain collaboration? How to measure collaborative

age fageollabationage,stud

tion blingtandllaboanu

p relatiovantstsmonrm pnce.

oret

ply cvantage (ly chdentratioompvantts foage ea rrativcha

um grentschaxamnsactview

ansa

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cisiochanoundteresplynizihiescollaonitos inthat p, 20lizintencsen et al., 2005; Das et al., 2006; Deveraj et al., 2007;2008; Van der Vaart and Van Donk, 2008). For moreiew, see Van der Vaart and Van Donk (2008) and Flynn). Flynn et al. (2010) point out that many conceptual-CI are incomplete, and these incomplete and evolvingzations have led to inconsistent ndings.cant amount of research has focused on the devel-supply chain integration models that advance ouring of this relatively new research area (Frohlich and2001; Narasimhan and Kim, 2002; Das et al., 2006;

al., 2007; Zhao et al., 2008; Chen and Paulraj, 2004;art and Van Donk, 2008; Flynn et al., 2010). What isframework for accurately dening the extent of supplyoration (Lambert et al., 1999). Previous denitions ofn collaboration put more emphasis on process integra-s on the components of relational communication andcreation (Simatupang and Sridharan, 2005). Miscom-,which causes conicts andmisunderstandingbetweennpartners, is recognized as the reason formany collabo-es (Tuten and Urban, 2001). Communication is the glueupply chain partners together through balanced, two-evel contacts and message services (Mohr and Nevin,and Paulraj, 2004). Further, collaboration between sup-artners is not merely pure transactions, but leveragessharing and market knowledge creation for sustain-

titive advantage (Malhotra et al., 2005).in investigating the consequences of supply chainn, existing literature has ignored the collaborativeachieved through collaboration. Collaborative advan-relational view of interorganizational competitiveDyer and Singh, 1998). Collaborative advantage comesnal rent, a common benet that accrues to collabora-s through combination, exchange, and codevelopmentatic resources (Dyer and Singh, 1998). It is joint com-antage and focuses on joint value creation in dyadic. Supply chain partners work together toward com-nd achieve more mutual benets than can be achievedone (Mentzer et al., 2001; Stank et al., 2001; ManthouSheuet al., 2006). In contrast, according to the extendedses view, competitive advantage focuses more on valueon by both appropriating relational rent (i.e., commondunilaterally accumulating spillover rents thatproduceets (Lavie, 2006).ept of collaborative advantage has been mentioned in

re (Jap, 2001; Dyer and Singh, 1998; Ferratt et al., 1996;4; Vangen and Huxham, 2003). However, the opera-n of this construct has not been adequately addressedt literature. In addition, when considering performances of supply chain collaboration, a distinction shouldetween collaboration performance (e.g., collaborativeand the impact of collaborations on rm performance.any studies that empirically tested the relationship

I and rmperformance (Frohlich andWestbrook, 2001;and Kim, 2002; Das et al., 2006; Deveraj et al., 2007;

rt andVanDonk, 2008). There are also somestudies thatpirical evidence of the impact of supply chain man-

actices or SCI on competitive advantage (or operationale) and rm performance (Li et al., 2006; Flynn et al.,ever, there is no empirical work on the impact of SCCative advantage and rm performance.ctive of the study is to uncover the nature and char-of supply chain collaboration and explore its impact

advantadvantchain cthe reladvant

ThelaboraBy pooundersand cowith mdevelothe retive adalso teships aand invaria

2. The

Suptive adadvanta suppdepencollabojoint ctive adbeneadvantimizecollabosupplyzero-stionalsupplystudy e(1) trational

2.1. Tr

Trathat caBarrinarchiesthe deketmefrom bself-in

Supto orgahierarcchainand mprocesbility t(Croominternacomperom a perspective of relational rent? Does collaborativecompletely mediate the relationship between supplyorationandrmperformance?Doesrmsizemoderateships among supply chain collaboration, collaborativeand rm performance?y contributes to our knowledge on supply chain col-y providing theoretical insights and empirical ndings.an extensive set of factors, the research extends ouring of the attributes of supply chain collaborationrative advantage. Through a large-scale Web surveyfacturers across the US, the research also intends toliable and valid instruments and to empirically testnships among supply chain collaboration, collabora-age, and rm performance. In addition, the researchthe moderation effect of rm size on the relation-g supply chain collaboration, collaborative advantage,erformance using multi-group analysis of structural

ical paradigms

hain collaboration is rooted in a paradigm of collabora-age (Kanter, 1994; Dyer, 2000) rather than competitivePorter, 1985). According to the collaborative paradigm,ain is composed of a sequence or network of inter-relationships fostered through strategic alliances andn (Chen and Paulraj, 2004). It is a relational view ofetitive advantage (Dyer and Singh, 1998). Collabora-age comes from relational rents that produce commonr bilateral rent-seeking behaviors while competitivencourages individual rent-seeking behaviors thatmax-ms own benets (Lavie, 2006). The perspective ofe advantage enables supply chain partners to view

in collaboration as a positive-sum game rather than aame where partners strive to appropriate more rela-for their own competitive advantage. The literature on

in collaboration represents multiple perspectives. Thisines supply chain collaboration from four perspectives:ion cost economics, (2) resource based view, (3) rela-, and (4) extended resource based view.

ction cost economics

ion cost economics (TCE) is a very inuential theoryplain relationships among rms (Williamson, 1975;nd Harrison, 2000). Williamson (1975) identies hier-markets as two methods to organize. According to TCE,

n to use either vertical integration/hierarchies or mar-ismsdepends on the relativemonitoring costs that ariseed rationality and from uncertainties due to partnerst and opportunism (Kaufman et al., 2000).chain collaboration emerges as the third alternativeng, which helps avoid the problems arising from bothand markets (Koh and Venkatraman, 1991). Supply

boration helps rms reduce the costs of opportunismring that are inherent in market transactions throughegration and mutual trust, thus increasing the proba-artners behave in the best interest of the partnership01). Supply chain collaboration also helps rms avoidg an activity that may not be aligned with theiries.

M. Cao, Q. Zhang / Journal of Operations Management 29 (2011) 163180 165

Collaborative

Advantage

Process Efficiency

ity

ve adv

2.2. Resour

Resourcetion in explRBV are resRBV arguesstrategic re1990), dyncapacity (Coin a uniquewho are unresources abilities, rm2003). RBVpartneringrare, valuab(Barney, 19

The embtional assetcompetitorallows rmrm specieffects, ther2004).

2.3. Relatio

The relacritical resoFirms can escarcity ofrelational rejointly geneated by eiththe joint cSingh, 1998laborativeknowledge,inter-rm kendowmen

Collaborelaboratesorent generation level forole of both

998)rativ

tend

ventsourcERBVoy tagested ces ae admpee/colriatend srmsnal rartnertnere, intion osultsr. Thtbous comriateontraH4a

Offering Flexibil

Business Synergy

Quality

Innovation Supply Chain

Collaboration

Information Sharing

Goal Congruence

Decision Synchronization

Incentive Alignment

Resource Sharing

Collaborative Communication

Joint Knowledge Creation

H1

Firm

Size

H3

H4c

Fig. 1. Impact of supply chain collaboration on collaborati

ce based view

based view (RBV) of the rm also receivesmuch atten-aining supply chain collaboration. The key concepts ofources, capabilities, and strategic assets (Barney, 1991).that variance in rm performance can be explained bysources, such as core competence (Prahalad and Hamel,amic capability (Teece et al., 1997), and absorptivehenandLevinthal, 1990). Firms that combine resourcesway may achieve an advantage over competing rmsable to do so (Dyer and Singh, 1998). By owning scarcend assets and excelling in core competencies and capa-s can reach a sustained market advantage (Knudsen,

claims that investing in relation-specic assets enablesrms to build competitive advantage because of theirle, non-substitutable, and difcult-to-imitate nature91).eddedness of the supply chain partnering rms rela-s and the causal ambiguity makes it difcult for theirs to imitate (Jap, 2001). Supply chain collaboration alsos to focus on their unique core activities, which increasec skills and realize economies of scale and learningeby improving their competitive positions (Park et al.,

nal view

tional view (RV) complements the RBV by arguing thaturcesmay spanrmboundaries (Dyer and Singh, 1998).

et al., 1collabo

2.4. Ex

Conthe review (or enjadvantconnecresourpetitivthe coalliancappropoutboufocal relatioboth pthe paleakagnalizatrent repartneand ourm. Itapprop

In carn not only internal rents (i.e., Ricardian rents fromresources and quasi-rents from added value) but alsonts. A relational rent is dened as a supernormal protrated in an exchange relationship that cannot be cre-er rm in isolation and can only be created through

ontributions of the collaborative partners (Dyer and; Lavie, 2006). Relational rents are possible when col-partners combine and exchange idiosyncratic assets,and capabilities through relation-specic investments,nowledge-sharing routines, complementary resourcets, and effective governance mechanisms.ative advantage is based on the relational view, whichn themechanismsof joint valuecreation (i.e., inter-rmtion). It argues relational rents accrue at the collabora-r mutual benets. Unlike studies that acknowledge theprivate and common benets (Hamel, 1991; Khanna

tageandcomto collaboracannot be gaddition, Lacreation inof spillover

3. Concept

By collaba part of a scan accessassociatedadvantage aalso be moderating effeH2 Firm

Performance

Growth of sales

Return on investment Growth in return on investment

Profit margin on sales

H4a

antage and rm performance.

, the relational view emphasizes common benets thate partners cannot generate independently.

ed resource-based view

ional RBV assumes rms must own or fully controles to create value. In the extended resource-based), resource accessibility, the right to employ resourcesheir associated benets, enables rms to achieve. Lavie (2006) extends the RBV by explaining how inter-rms in dyadic collaboration/alliance combine externalnd internal resource endowments to achieve com-

vantage for the focal rm. According to Lavie (2006),titive advantage of a focal rm participating in anlaboration includes four elements: (1) internal rent, (2)d relational rent, (3) inbound spillover rent, and (4)pillover rent. Internal rent can be extracted from theown shared and nonshared resources. Appropriated

ent can be extracted only from the shared resources ofrs. Inbound spillover rent is the rent generated froms shared and nonshared resources through knowledgeer-rm learning, relative absorptive capacity, and inter-f the partners practices, whereas outbound spilloverfrom the transfer of benets from the focal rm to thee combination of internal rent, inbound spillover rent,nd spillover rent forms private benets for the focalpetitive advantage depends on its private benets andd relational rent (i.e., appropriated common benets).st, collaborative advantage is joint competitive advan-

e froma relational rent, a commonbenet that accrues

tive partners (Dyer and Singh, 1998). This type of rentenerated individually by either collaborative partner. Invies (2006)model extends prior research on joint valuedyadic alliance by considering unilateral accumulationrents that produce private benets.

ual development

orating, supply chain partners can work as if they wereingle enterprise (Lambert and Christopher, 2000). Theyand leverage each others resources and enjoy theirbenets. Such collaboration can increase collaborativend enhance rm performance. The relationships mighterated by rm size. These direct, mediating, and mod-cts are captured in a framework as shown in Fig. 1.

166 M. Cao, Q. Zhang / Journal of Operations Management 29 (2011) 163180

3.1. Supply chain collaboration

Supply chain collaboration has been dened in many differentways, and basically they fall into two groups of conceptualization:process fochas been viechainpartn2001; Stankwhile SCC hterm partnand share iobjectives (ture reviewet al., 2000)1999), coorting supplyinformation

Combinias a partnework closelcommon gosharing (Ma2001), decising (Sheu eSridharan, 2

While recollaboratiofor collaborNevin, 199ply chain cSohi, 2003)ply chain cinformationincentive altion, and joexpected tothere mighto supply chleveraging r

Informata variety oftion in a tiand Nath, 2tion sharing(Stuart and2001), esse(Sheu et alsupply chaiMichigan Sthe willingntory levels,strategies a

Goal conwhich suppised by accof goal agre2001). In theither feel tply chain, oachieved assupply chai

Decisionchain partnoperationsand Sridharthe most e

to achieve a specic set of objectives. There are seven key sup-ply chain management planning decision categories: operationsstrategy planning, demand management, production planning andscheduling, procurement, promise delivery, balancing change, and

utionng isisionder dntivend bran,wellpartnequibens a chice an

ourceets ars. Requige bis o

yer, 1ed inia Eleishmabornproon, may, mse inandexp

persporatationinfort knopartnmarktractivind relate aturelogyinnos a w

llabo

laborJap,titororatiaborm as th

nd ggen

rompra, bece syus and relationship focus. Supply chain collaborationwed as a business processwhereby twoormore supplyerswork together toward commongoals (Mentzer et al.,et al., 2001; Manthou et al., 2004; Sheu et al., 2006),as also been dened as the formation of close, long-

erships where supply chain members work togethernformation, resources, and risk to accomplish mutualBowersox et al., 2003; Golicic et al., 2003). The litera-reveals the importance of planning activities (Boddy

, integrating cross-functional processes (Lambert et al.,dinating the supply chain (KimandUmanath, 2005), set-chain goals (Peck and Juttner, 2000), and establishingsharing parameters (Lamming, 1996).

ng both process and relationship focus, SCC is denedrship process where two or more autonomous rmsy to plan and execute supply chain operations towardals and mutual benets. SCC consists of informationnthou et al., 2004), goal congruence (Angeles and Nath,ion synchronization (Stank et al., 2001), resource shar-t al., 2006), and incentive alignment (Simatupang and005) among independent supply chain partners.searchers have addressed some aspects of supply chainn, they have not adequately highlighted the needative communication as a critical variable (Mohr and0). Another overlooked but crucial variable in sup-ollaboration is joint knowledge creation (Johnson and. Synthesizing the literature, this study denes sup-ollaboration as seven interconnecting components:sharing, goal congruence, decision synchronization,

ignment, resources sharing, collaborative communica-int knowledge creation. These seven dimensions arebe intercorrelated and covarywith each other althought be causal relationships among them. They add valueain collaboration by reducing costs and response time,esources, and improving innovation.ion sharing refers to the extent to which a rm sharesrelevant, accurate, complete, and condential informa-mely manner with its supply chain partners (Angeles001; Cagliano et al., 2003; Sheu et al., 2006). Informa-isdescribedas the heart (Lamming, 1996), lifebloodMcCutcheon, 1996), nerve center (Chopra andMeindl,ntial ingredient (Min et al., 2005), key requirement., 2006), and foundation (Lee and Whang, 2001) ofn collaboration. The Global Logistics Research Team attate University (1995) denes information sharing asess to make strategic and tactical data such as inven-forecasts, sales promotion, strategies, and marketingvailable to rms forming supply chain nodes.gruence between supply chain partners is the extent toly chain partners perceive their own objectives are sat-omplishing the supply chain objectives. It is the degreeement among supply chain partners (Angeles and Nath,e case of true goal congruence, supply chain partnershat their objectives fully coincide with those of the sup-r, in case of disparity, believe that their goals can bea direct result of working toward the objectives of then (Lejeune and Yakova, 2005).synchronization refers to the process by which supplyers orchestrate decisions in supply chain planning andthat optimize the supply chain benets (Simatupangan, 2002). Planning decisions are required to determinefcient and effective way to use the rms resources

distribplanniing decand or

Incerisks, aSridhats aschainlossestiablyrequiretably, wrisk (Le

ResandasspartneturingThe larworks(e.g. Dmanagdata, vreplen

Collmissiodirectitwo-wof cloTuten(1990)nisticcollabmunicows,

Joinchainto the(Malhoation anew aassimiThecaptechnoenablechain a

3.2. Co

Coltage (compeCollabof collany rexplainets anot beation fof bestactionsresourmanagement (Lockamy and McCormack, 2004). Jointused to align collaborative partner and to make operat-s including inventory replenishment, order placement,elivery.Alignment refers to the process of sharing costs,

enets among supply chain partners (Simatupang and2005). It includes determining costs, risks, and bene-as formulating incentive schemes. Successful supplyerships require that each participant share gains andtably and the outcomes of the collaboration are quan-ecial to all (Manthou et al., 2004). Incentive alignmentareful denition of mechanisms that share gains equi-h means gains are commensurate with investment andd Whang, 2001).sharing refers to the process of leveraging capabilitiesnd investing in capabilities andassetswith supply chainesources include physical resources, such as manufac-pment, facility, and technology (Harland et al., 2004).ody of literature on industry clusters and regional net-ne example of the importance of this phenomenon996). In the retailing sector, practices such as vendor-ventory (VMI) enable suppliers to assess stock-levelctronic Data Interchange (EDI), and take the necessaryent action (Lamming, 1996).ative communication is the contact and message trans-cessamongsupplychainpartners in termsof frequency,ode, and inuence strategy. Open, frequent, balanced,ultilevel communication is generally an indication

terorganizational relationships (Gofn et al., 2006;Urban, 2001). In-depth work by Mohr and Nevin

lores the pattern of communication from the mecha-ective of communication theory. They coin the term

ive communication strategy, which refers to key com-attributes including frequency, extent of bi-directionalmal modes, and indirect content.wledge creation refers to the extent to which supplyers develop a better understanding of and responseet and competitive environment by working together

et al., 2005). There are two kinds of knowledge cre-ties: knowledge exploration (i.e., search and acquirelevant knowledge) and knowledge exploitation (i.e.,nd apply relevant knowledge) (Bhatt andGrover, 2005)., exchange, andassimilationofknowledge (e.g., process,, or market knowledge) between supply chain partnersvation and the long-termcompetitiveness of the supplyhole (Harland et al., 2004).

rative advantage

ative advantage is also called joint competitive advan-2001). It refers to strategic benets gained overs in the marketplace through supply chain partnering.ve advantage relates to the desired synergistic outcomeative activity that could not have been achieved bycting alone (Vangen and Huxham, 2003). Jap (1999)at collaboration can enlarge the size of the joint ben-ive each member a share of greater gain that coulderated by each member on its own. The value cre-collaboration could be cost savings through the transferctices, enhanced capacity and exibility for collectivetter decision making and increased revenue throughnergy, and innovation through the combination and

M. Cao, Q. Zhang / Journal of Operations Management 29 (2011) 163180 167

cross-pollination of ideas. Benets by business synergy may notbe immediately visible; however potential long-term rewards areenticing and strategic (Min et al., 2005). Synthesizing the abovestudies, this research conceptualizes collaborative advantage as thefollowingity, businesadvantage aspective (D

Process eoration proamong primprocess coucess, joint pprocess. Prominant factturnover anthe cooperaimprove petion include1997).

Offeringchain linkagfeatures, voIt is also caNovack, 199the ability otures or adfeatures ofmarket rmsolicit custotance of the2005).

Businessners combisupernormaduce a comof individuacess ofmakphysical asssuch as cuszational cultwo majormentary reby related r

Quality rpartners oftomers (Grthat rmsquality proservice alleand ultimadimensionsmance, durwhich areestablish.

Innovatiits supply chservices. Dufrequently aKessler andtionships wto engage inBy tappingknowledgepartners, rnew produc

3.3. Firm performance

Firm performance refers to how well a rm fullls its nancialgoals compared with the rms primary competitors (Yamin et al.,

Baruis mestmres hre prStockFlynn002)ed on

ypoth

viousductisets,r (Siidharel ofs posply cponss theer nDeciinuply con

m-sot by rartnndasredsou

sourcurcee., cott-Paavea, 20ps th

hesisect o

necpplyergyrs wially fppoduce004)ater997)he shtivitply cts anle cocheo

hesisn rvesub-components:processefciency, offeringexibil-s synergy, quality, and innovation. These collaborativend performance are viewed from the focal rms per-

uffy and Fearne, 2004).fciency refers to the extent to which a rms collab-cess with supply chain partners is cost competitiveary competitors (Bagchi and Skjoett-Larsen, 2005). Theld be information sharing process, joint logistics pro-roduct development process, or joint decision makingcess efciency is a measure of success and a deter-or of the ability of the rm to prot (e.g., inventoryd operating cost). Supply chain collaboration facilitatestion of participatingmembers along the supply chain torformance (Bowersox, 1990). The benets of collabora-cost reductions and revenue enhancements (Lee et al.,

exibility refers to the extent to which a rms supplye supports changes in product or service offerings (e.g.,lume, andspeed) in response toenvironmental changes.lled customer responsiveness in literature (Kiefer and9; Holweg et al., 2005). Offering exibility is based onf collaborating rms to quickly change process struc-

apt the information sharing process for modifying thea product or service (Gosain et al., 2004). In todayss indeed pay attention to customers and more rmsmer inputs at the design stage resulting in better accep-products and services later (Bagchi and Skjoett-Larsen,

synergy refers to the extent to which supply chain part-ne complementary and related resources to achievel benets. Ansoff (1988) suggests that synergy can pro-bined return on resources that is greater than the suml parts (2 +2=5). This joint effect results from the pro-ing better use of resources in the supply chain, includingets such as manufacturing facilities and invisible assetstomer knowledge, technological expertise, and organi-ture (Itami and Roehl, 1987). Tanriverdi (2006) offerssources of synergy: super-additive value by comple-sources and sub-additive cost (or economies of scope)esources.efers to the extent to which a rm with supply chainfers quality product that creates higher value for cus-ay and Harvey, 1992; Li et al., 2006). It is expectedthat can respond fast to customer needs with highduct and innovative design, and excellent after-salesgedly build customer loyalty, increase market sharetely gain high prots. Garvin (1988) proposes eightof quality: performance, features, reliability, confor-

ability, serviceability, aesthetics, and perceived quality,comprehensive but measures for each are difcult to

on refers to the extent towhich armworks jointlywithain partners in introducingnewprocesses, products, ore to shorter product life cycles, rms need to innovatend in small increments (Handeld and Pannesi, 1995;Chakrabarti, 1996). By carefully managing their rela-

ith suppliers and customers, rms improve their abilityprocess and product innovation (Kaufman et al., 2000).

joint creativity capacities, joint organizational learning,sharing, joint problem solving between supply chainms can improve absorptive capacity and thus introducets and services fast and frequently.

1999;manceon invmeasuthey a1999;2004;Kim, 2reect

3.4. H

Precost retary astransfeand Srthe levindex i

Supate resenablecustom2005).cantly

Supquicklyproblemarkechain pNaraya

Sharelatedtary reBoth sotage (i.Hewleners hOliveirdevelo

Hypottive eff

Thethe suto synpartneespecialso suand reet al., 2ter greet al., 1

In tproducthe supproducpossibMcCut

Hypoteffect oa et al., 2004; Li et al., 2006). In this study rm perfor-easured by sales growth, prot margin on sales, returnent (ROI), and growth in return on investment. Theseave been widely used in previous researches becauseimary yardsticks for most stakeholders (Vickery et al.,et al., 2000; Chang and King, 2005; Chen and Paulraj,et al., 2010; Petersen et al., 2005; Narasimhan and

. Effectiveness of supply chain collaboration should besuch nancial metrics.

eses development

studies suggested that collaboration benets includeon, risk sharing, access to nancial capital, complemen-improved capacity for rapid learning, and knowledge

ngh and Mitchell, 1996; Park et al., 2004). Simatupangan (2005) introduce a collaboration index to measurecollaborative practices and nd that the collaborationitively associated with operational performance.hain collaboration enables the chain members to cre-iveness to react to demand changes. Close collaborationsupply chain partners to improve their ability to fullleeds by exible offerings (Simatupang and Sridharan,sion synchronization and incentive alignment signi-ence responsiveness performance (Fisher, 1997).hain collaborationpromotes arms ability to capitalizemarket opportunities (Uzzi, 1997). For example, jointlving increases the speed that products are brought toesolving problems faster. Collaboration between supplyers can be sources of new product ideas (Kalwani and, 1995).resources between supply chain partners could berces, which reduces sub-additive cost, or complemen-es,whichbring super-additivevalue (Tanriverdi, 2006).s of business synergycanbring joint competitive advan-llaborative advantage). Firms such as Procter &Gamble,ckard, IBM, andDellwhichwork closelywith their part-captured the advantage of collaboration (Barratt and01; Callioni and Billington, 2001). Therefore, this studye following hypothesis:

1. Supply chain collaboration has a signicant posi-n collaborative advantage.

essary condition for supply chain collaboration is thatchain partners are able to expand the total gain due(Simatupang and Sridharan, 2005). The supply chainll gain nancial benets by increasing responsiveness,or innovative products (Fisher, 1997). The literaturerts the ability of partnerships to achieve cost savingsduplication of efforts by the rms involved (Lambert. In particular, cooperation among competitors can fos-knowledge seeking and result in synergetic rents (Lado.ort term, rms will see operational improvements (e.g.,y) as the primary benets. In the long run, rms expecthain collaboration to pay off throughmore competitivedquicker product development thatwill transform intompetitive advantage and increased prots (Stuart andn, 1996). Thus this study hypothesizes:

2. Collaborative advantage has a signicant positivem performance.

168 M. Cao, Q. Zhang / Journal of Operations Management 29 (2011) 163180

Many scholars contend that both customer and supplier rmsseek collaborative relationships with each other as a way ofimproving performance (Duffy and Fearne, 2004; Sheu et al.,2006). Supplier rms can obtain high sales and earn great returnsfrom resources invested in maintaining long-term relationshipswith their customers (Kalwani and Narayandas, 1995). Stanket al. (2001are necessaprotabilityeration (Ail

Lee andby Stanford100 retailerthat compaones who wgeneral, resdence (i.e., hrm perfor1994). Thus

Hypothesistive effect o

Supply cfor exampland prot.increased cet al., 2006rm performight requPotentially,performancas rm size2005; KrauSmros, 20Yeung, 200sented as tmedium (Deveraj etferent suppof collaboralevels of rmsize will mSpecically

Hypothesisand collabo

Hypothesiscollaborativ

Hypothesisand rm pe

4. Instrum

The devtion and co(1) item gelarge-scalestructs, aneconstruct astructs. Theto provide aof the scaleinstrument

4.1. Item generation

The objective of item generation is to achieve the contentvalidity of constructs by reviewing literature and consulting withacademic ashould cov

anduct, piteratled. Oen cevelint Lers ae, 2

ructu

r theere

manuscalelevanrdint theon thwereary. T. Inteth jual nus itetegors Kapentareereicatrposom tnna

mpli

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rimanshipsam

enceEOs,nufar madentre abricaent

ortatts (Semaiil ofiousemeializ) suggest that both internal and external collaborationry to ensure performance. Partnerships can improve, reduce purchasing costs, and increase technical coop-awadi et al., 1999; Han et al., 1993).Whang (2001) report that a study conducted jointlyUniversity and Accenture on 100 manufacturers ands in the food and consumer products industry revealsnies that reported higher than average prots were theere engaged in higher levels of information sharing. Inearchers suggest that thehigher the level of interdepen-igher level of collaboration) in a relationship the better

mance (Duffy and Fearne, 2004; Mohr and Spekman,this study hypothesizes:

3. Supply chain collaboration has a signicant posi-n rm performance.

hain collaboration can deliver benets to all partners,e, reducing risk and cost and increasing productivityHowever, collaborating with partners can also causeosts of coordination, compromise, and inexibility (Das). The effect of SCC on collaborative advantage andmance is a multi-faceted and intricate issue, whichire a contingency perspective (Sousa and Voss, 2008).there are many other factors that might impact rme including environmental or contextual variables such(Frohlich and Westbrook, 2001; Hendricks and Singhal,se et al., 2007; Deveraj et al., 2007; Danese, 2007;07; Johnson et al., 2007; Ramaswami et al., 2009;8; Heim and Peng, 2008). Firm size can be repre-he number of employees, e.g., small less than 250,between 250 and 500, and large greater than 500al., 2007). Firms with different sizes might have dif-ly chain collaborative efforts, achieve different levelstive advantage and benets, and thus attain differentperformance. Thus, this study hypothesizes that rm

oderate the relationships proposed in the framework.,

4a. Firmsizemoderates the relationshipbetweenSCCrative advantage.

4b. Firm size moderates the relationship betweene advantage and rm performance.

4c. Firm sizemoderates the relationship between SCCrformance.

ent development

elopment of instruments for supply chain collabora-llaborative advantage was carried out in three steps:neration, (2) structured interview and Q-sort, and (3)analysis. First, to ensure the content validity of the con-xtensive literature reviewwasconducted todeneeachnd generate the initial items for measuring the con-n, a structured interview and Q-sort were conductedpreliminary assessment of the reliability and validity

s. The third step was a large-scale survey to validate thes.

SegarsconstrA for lcompifor sevwere dA 5-pomanagdisagre

4.2. St

Afteitems wferentof thethe rethe wosortouBaseditemsnecessmentsthat bothe totratio) iical caCohenagreemresultsitemswand indThe puback frquestio

4.3. Sa

Supon thethe theized totheir prelatio

Theexperiwere Cthe maa senioresponFurnitu30), FaEquipmTranspProduc

AnCouncprestigmanagis specnd industrial experts. Themeasurement items for a scaleer the content domain of a construct (Churchill, 1979;Grover, 1998). To generate measurement items for eachrior research was extensively reviewed (see Appendixure citations) and an initial list of potential items wasut of the extensive literature, 42 items were created

omponents of supply chain collaboration and 20 itemsoped for ve components of collaborative advantage.ikert scale was used to indicate the extent to whichgree or disagreewith each statementwhere 1= strongly=disagree, 3 =neutral, 4 = agree, and 5= strongly agree.

red interview and Q-sort

measurement itemswere created, the commonpool ofreviewed and evaluated by practitioners from four dif-facturing rms to pre-assess the reliability and validity

s. First, structured interviews were conducted to checkce and clarity of each sub-constructs denition andg of question items. Then, interviewees were asked toquestionnaire items intocorrespondingsub-constructs.e feedback from the experts, redundant and ambiguouseliminated or modied. New items were added whenhree Q-sortmeasureswere used to evaluate the instru-r-judge raw agreement score is the number of itemsdges agree to place into a certain category divided bymber of items. Second, item placement ratio (i.e., hit

ms that are correctly sorted into the intended theoret-y divided by twice the total number of items. Third,pa is the proportion of joint judgments where there is

after chance agreement is excluded. The detailed Q-sortavailable from the authors. After two rounds of Q-sort,distributed to sixacademicianswhoreviewedeach itemed to keep, drop, modify, or add items to the constructs.e was to further rene the items. Based on the feed-he reviewers, items were further modied. Overall, 59ire items were sent out for a large-scale survey.

ng design and large-scale data collection

hain collaboration and collaborative advantage focusrelationship between supply chain partners. Therefore,ical constructs identied in this study are conceptual-y the dyadic relationship between manufacturers andry/key suppliers. The unit of analysis is thus the dyadic, viewed from a focal manufacturers perspective.ple respondents were expected to have knowledge orin supply chain management. The target respondentspresidents, vice presidents, directors, or managers incturing rms across the U.S. We focused the survey onnager per company as the key informant. The samples were expected to cover the following seven SIC codes:nd Fixtures (SIC 25), Rubber and Plastic Products (SICted Metal Products (SIC 34), Industrial Machinery and(SIC 35), Electric and Electronic Equipment (SIC 36),ion Equipment (SIC 37), and Instruments and RelatedIC 38).l list of 5000 target respondents were purchased fromSupply Chain Management Professionals (CSCMP), aassociation of professionals in the area of supply chainnt, and lead411.com, a professional list company whiched at providing executive level email lists. The sam-

M. Cao, Q. Zhang / Journal of Operations Management 29 (2011) 163180 169

Table 1Demographic data for the respondents (211 responses).

Variables Totalresponses

First-wavefrequency

Second/thirdwave frequency

Chi-squaretest

SIC25 8 4 4 2 = 10.00

df =7p=0.17

30 9 4 534 40 25 1535 30 23 736 67 43 2437 29 21 838 23 15 8Others 5 4 1

Firm size150 10 7 3 2 = 4.71

df =5p=0.45

51100 16 12 4101250 38 27 11251500 58 34 245011000 14 8 61001+ 75 51 24

Job titleCEO/President 54 36 18 2 = 4.73

df =4p=0.32

Vice President 99 62 37Manager 27 20 7Director 23 17 6Others 8 4 4

ple of 5000 respondents was randomly generated from their largedatabases with the specied SIC codes and job titles. A Web sur-vey was conducted to reach as many respondents as possible andretrieve as much information as possible in short time. Excludingmultiple names from the same organization, undelivered emails,and returned emails saying that target respondents were no longerwith the company, the actual mailing list contained 3538 names.

To improve the response rate, three waves of emails were sentonce a week. Out of the 227 responses received (16 incomplete),211 are usable resulting in a response rate of 6.0%. Character-istics of the respondents appear in Table 1. A chi-square test isconducted to check non-response bias (see Table 1). The resultsshow that there is no signicant difference between the rst-waveand second/third-wave respondents by all three categories (i.e., SICcode, rm size, and job title) at the level of 0.1. It exhibits thatreceived questionnaires from respondents represent an unbiasedsample.

4.4. Common method variance

The data were collected from a single respondent per rm, socommon method bias may be a problem (Podsakoff et al., 2003).Analysis of Harmons single-factor test of common method bias(Podsakoff et al., 2003; Harman, 1967) revealed 10 factors withEigenvalues above 1, explaining 74.9% total variance. The rst fac-tor explained 35.8% of the variance, which is not the majority ofthe total variance. As a second test of common method bias, conr-matory factor analysiswas applied toHarmans single-factormodel(Sanchez andBrock, 1996; Flynnet al., 2010). Themodels t indicesof 2/df = 7.8, NNFI =0.49, CFI = 0.51, and RMSEA=0.18 were signif-icantly worse than those of the measurement model. This suggeststhat a single factor is not acceptable, thus the commonmethod biasis small. To further assess common method bias, a measurementmodel having only the traits and one including a method factor inaddition to the traits was tested (Widaman, 1985; Williams et al.,1989; Podsakoff et al., 2003; Paulraj et al., 2008; Flynn et al., 2010).The results indicated that the method factor, accounting for 8% ofthe total variance, marginally improved the model t indices (NNFIby 0.01 and CFI by 0.02). Also, the item loadings for their factors arestill signicant in spite of the inclusion of amethod factor. Based on

Table 2Conrmatory factor analysis results for supply chain collaboration.

Items

SCIS2SCIS3SCIS4SCIS5SCGC1SCGC2SCGC3SCGC4SCDS1SCDS2SCDS3SCDS4SCIA1SCIA2SCIA4SCIA5SCRS1SCRS3SCRS4SCRS5SCCM1SCCM2SCCM3SCCM4SCCM5SCKC1SCKC2SCKC3SCKC4SCKC5AVEc(reliability)Informationsharing

Goalcongruence

Decision syn-chronization

Incentivealignment

0.86 ()0.79 (12.64)0.75 (12.63)0.70 (11.50)

0.86 ()0.77 (10.12)

0.75 (12.63)0.78 (13.29)

0.77 ()0.75 (11.20)0.70 (10.35)0.70 (10.25)

0.73 ()0.80 (11.57)0.74 (10.60)0.75 (10.83)

0.60 0.63 0.55 0.580.86 0.87 0.83 0.84Resourcesharing

Collaborativecommunication

Joint knowledgecreation

0.73 ()0.81 (11.16)0.78 (10.78)0.81 (11.24)

0.88 ()0.88 (18.10)0.70 (11.97)0.78 (14.35)0.73 (12.80)

0.90 ()0.87 (18.27)0.81 (15.75)0.75 (13.83)0.76 (13.91)

0.61 0.64 0.670.86 0.90 0.91

170 M. Cao, Q. Zhang / Journal of Operations Management 29 (2011) 163180

Table

3Pa

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com

par

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of

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forsu

pply

chai

nco

llab

orat

ion.

Con

stru

ctSC

ISSC

GC

SCDS

SCIA

SCRS

SCCM

Free

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Free

Fix

Dif.

Free

Fix

Dif.

Free

Fix

Dif.

Free

Fix

Dif.

Free

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Dif.

SCGC

37.6

541

.89

4.24

b

SCDS

65.4

774

.11

8.64

a20

.29

26.7

16.42

b

SCIA

23.6

530

.80

7.15

a64

.29

76.0

211

.73a

59.7

866

.64

6.86

a

SCRS

24.9

432

.41

7.47

a49

.10

61.5

912

.49a

40.8

551

.41

10.56a

43.7

353

.47

9.74

a

SCCM

47.1

553

.20

6.05

b48

.91

53.9

55.04

b78

.38

87.9

79.59

a68

.25

75.4

67.21

a43

.51

51.8

08.29

a

SCKC

51.9

156

.78

4.87

b49

.36

55.8

66.50

b43

.85

50.7

46.89

a31

.19

36.2

95.10

b39

.49

49.9

010

.41a

51.4

357

.09

5.66

b

aSi

gni

cantat

p