Antecedents of supply chain relationships between MNC's and SME's in agile environment.

In a constantly changing global competitive environment, an organisation’s supply chain relationship directly impacts its ability to produce, and deliver innovative products to their customers in a timely and cost effective manner. The emerging area of supply chain relationship has received considerable attention in the academic and managerial press, yet there are many unanswered questions regarding the dynamics of such relationships. While the beneficial impact of supply chain relationship is generally acknowledged, very little research exists to date addressing what constitute supply chain relationship success in agile environment. A number of such fundamental issues drive this research initiative, including what are the antecedents of supply chain relationships between multinational companies (MNCs) and small and medium enterprises (SMEs) in Malaysian electrical and electronics industry. <br><br>The study begins by establishing the definition of supply chain relationship, based on a comparison of both theoretical and managerial descriptions. The critical antecedents associated with the supply chain relationships were developed, and the magnitude of the effect of these constructs on relationships between MNCs and SMEs in agile environment is assessed. Three critical antecedents of supply chain relationships which are; partner’s characteristics capability, alliance management capability and process capability, were established from resource-based and extended resource-based theories. This study presents a framework of an organisation’s resources and capabilities as an important antecedent of supply chain relationships. <br><br>Using extensive literature reviews and empirical data, measurement scales of partner’s characteristics capability, alliance management capability and process capability were developed to relate the supply chain relationships model. The model was then tested using confirmatory factor analysis, structural equation modelling and multigroup analysis. The analysis employs quantitative data, collected through drop-and-collect method to 300 MNCs and SMEs respectively, in order to avoid low response rate. <br><br>Findings reveal that in Malaysian agile environment, partner’s characteristics capability, alliance management capability and process capability directly and positively impacted supply chain agility practices in the dyad. The results also support the view that supply chain agility practices are impacted by the synergy among the three antecedents of supply chain relationships. The following attributes of organisations were found to be significantly related to partnership success in agile environment: innovation capability, information technology capability, process flexibility proficiency, partner compatibility, resources complementarities, cooperation and conflict management. The implications of these results for theoretical and managerial decision making in developing mutually beneficial supply chain relationship in agile environment are discussed.<br>