SUPPLY CHAIN MANAGEMENT: DISCOVERIES ON HOW MANAGERS MANAGE AND THE CONDITIONS TO COLLABORATION

Abstract

This paper studies managerial behavior in inter-firm supply chain relationships. I first answer two questions: When a firm outsources to a 3PL, a firm that provide multiple logistics services for use by customers, what is the impact on the managerial functions that the outsourcing firm carries out on an ongoing basis? How do the managerial functions impact the relationship of managerial competence on supply chain performance? These questions are answered via the examination of a sample of companies operating in the US and international markets who purchase services from 3PL providers. I find that the ongoing management of outsourcing partially mediates the relationship of managerial competence on supply chain performance. The higher the managerial competence, the less time spent managing established outsourcing relationships. This negative association holds, whether the firm does or does not employ the services of a 4PL, a firm that organizes 3rd party logistics providers. This study also finds that of the managerial functions of planning, coordinating, leading, educating, and monitoring, that only monitoring is significant with respect to managerial competence levels. Managerial units with moderate or high competence levels are about two times as likely to monitor their relationships with their 3PL providers, as managerial units with lower competence levels. Supply chain managers concentrate their monitoring efforts on client/provider relationships, based upon their view of these relationships. The managerial units with moderate or high competence levels are two times as likely to monitor when they have a least favorable view, as opposed to when they have a moderate or more favorable view. The supply chain managers who measure lower in competence make no such adjustment in time spent monitoring their client's performance, regardless of their view of the client/provider relationships. The findings just discussed spurred two additional studies in which I explore and test the importance of trust in collaborative supply chain relationships (CSCRs). The first is done via 19 semi-structured interviews with supply chain managers, while the second utilizes 50 surveys. Particular attention was paid to assessing only those managers in collaborative, as opposed to arms-length relationships. From the results of the interviews I provide a taxonomy for understanding trust signals in new CSCRs. I also obtain a number of thick descriptions for understanding what constitutes psychological contract breach (PCB), the operational and relational expectations of the customer in the collaboration, and a contemporary view of the goals of supply chain collaboration. These results were incorporated into the scales utilized in the survey research and have been validated. In each of the two studies, I carry out hypothesis testing, which reveals that initial trust is important to decrease feelings of psychological contract breach, whether the respondent is the customer or the supplier to the relationship. However, in one case PCB is felt more strongly when the respondent speaks of his collaborative supplier for all levels of initial trust. In the other, it is felt more strongly in reference to the customer, given higher levels of initial trust. Once PCB has occurred, meeting operational expectations alone is not sufficient to instill feelings of goal achievement; meeting relational expectations is also required. Continuing on with PCB, I find that its magnitude and established trust are important factors in the extension of continued trust and future collaborative intentions. For all magnitudes of PCB, the higher the established trust, the higher the subsequent trust up to a tipping point, at which point trust diminishes. Intentions to remain in the collaborative relationship, additionally, are subject to a tipping point. Last but not least, I establish an association between the importance of trust and the just distribution of rewards. By examining the payoff structures of actual supply chain collaborations, however, I find that rewards are not always shared equally. My research makes a unique internally-focused contribution to the literature. It looks at a firm's supply chain managerial unit as a driver of firm performance in outsourcing relationships. Additionally, it looks at the process the managerial units goes through in extending initial trust to a collaborative partner, how it moves beyond any psychological contract breaches that might occur, and the rewards the collaborative partner receives as an outcome of the collaborative effort.