strategic supply chain factors influencing agribusiness innovation utilization

Strategic supplychain management factorsinfluencing agribusinessinnovation utilization

Maree StorerUQ Business School, Faculty of Business Economics & Law,

University of Queensland, Brisbane, Australia

Paul HylandSchool of Management, Faculty of Business,

Queensland Institute of Technology, Brisbane, Australia

Mario FerrerBusiness Faculty – Operations Management, Alfaisal University,

Riyadh, Saudia Arabia

Ricardo SantaBusiness Faculty – Production and Operations Management,

Alfaisal University, Riyadh, Saudi Arabia, and

Andrew GriffithsUQ Business School, Faculty of Business Economics & Law,

University of Queensland, Brisbane, Australia

Abstract

Purpose – The purpose of this paper is to examine empirically, an industry development paradox,using embryonic literature in the area of strategic supply chain management, together withinnovation management literature. This study seeks to understand how, forming strategic supplychain relationships, and developing strategic supply chain capability, influences beneficialsupply chain outcomes expected from utilizing industry-led innovation, in the form of electronicbusiness solutions using the internet, in the Australian beef industry. Findings should add valuableinsights to both academics and practitioners in the fields of supply chain innovation management andstrategic supply chain management, and expand knowledge to current literature.Design/methodology/approach – This is a quantitative study comparing innovative andnon-innovative supply chain operatives in the Australian beef industry, through factor analysis andstructural equation modeling using PAWS Statistical V18 and AMOS V18 to analyze survey data from412 respondents from the Australian beef supply chain.Findings – Key findings are that both innovative and non-innovative supply chain operators attributesupply chain synchronization as only a minor indicator of strategic supply chain capability, contrary to theliterature; and they also indicate strategic supply chain capability has a minor influence in achievingbeneficial outcomes from utilizing industry-led innovation. These results suggest a lack of coordinationbetween supply chain operatives in the industry. They also suggest a lack of understanding of the benefitsof developing a strategic supply chain management competence, particularly in relation to innovationagendas, and provides valuable insights as to why an industry paradox exists in terms of the level ofinvestment in industry-led innovation, vs the level of corresponding benefit achieved.

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0957-4093.htm

Received 28 February 2013Revised 27 December 2013

Accepted 5 March 2014

The International Journal of Logistics

Management

Vol. 25 No. 3, 2014

pp. 487-521

r Emerald Group Publishing Limited

0957-4093

DOI 10.1108/IJLM-02-2013-0026

Acknowledgment is given to the Cooperative Research Centre for Beef Genetic Technologies(CRCBeef) which provided the Doctoral Scholarship that enabled this research to be undertaken.

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Research limitations/implications – Results are not generalized due to the single agribusinessindustry studied and the single research method employed. However, this provides opportunity forfurther agribusiness studies in this area and also studies using alternate methods, such as qualitative,in-depth analysis of these factors and their relationships, which may confirm results or producedifferent results. Further, this study empirically extends existing theoretical contributions and insightsinto the roles of strategic supply chain management and innovation management in improving supplychain and ultimately industry performance while providing practical insights to supply chainpractitioners in this and other similar agribusiness industries.Practical implications – These findings confirm results from a 2007 research (Ketchen et al., 2007)which suggests supply chain practice and teachings need to take a strategic direction in the twenty-first century. To date, competence in supply chain management has built up from functional andprocess orientations rather than from a strategic perspective. This study confirms that there is a needfor more generalists that can integrate with various disciplines, particularly those who can understandand implement strategic supply chain management.Social implications – Possible social implications accrue through the development of responsiblegovernment policy in terms of industry supply chains. Strategic supply chain management and supplychain innovation management have impacts to the social fabric of nations through the sustainability oftheir industries, especially agribusiness industries which deal with food safety and security. If supplychains are now the competitive weapon of nations then funding innovation and managing their supplychain competitiveness in global markets requires a strategic approach from everyone, not just theindustry participants.Originality/value – This is original empirical research, seeking to add value to embryonic andimportant developing literature concerned with adopting a strategic approach to supply chainmanagement. It also seeks to add to existing literature in the area of innovation management,particularly through greater understanding of the implications of nations developing industry-wide,industry-led innovation agendas, and their ramifications to industry supply chains.

Keywords Innovation utilization, Strategic supply chain capability,Strategic supply chain relationships

Paper type Research paper

IntroductionTraditional agribusiness industries such as the Australian beef industry are someof the most competitive industries in the world (MLA, 2012). Yet there is littleunderstanding of the supply chain’s role in the competitiveness and sustainability ofthis industry. Although some argue that the supply chain is now the arena forcompetition for global industries (Ketchen and Hult, 2007a, b), if this is the case thensupply chains need to take a strategic approach toward relationship and capabilitybuilding if they are to remain competitive in what is now a dynamic global market(Ketchen and Guinipero, 2004; Ketchen and Hult, 2007a). Beef industry supply chainsare comprised of a diverse group of intra- and inter-organizational relationships thatmove goods from paddock to plate through varying levels of coordination, cooperationand collaboration, utilizing a range of supply chain capabilities. One of the key driversof the competitive advantage for this supply chain globally is the constant source ofindustry-led innovation available to it, co-funded by the national government andindustry levies on the sale and slaughter of cattle. However, research has shown thatthe benefits of these innovations are not always equally dispersed throughout theindustry or its supply chains (Moreland and Hyland, 2010).

Taking this view the objective of this research is to explore the existence of strategicsupply chain capability and its influence on competitive outcomes in the Australianbeef supply chain through utilizing industry-led electronic business (e-business)technology innovation using the internet. This research seeks to extend previousstudies in the areas of strategic supply chain management by Ketchen et al. (2007) and

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strategic supply chain capability (Hult et al., 2002, 2008) to develop a framework, whichin part explains some of the relationships between strategic supply chain capabilities,relationships and utilizing industry-led innovation. This study combines a resource-based view (RBV) of the firm (Barney, 1991a) and the supply chain (Crook et al., 2008),with the relational view of the supply chain (Dyer and Singh, 1998), and the views frominnovation management (Adams et al., 2006) to expand the literature relating to astrategic approach to supply chain innovation management, through aninterdisciplinary empirical study at an industry supply chain level. In this researchwe examine the influence strategic relationships and strategic capability can have onutilizing e-business technology innovations to meet the competitive priorities of theAustralian beef industry, through its supply chain performance, in dynamic consumermarkets (Black and Boal, 1994; Godfrey and Hill, 1995). We survey innovative andnon-innovative beef supply chain operatives on their preparedness to engage inindustry-led innovation for competitive supply chain outcomes through theexploitation of sophisticated internet-based electronic business systems (EBS) tostreamline supply chain transactions, communications and engagements generally.Data from 202 innovative supply chain operatives and 212 non-innovative operativeswere gathered and analyzed using PASW Statistics V18 and AMOS V18. This researchaddresses the research question:

RQ1. How do strategic supply chain relationships influence supply chain performanceoutcomes, through strategic supply chain capability and utilizing industry-ledelectronic business innovation, in innovative firms in the Australian beef industry?

Although results of the study are limited to the Australian beef industry they doprovide lessons for other traditional agricultural sectors, where innovation has beenmainly industry led, and for supply chain researchers examining the role of supplychains in the utilization and adoption of innovations, and the issue of intangiblestrategic supply chain resources, such as strategic supply chain capability. The followingsection provides an explanation of the research setting both in terms of offering definitionsand a better understanding of the context of the research. Subsequent sections provide theresearch methodology, results and discussion, leading to a discussion and conclusion thatincludes ideas for future research.

Research contextThe Australian beef supply chain is a good example of a global agribusiness supply chain.They consist of multiple individual supply chain operatives, geographically dispersed anddemographically diverse. The supply chain can include research and development,breeding operations, professional services, grow-out operations, first-phase processing,secondary manufacturing, logistics which includes live animal transport, feedstocktransport, dry-goods transport, cold-chain transport, warehousing, and distribution,wholesaling, food-service, retail, export and ultimately the consumers. Most suppliers aredriven by both domestic and global competition by high volume/low margin bulkconsumer product development, unpredictable natural environments, fluctuating foreignand domestic currency markets and lessening availability to relevant human capital andcapability, conditions that ensure there is a constant pressure on performance and profittaking (Bowersox, 1990). These market conditions often lead to supply chain opportunisticbehavior, with individual firms pursuing their own goals (Eliashberg and Michie, 1984),rather than taking an industry or supply chain perspective. These industries constantly

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seek cost efficiencies while still attempting to meet what can only be described as dynamiccustomer demand across local and global markets (RMCIC, 2010). Particularly, as foodproducts, such as meat, have many substitutes, consumer eating trends wax and waneand other threats affect the industry into twenty-first century (Bell et al., 2011). Theliterature notes this process can often leave supply chain relationships in a tenuous state(Simatupang and Sridharan, 2005b), and supply chains appear conditioned to resist anyimpetus to change or utilize many of the industry-led innovations (Moreland and Hyland,2010). Particularly innovation involving enabling technologies such as internet-basedadvanced EBS (Gregor and Jones, 1999; Storer and Hyland, 2011) that underpin electronictracking of live animals from paddock to plate, electronic communication and electroniccommerce strategies (Trevarthan, 2006). Factors also influencing these industries andmaintaining a competitive edge through innovation utilization may be a lack of strategicfocus on relationships, cooperation and capability in the supply chain which is oftenrequired to implement such systems across an entire industry.

Theoretical background and hypothesis developmentAccording to Drucker (1985), innovation can be generally defined as the processof equipping organizations with new, improved capabilities or increased utility.Supply chain innovation often involves collaborative and partnering relationships,particularly in terms of utilizing industry-led and industry-wide innovation, consideredmutually beneficial, such as new technologies and information systems (Smith et al.,1996). Developing a supply chain’s competitive edge through the utilization ofinnovations often involves pooling together capabilities and resources that reconfigure,adapt and coordinate supply chain offerings in new and more satisfying ways forcustomers, thus creating flexibility and efficiencies in supply chain operations(Storer and Hyland, 2011). By combining tangible and intangible resources, the supplychain ensures both customers and suppliers share some of the costs, risks and benefitsassociated with innovating (Ketchen and Hult, 2007a), particularly when new orimproved products, processes and systems are developed as strategies to meetchanging market demand (Hult et al., 2007). Supply chains seeking to improveoutcomes from innovating need to possess the ability to adopt and implement theinnovation across key supply chain operatives and customers. When utilizingindustry-led innovation, supply chains such as the Australian beef supply chain needto be prepared to adapt and change if they are seeking better performance and greaterlevels of supply chain and industry competitive advantage.

Although some industry supply chains have moved to a more integrated approach,such as the automotive, aeronautic and pharmaceutical supply chains, in agribusinesssupply chain operatives appear to be taking the path of least resistance and focussingonly on daily market specifications, and appearing to innovate individually ratherthan at an industry level to optimize supply chain profitability and sustainability. Thisbehavior may suggest conflicting interests within this supply chain with relationshipsprimarily modeled on one-off transactional relationships, rather than cooperative orcollaborative supply chain models (Sabath and Fontanella, 2002) and may be reflectedwith the recent horsemeat substitution scandal in the UK where horsemeat wassubstituted and sold as cow meat in the UK beef supply chain.

In order to extend understanding of this phenomena more clearly, this researchseeks to examine how different supply chain relationships types, and certain strategicsupply chain capabilities, impact supply chain operatives exploiting industry-ledinnovation, specifically sophisticated internet–based EBS, which are proposed to

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improve supply chain and industry performance, and in the context of a specificagribusiness industry – the Australian beef industry supply chain. The literatureunderpinning this study is based in the strategy field. As Dyer and Singh (1998) pointout many scholars in this field are concerned fundamentally with explainingdifferential performance (Rumelt et al., 1991), either at the firm level or, as is thecase in this research, at the supply chain level. Two key areas utilized assist to examinefactors at both the organization and supply chain level and in terms of industrycompetitiveness – the resource based view of the firm or RBV (Barney, 1996) and thesupply chain (Ketchen et al., 2007), and the relational view (Crook and Combs, 2007)which looks at inter-firm relationships.

RBV examines firm capability in terms of obtaining and/or exploiting strategicresources to leverage a competitive advantage in the market. These abilities are viewedas strategic resources (Crook et al., 2008) and include tangible and intangible assetsthat are organizationally activated, rare, valuable and difficult to imitate or substitute(Barney, 1991b; Wernerfelt, 1984). Tangible assets are those resources that are physicaland easily transferred, whereas intangible assets are tacit and difficult to define andtransfer (Barney, 1991b; Villalonga, 2004) and are considered the most valuable inrelation to achieving a competitive advantage. Conversely, the relational view takesinto consideration the inter-firm resources (which are also tangible and intangible) thatare strategic and provide competitive advantage because their combinations are rare,valuable and also difficult to imitate or substitute (Dyer and Singh, 1998). Drawing onboth the RBVand relational view literature, we argue it is possible to gain supply chaincompetitive advantage through the unique combinations of reactive and proactivecapabilities that result from varying levels of coordination and cooperation within asupply chain. These strategic capabilities tend to be unique to a supply chain at anypoint in time. Figure 1 generally guides this exploratory, empirical study, and thedevelopment of hypotheses to be tested, to address the central research questionpreviously identified.

Strategic supply chain capability in an agribusiness settingStrategic supply chain capability for the purpose of this research describes higher-order supply chain resources (Godfrey and Hill, 1995), defined as capabilities havingthe capacity to influence important supply chain and industry outcomes, by default,over and above the normal course of business (Hult et al., 2002). Strategic supply chaincapabilities can incorporate capabilities such as integrated information exchange,systems-level coordination, inter-firm activity integration and supply chainresponsiveness (Wu et al., 2006). They can also include strategic and competitive

Strategic

Agribusiness

Supply Chain

Relationships

This model tests responses from innovative vs

non-innovative supply chain operatives

Strategic

Agribusiness

Supply Chain

Capability

Industry-led

Agribusiness

Innovation

Utilization

Supply Chain /

Industry Outcomes

Figure 1.Proposed research

framework

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capabilities such as organizational resource bundling, reconfiguration andsynchronization capabilities within the supply chain (Black and Boal, 1994; Teece et al.,1997). These strategic capabilities are not always evident within all chain operatives (Hultet al., 2008) and can vary across operatives. In this research we describe and differentiatebetween two types of strategic supply chain capabilities mentioned in the literature:reactive (immediate and instantaneous) capabilities, such as supply chain dynamiccapabilities – indicated in the literature by the ability of the supply chain to reconfigureand adapt to changing market conditions (Ketchen and Hult, 2007a); and performancedifferential capabilities indicated by the supply chain’s ability to control supply chainissues and manage complexity (Storer and Hyland, 2011); vs synchronization capability(Hahn et al., 2000) and innovation utilization capability (Storer and Hyland, 2011), whichwe describe as proactive (constant and gradual) capabilities, and indicated by a supplychain’s ability to coordinate soft and hard infrastructure for the competitiveness of thesupply chain at any given time.

Reconfiguration and adaptability – supply chain dynamic capabilityUtilizing and implementing industry-initiated innovation at firm and the inter-firmlevels of a supply chain often triggers reconfigurations within that supply chain.Reconfiguration is often reactive and is considered a dynamic capability describing theprocess of changing existing configurations of resources into new ones that matchthe changing environment (Menon, 2008). Menon (2008) argues that reconfiguration asa capability has been connected to the appropriateness (Galunic and Rodan, 1998),timeliness (Zott, 2003) and efficiency (Kogut and Zander, 1992) by which existingresources are re-shaped by business and supply chain operatives into new operationalcompetencies. Complementary to this process, especially in changing markets, supplychains that are innovating also need to be able to adapt to the changes such innovationcan cause to its members. Adaptability, another dynamic capability, enables supplychain operatives to reshape business practices in a new direction for the supply chain,which may have reconfigured through innovation episodes in response to changingmarket pressures. Adaptability involves supply chain operatives sensing, or learning,what is required to meet new or changing consumer trends or market demands,particularly in relation to the rising level of sophistication required in the informationsystems that inform these shifts and trends (Lee, 2004; Ketchen and Hult, 2007a).

Complexity and control – supply chain performance differential capabilityAdding to these reactive strategic supply chain capabilities are those that characterizeperformance differentials or discrepancies within a supply chain (Storer and Hyland,2011). These capabilities relate to how, individually and collectively, supply chainoperators gain strategic and competitive advantage from their unique ability tomanage the complexities of supply chain relationships and activities, and controlrespective outputs, for the competitive benefit of all supply chain participants. This isespecially relevant during phases of dynamic change that are the result of utilizinginnovations throughout the supply chain. Supply chain complexity stems from theintra- and inter-organizational transactions within the supply chain, and the layers ofinfrastructure and systems interacting during any given transaction, as well aspotential goal incompatibilities (Lee et al., 2010). For the Australian beef supplychain, complexity varies in terms of business activities, innovation capacity and thegeographical dispersion of chain participants. For example, large numbers of supplychain participants operate in remote areas of Australia. Additionally, there is industry

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divergence where moderately dynamic (Eisenhardt and Martin, 2000) activities relate tothe processing of commodity beef cuts for domestic and global consumption. Whileextremely complex, high velocity (Eisenhardt and Martin, 2000) activities relate toprocessing by-products from the first process and value-adding into by-products, co-products and derivative beef products for domestic and global customers. Complexity mayalso reside in the incompatibility of information, technology and communications (ICT)systems (Devaraj et al., 2007). Simple issues such as inadequate online bandwidth andtelephone infrastructure, typical in more remote production areas, or the lack ofsynchronization of ICT systems with other supply chain operatives can cause thisincompatibility (Lee et al., 2010). Therefore, achieving competitive advantage throughindividually and collectively managing varying degrees of complexity within the supplychain closely relates to the level of control within and between supply chain operators.

Often there are differing degrees of control exerted by supply chain operators withina supply chain at any point in time. However, controlling supply chain relationshipsand processes, and managing complexities within the supply chain for the competitivebenefit of the entire chain is very important. This is especially the case when thesupply chain is attempting to utilize innovation such as new industry-wide electronicbusiness solutions through the internet (Krause et al., 2007; Devaraj et al., 2007; Sabathand Fontanella, 2002). Control is also often associated with “power” in terms of supplychain literature (Cox, 1999) and managing complexity, both in terms of the innovationprocess (Chapman and Hyland, 2004) and supply chain management. Control ensuresthe supply chain sustains and maintains its ability to appropriate and accumulatevalue for all its participants, through flexibility in design and by processinginformation accurately and efficiently (Cox, 1997). As discussed, control and managingcomplexity are not confined within the legal boundaries of a single supply chainfirm (Newman et al., 2009) and often differentiate the supply chain to competition,particularly through their associated roles in increasing or decreasing costs and theirappropriation within the chain, and in coordinating and synchronizing supply chainactivities (Hopwood, 1996). In the Australian beef industry degrees of control mayfluctuate due to the size of the supply chain operative (Cohen and Klepper, 1996;Nieto and Santamaria, 2010). Differences in scale reside between the domain of themulti-national and large-scale national operators and the micro/smaller operators,together with fluctuating capability and differentiated access to strategic industryresources. Once a supply chain has significantly altered through reconfiguration andadapting to market forces varying degrees of control are required to manage thecomplexities so that the supply chain remains synchronized.

Coordination and alignment – supply chain synchronization capabilityCoordinating the supply chain ensures supply chain members behave as a part of aunified and aligned system that delivers an end product or service to its ultimateconsumer (Arshinder et al., 2011). Alignment, a factor in coordinating supply chains,describes the linear or consistent fit between systems, processes and activitiesoccurring between operatives, and often involves organizing supply chain incentives insuch a way that they fit the requirements of the whole supply chain (Ketchen and Hult,2007a). Supply chain synchronization capability describes how supply chain operatorsproactively coordinate, align, and realign supply chain relationships and activities tomeet dynamic and new market direction (Hahn et al., 2000; Kambil, 2008). Thissynchronization is necessary to ensure maximum efficiencies and effectiveness withinthe supply chain continues to occur through coupling, decoupling, and recoupling of

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suppliers is maintained at all times. In other words, maintaining coordination andalignment on a daily basis determines how well supply chains maintain unanimousdecision making, constant and transparent information sharing and equilibrium inincentive sharing (Simatupang and Sridharan, 2005a). Ensuring supply chainsynchronization is a strategic skill between supply chain operators that enables themto moderate, between lesser and higher degrees, the sharing of systems, processes,activities and relationships, in order to achieve greater supply chain efficiencies andquality controls on a daily basis to generate superior returns (Powell, 1992) throughnew synergies that meet the demands of customers and suppliers in the face ofcompetition. For the agribusiness industries such as the Australian beef industry, theintroduction of advanced electronic business solutions using the internet could bedisruptive if the supply chain lacks synchronization, and any advantage from use ofthese solutions could be lost as a competitive advantage in global markets. Therefore,we propose the following hypothesis to direct this area of the research:

H1. Strategic agribusiness supply chain capabilities in innovative firmspositively influence utilizing industry-led electronic business innovationthrough performance outcomes in the supply chain.

Strategic agribusiness supply chain relationships – One-off vs cooperativeSupply chain relationships involve groups of supply chain operatives enteringinto formal or informal business agreements at specified points in time to securesupply and demand in order to meet consumer expectations (Lambert and Knemeyer,2006). However, not all supply chain relationships are strategic. This research arguesthat strategic supply chain relationships are those combinations of purposiverelationships that engender innovation capacity and drive the supply chain’scompetitive advantage. These supply chain relationships involve specific levels ofcoordinated one-off transaction relationships and various levels of cooperativerelationships. To understand these interactions better this research explored thevarious levels of cooperation and coordination that exist between various supply chainoperatives as presented in Figure 2.

The exchange mechanisms outlined in Figure 2 suggest supply chain relationshipscan be transactional and one-off, or can be more cooperative and developed throughvarying degrees of collaborating (partnering). These varying levels of relationalcapability refer to the strategic intent by supply chain operatives to determine theintensity and formality of sharing and integration, which will exist between varioussupply chain operatives. We suggest that both one-off transaction and varying levels ofcooperation within a supply chain are strategic relational states.

One-off supply chain relationshipsOne-off relationships are dynamic transactional relationships that require constantcoordination, varying degrees of low-level alignment and integration within the chain.These relationships are not perceived to be long lasting, yet there is a perception thatthese types of relationships provide strategic value through their ability to providesupply chain operatives with a greater level of flexibility (Hulsmann et al., 2008;Wadhwa et al., 2008). This flexibility relates to the ability of supply chains to decoupleexisting supply chain relationships and couple to new supply chain relationships tomeet changing demand conditions in the marketplace. The strategic nature of this typeof supply chain relationship is very competitive, and often this competitive behavior

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becomes more powerful as supply gets closer to the end users of a final product.While supply chain cooperation is encouraged in certain areas of activity, the closersupply gets to the end consumer, often levels of competition increase and cooperationwithin the supply chain diminishes, based on rent-seeking behavior, organizationalcompetencies and research efforts (Lado et al., 1997).

Cooperative relationshipsCooperation and collaboration in supply chain relationships usually invoke varyingdegrees of formal and informal partnerships, which can be dyadic ( Jongkuk and William,2010) or involve broader cooperation between multiple supply chain actors as interestsconverge and they strive to derive mutual benefits and outcomes (Contractor and Lorange,1988). These types of supply chain relationships usually involve medium to high levels ofalignment and varying degrees of integration of systems and processes. They also suggestsupply chain operatives are able to control how they act within the supply chain tostrategically compete at the firm level and at the inter-firm level, yet achieve focussedoutcomes as part of competitive supply chain behavior (Stevenson and Spring, 2007).Cooperative and collaborative supply chain relationships are perceived to provide astrategic value usually associated with high degrees of sharing across processes such asresearch and development activities, innovation activities, developing strategicmanagement initiatives, and designing supply chain functions and systems such asintegrating EBS in order to achieve improved supply chain outcomes. Competitors withina supply chain can also cooperate – a relationship described as coopetition (Brandenburgerand Nalebuff, 1996; Bengtsson and Kock, 2000).

More often than not, developing and utilizing industry-led innovations across asupply chain involves varying degrees of inter-relationship coordination andcooperation and is rarely an isolated process, particularly in the Australian beefindustry (Burgess, 2007). The intrinsic and extrinsic nature of innovation in the supplychain affects both individuals and organizations (Shavinina, 2003), particularlyinnovations that involve market challenges or realign market trajectories (Mangan and

Source: Adapted from Wagner and Boutellier (2002)

Level of strategic intent

to develop supply

chain capabilities

One-Off

Transactional

Relationships

Partnerships and

Collaborations

Large Degrees of Coordination

- based on Cooperation

Minimal Degrees of Coordination

- based on Competition

BU

SIN

ES

S E

XC

HA

NG

E

Discrete

Relational

Supply Chain Relationship Types vs Nature of Business Exchanges

ST

RA

TE

GIC

IN

TE

NT

SUPPLY CHAIN OPERATIONAL INTEGRATION

Long

Term

Short

Term Figure 2.

Degrees of exchangebetween supply chain

relationships

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Christopher, 2005). This often requires strategic redevelopment or realigning of supplychain relationships and capabilities, including much of the physical infrastructure andsystems that go with those relationships. Innovation capacity is a critical tool indeveloping supply chain competitiveness (Ferrer et al., 2008; Storer et al., 2007). In theAustralian beef industry, supply chains which utilize innovation, and particularlyindustry-led innovation, are striving to reduce costs, increase efficiencies andeffectiveness and definitely improve profitability across the industry – not just at theindividual firm level. We argue in this research that both one-off transaction andcooperative relationships can provide strategic capability, although innovationresearchers argue that it is the level of cooperation and collaboration between firmsthat is important to innovation and its utilization (Bessant, 1994). We therefore proposethe following hypothesis to guide this section of the research:

H2. Developing strategic agribusiness supply chain relationships positivelyinfluences strategic supply chain capability in innovative firms.

Innovation utilization capability – agribusiness industry-led innovationSupply chain innovation utilization as a strategic capability can deliver higher-ordersupply chain resources (Godfrey and Hill, 1995) and a capacity to influence importantsupply chain performance outcomes over and above the normal course of business(Hult et al., 2002). Innovation is often described as evolutionary, incorporatingcontinuous and incremental improvement (Utterback, 1986), or revolutionary(Carayannis et al., 2003), incorporating radical or disruptive change (Bessant, 2006),and may not create value every time (Bessant et al., 2005). Further, innovation canbring uncertainty and discontent as participating supply chain organizations,particularly those involved in industry-led innovation, grapple with any changebrought about by the implications of new or improved products, processes or systems.This is particularly relevant to innovation involving internet-based advanced EBSacross a national agribusiness industry and its supply chains, and may require astrategic response involving both proactive and reactive capabilities. Especially insituations that involve excessive distances and high levels of remoteness andruggedness of locations between supply chain operators act as compounding factors.Furthermore, some operatives may lack the relevant expertise to set up electronicinfrastructure, programs and systems, hampered by their limited access to training,being time poor, and not being of sufficient size to afford engaging expert staff (Gregorand Jones, 1999). These factors may result in supply chain performance benefits frominnovating through internet-based EBS being somewhat mixed. This is particularlytrue when challenges of variability in infrastructure and capability continue toundermine the quality and usefulness of such an initiatives and performance measuresare still evolving (Murali et al., 2009).

For the purposes of this research, utilizing industry-led innovation is measuredthrough three supply chain performance outcomes identified in the literature as:financial benefits, operational efficiencies and growth (Trienekens et al., 2012). Thesemeasures also acknowledge that these types of technology innovations have areputation for challenging the functional and operational capacities of some supplychain organizations and causing unreported negative impacts (Storer, 2007). Financialbenefits, as a measure of the effects of industry-led innovation in the supply chain, aregauged in this research by a perceived increase in profits and turnover, and reducedoperating costs (Brewer and Speh, 2000) across the supply chain. Operational efficiency,

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however, relates to perceived more effective use of time, improved efficiencies inbusiness and supply chain operations, and improved overall performance efficienciesthat align with supply chain objectives (Chandra and Kaumar, 2001). Finally, growthfactors have been adapted from literature relating to value-adding and continuedimprovements in the supply chain (Christopher, 2005) through perceived improved andmore frequent contact with customers/distributors/staff, and increased businessopportunities in domestic and global markets. Therefore, we offer the following hypothesisto direct this area of the research:

H3. Developing strategic supply chain relationships positively influences supplychain performance outcomes derived from utilizing industry-led electronicbusiness innovation in innovative firms in the Australian beef industry.

Using confirmatory factor analysis and structural equation modeling (SEM), and theSEM framework in Figure 3 to guide the next phase of this research, these hypothesesare tested against industry data, comparing two models (innovative vs non-innovativesupply chain operatives).

The next section focusses on describing the research methods used in this research.

Research methodsSurvey data collectionThe process for developing the survey instrument, its measurement constructs and the“best fit” model to answer the research questions outlined in this research has beendeveloped using the instrument development process as recommended in Hair et al.(2010). Scale development followed acceptable procedures already set out by Churchill(1979) with each construct clearly defined in terms of what would be included orexcluded. Relevant scales and measures were adopted or adapted from the existingliterature where appropriate, as identified in Table II.

If none were available or appropriate, new measures were developed (Churchill,1979). Initial factor analysis was undertaken using PASW SPSS V18 software to ensure

Model Tests:

IS = Innovative SC Operatives vs

NIS = Non-innovative SC Operatives

Strategic

Agribusiness

Supply Chain

Relationships

1

Cooperative One-Off

11

Strategic

Agribusiness

Supply Chain

Capability

Industry-led

Agribusiness

Innovation

Utilization

Supply Chain Financial

Outcomes

Supply Chain Operational

Efficiency Outcomes

1

Supply Chain Growth

Outcomes

1

1

1

CoordinationControl ReconfigurationComplexity Adaptability

1 1 1 1 1

Z1 1

Z2

1

H1

H2

H3

Figure 3.Structural equation

model (SEM) constructs

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measures and factors achieved reliability through Cronbach a scores. Observedvariables are indicators/measures presented in the survey instrument in Appendix,based on Likert-scaled items ranging from 1 (negative) to 5 (positive) responses. aScores for the scales ranged from 0.79 to 0.93, and factor loadings of items wereacceptable (Dewberry, 2004).

Data for this research were collected through a postal survey instrument sent to2,400 Australian beef industry supply chain participants across various industrycategories representing the majority of activities undertaken by the supply chain. Allmailings, including a cover letter, the survey and a postage paid return envelope weresent via registered mail and within four weeks of the initial mailing, follow-up wasundertaken through telephone calls or e-mails to any respondents who had not replied,as suggested in Dillman’s total design method (Dillman, 1978).

The Non-response bias was checked by comparing early and late respondents(Armstrong and Overton, 1977) using t-tests which revealed there was no significantdifferent on major constructs between the two groups. Therefore it was accepted therewere no significant issues with a non-response bias for this study. This study was alsotested for common method bias using the Harman one-factor test with no dominantfactor emerging, and therefore it was concluded there was no presence of commonmethod bias in the study (Podsakoff and Organ, 1986). From that survey 416 responseswere accepted and represented a response rate of 17.3 percent which is acceptable of asurvey of this nature. Both SPSS V18.0 (SSPS Inc and IBM Company, Chicago, III,USA) and Analysis of Moment Structures (AMOS version 18.0, AMOS DevelopmentCorporation, Spring House, Penn., USA) software programs are used to undertakemultivariate analysis research on this data.

Although not ideal, the data still provides interesting insights into this topic, as thisresponse rate reflects the difficulties of extracting data across a national agribusinesssupply chain, characterized by geographic diversity and compounded by the timeconstraints for conducting such research. Data are compared in two structuralequation models, between 202 supply chain operatives prepared to innovate throughthe use of industry-led e-business systems using the internet, and placed a highimportance on product and breeding innovation (innovative), and 212 supply chainoperatives who rated product and breeding innovation as unimportant or notimportant (non-innovative). This response rate is well within the 100 casesrecommended for undertaking multivariate analysis (Cramer, 2006). A sufficientpower analysis is dependent on the ratio between the total number of variables and thesample size; one observed variable per ten operatives is given as reliable (Hair et al.,2010; Schumacker and Lomax, 1996; Joreskog, 1977). Thus, this sample size isacceptable bearing in mind the geographically and demographically diversified natureof this type of supply chain. Respondents are from production, logistics, processing,wholesaling, retailing, services and upstream manufacturing set out in Figure 4(a), anddrawn from either company owners or senior supply chain/business managers set outin Figure 4(b).

Data analysisTo simplify modeling and ensure “goodness of fit” measures prior to testing themeasurement model a series of composite indicators ( Joreskog, 1971) were developedto avoid some of the inherent modeling issues in modeling large numbers of factors inAMOS (Grace and Bollen, 2008). These composite indicators represent the regressionof the set of observed indicator variables on a single latent variable; in this case,

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IJLM25,3

first-order indicators of strategic supply chain capability: supply chain performancedifferential capability (control and complexity); supply chain dynamic capability(reconfiguration and adaptation) and supply chain synchronization (coordination andalignment); and industry-led innovation utilization (financial benefit, operationalefficiency and growth).

Table I lists composite indicators, tested for their reliability and distribution values,through their standard deviation scores, new factor loadings and measurement errorvariances, using coefficient tables to establish composite Cronbach’s a scores, andfactor score weights.

An SEM was then constructed to examine the relationships between thesethree key latent variables (strategic agribusiness supply chain capability, strategicagribusiness supply chain relationships and utilizing industry-led innovation)measured through their respective indicators. Construct validity was then testedagainst the structural model developed using maximum likelihood estimationprocedure ( Joreskog et al., 1999). SEM confirmed the accuracy of the VariantModel verses the Invariant Model as the “best fit” model for both data sets. Model fitindices are set out in Table II.

The Akaike information criterion (AIC) score was used to test for parsimony andmodel fit using the lowest indicator (Byrne, 1998). The variant model received thelowest AIC score of 176.87 vs 178.70 for the invariant model. Other measures such asthe CMIN/df test for fit, together with some baseline comparison indices such as theincremental or comparative fit through the Tucker-Lewis Index; and the ComparativeFit Index. Model reliability scores all ranged within or over the norm of X0.95 forthese tests. Additionally, confirmation was found through the most important fit index,the root mean square error of approximation (RMSEA) fit index (good modelfit at p0.05 with PCLOSE X0.5), which also takes into account the error ofapproximation in the population (0.02 with a 90 percent confidence interval of 0.01-0.03and a PCLOSE (X0.5) value of 1.00). Discriminate validity relating to the model’sreliability was achieved with the parameters constrained to be the same across twogroups: innovative supply chain operatives (IS) (n¼ 202) to non-innovative supplychain operatives (NIS) (n¼ 210) for both models (Thomas, 1959). The models inFigure 5 represent a comparison of the Variant Model using data from innovative andnon-innovative supply chain operatives.

The following section provides a summary of the results.

30%

10%17%

28%

15%

Production

Live and Cold Chain Logistics and Warehousing

Professional and Other Services

Processing/Manufacturing

Sales

21%

17%62%

Chief Executive Officers

Supply Chain or Procurement Managers

Business Owners/Managing Directors

(a) (b)

Figure 4.(a) Supply chain

participation and (b)respondents

499


Indicators

Conceptdescription

Sampleliterature

Strategicsupplychain

capability

Reconfiguration

Adaptability

Levelofsupply

chain

dynamiccapability–ability

tore-act,to

reconfigure

andadaptsupply

chain

capabilitiesandoperationsin

changingmarket

conditionsandto

changingconsumer

trends

E.g.A

mitandSchoem

aker

(1993),Changetal.(2008),

Danneels(2008),Dyer

andChun(2001),Eisenhardt

andMartin

(2000),Helfat(1997),Jongkukand

William

(2010),Mahoney

(2004),Menon(2008),

StorerandHyland(2011),StorerandHyland(2011),

Teece

etal.(1997),Winter(2003),Zott(2003),Crook

etal.(2008),Hultet

al.(2008),Ketchen

andHult

(2007a),Ketchen

andGuinipero(2004),Ketchen

etal.(2007),Shooket

al.(2009),Wanget

al.(2009)

Control

Complexity

Levelofsupply

chain

perform

ance

differential

capability–abilityto

react,tomaintain

controlwhile

addressingandmanagingcomplexitieswithin

the

supply

chain

inchangingmarket

conditionsandto

changingconsumer

trends

E.g.BeamonandWare

(1998),Christopher

(2000),

Coxet

al.(2001),Craigheadet

al.(2009),DeA

ngelis

(2011),Eisenhardt(1985),FearneandHughes

(1999),

Kotler

(1997),LambertandPohlen(2001),Leiponen

(2008),McM

illanandHamilton(2004),Wanget

al.

(2007)

Coordination

Alignment

Levelofsupply

chain

synchronization–abilityto

be

proactiveandcontinuallycoordinate

andalign

supply

chain

technologies,capabilitiesandactivities

onaday

today

basisto

ensure

seamless

andcost-

effectiveoperationsin

changingmarket

conditions

andto

changingconsumer

trends

E.g.Chandra

andKaumar(2001),deBoeckand

Vandaele(2008),Dekker

(2004),Jansenet

al.(2006),

Omaret

al.(2012),Reuer

andArino(2007),

Sim

atupanget

al.(2002),Stanket

al.,Tan(2002),

Wolfet

al.(2001)

(continued)

Table I.Constructs and literature

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IJLM25,3

Indicators

Conceptdescription

Sampleliterature

Strategicsupplychain

relationships

One-off

transactions

Coordinatedand

cooperative

Levelofintensity

ofsupply

chain

relationships

BaihaqiandSohal(2012),BengtssonandKock

(2000),Bensaou(1999),Bethet

al.(2003),Boxersox

andLahowchic(2008),Boydet

al.(2010),Burgess

(2007),Chase

(1985),Coxet

al.(2001),Davies(1996),

DonadaandDostaler(2005),Ferreret

al.(2011),

Freem

anandGilbert(1987),Harland(1996),Hofstede

(2007),KasoufandCeluch

(1997),Kaufm

anet

al.

(2000),LambertandKnem

eyer

(2006),Maloni(2000),

Managers(2006),StorerandHyland(2011),Vickery

etal.(1999)

Innovationutilizationcapability

–perform

ance

measurements

Financial

benefits

Operational

efficiencies

Growth

Betterpricedproducts;reducedcosts;im

proved

profits

andturnover;increasedsalesvolumes

BetterQuality;product

improvem

ents;volume

flexibility;deliveryflexibility;product

flexibility;

increasedtotalchain

efficiencies;volumereliability

andcontinuity

Increasednew

productofferings;betteroverallvalue-

adding;offeringunique/exclusiveproducts;

improved

chain

relationships

E.g.Brewer

andSpeh

(2000),Gunasekaranaet

al.

(2004),LambertandPohlen(2001),Langfield-Smith

andSmith(2005),Adamset

al.(2006),Alegre

etal.

(2006),FearneandHughes

(1999),Tippingand

Zeffren

(1995)

Table I.

501


ResultsThe results outlined in Table III show supports for the three hypotheses. Keyconstructs identified in the structure of this model all have a critical ratio (CR) value of41.96, and p-values ofo0.000 (***), indicating statistical significance. This confirmsthat all coefficients or estimates of all measures are significantly different from zeroand should remain in the model, even though SMC values may be o0.2 asrecommended, and may indicate they are very poor measures and should be dropped.We argue these factors and measures are important to the model and have redeemingfeatures as they represent the literature and are reflective of attitudes in this industrytoward this topic at this time. Through the standardized regression weights, the resultsshow the strength of affect varies between each of the key factors and their measuresbetween innovative and non-innovative suppliers (Table IV).

DiscussionFor this agribusiness industry and others like it around the world, nationalgovernments are imposing mandatory regulatory reporting of activities on and offfarm, from paddock to plate. An example of this, is the mandatory reporting andelectronic tagging of all beef cattle movements in Australia through the use ofelectronic radio frequency identification tags (RFID tags); use of electronic domesticand export waybills and other electronic commerce transactions; and increasedreporting requirements in relation to quality controls, particularly the use ofantibiotics, growth hormones and industrial chemicals in the beef supply chain. Thisincrease in communication and transaction complexity has been constantly occurringin agribusiness industry supply chains over the past decade as global consumers andregulatory agencies demand food safety and governments address food security issues.This has resulted in an increasing reliance on electronic information and businesssystems at both the global supply chain and whole-of-industry level (Bell et al., 2011).

Indicators MeasuresCronbach

a

SD ofComp(sx)

Coeff.H Rel.Comp(rx)

FactorLoad (l)(sx*Orx)

Error Var. (q)(sx2 [1-rx] )

Composite indicators: strategic supply chain relationshipsOne-off 4 0.79 0.99 0.76 0.83 0.13Cooperative 3 0.77 0.97 0.74 0.85 0.12Composite indicators: strategic supply chain capability

Composite indicators MeasuresCronbach

a

SD ofComp(sx)

Coeff.H Rel.Comp(rx)

Factorload (l)(sx*Orx)

Error var. (q)(sx2 [1-rx] )

Reconfiguration 9 0.88 0.90 0.77 0.78 0.19Adaptability 6 0.96 0.92 0.84 0.84 0.14Control 13 0.80 0.93 0.75 0.81 0.22Complexity 11 0.91 0.97 0.85 0.90 0.14Coordination 12 0.93 0.90 0.81 0.81 0.16Composite indicators: utilizing industry-led innovation for beneficial outcomesPerformance benefits 4 0.96 0.94 0.88 0.88 0.11Operationalefficiencies 4 0.95 0.93 0.87 0.87 0.11Growth 4 0.95 0.89 0.80 0.80 0.16

Table II.Construct reliabilityand validity

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IJLM25,3

E1

E2

E3

Adaptability

Reconfiguration

Complexity

E4

0.49

Control

0.66

0.54

0.58

0.95

0.70

0.81

0.74

0.74

0.22

Z10.48

0.23

Strategic

Supply Chain

Relationships

Strategic

Supply Chain

Capability

0.82 0.83

0.03

E6 Synchronization

Best Fit to Data: Variant Model — Standardized: Non-Innovative SC Operatives

OneOff

OneOff

E1

E10 E11

0.55

Cooperate

Cooperate

E2

E3

0.68 0.69

Adaptability

Reconfiguration

Complexity

0.16

Strategic

Supply Chain

Relationships

Strategic

Supply Chain

Capability

Z2

0.03

Industry-Led

Innovation

Utilization

Industry-Led

Innovation

Utilization

0.290.85 0.41

0.92 0.64

0.52

0.52

0.41

0.48

0.72

0.72

0.64

0.69

Z10.46

0.21

0.03

0.15Z2

0.030.91

0.90

E10 E11

E4

E6

Control

Synchronization

FINBENFIT

FINBENFIT

OPBENEFIT

OPBENEFIT

GROWTH

GROWTH

0.83

0.91

0.73

0.69

0.83

0.54

0.960.25

0.80

0.82

0.82

0.65

Best Fit to Data: Variant Model — Standardized: Innovative SC Operatives

E7

E7

E8

E8

E9

E9

Figure 5.Structural equation

model (SEM) constructs

SEM – variant model – fit indices

w2 90.87df 67w2/df 1.35p-value (40.5) 0.03RMR 0.06RMSEA (o0.05) 0.0390% Confid. interval (0.05-o0.05) 0.01-0.44PCLOSE (40.5) 0.99GFI 0.96RFI 0.93IFI 0.99TLI 0.98CFI 0.98

Table III.SEM fit indices

503


Innovative

pSRW

SMC

Non-innovative

pSRW

SMC

Hypotheses

SSCC’

SSCR

***

0.48

0.23

SSCC’

SSCR

***

0.46

0.21

Supported

ILIU’

SSCC

***

0.03

0.03

ILIU’

SSCC

***

0.03

0.03

Supported

ILIU’

SSCR

***

0.16

ILIU’

SSCR

***

0.15

Supported

Financialbenefits’

ILIU

***

0.83

0.54

FinancialBenefits’

ILIU

***

0.91

0.82

Operationalefficiency’

ILIU

***

0.91

0.83

Operationalefficiency’

ILIU

***

0.90

0.82

Growth’

ILIU

***

0.73

0.69

Growth’

ILIU

***

0.80

0.65

Reconfiguration’

SSCC

***

0.81

0.66

Reconfiguration’

SSCC

***

0.72

0.52

Adaptability’

SSCC

***

0.70

0.49

Adaptability’

SSCC

***

0.72

0.52

Complexity’

SSCC

***

0.74

0.54

Complexity’

SSCC

***

0.64

0.41

Control’

SSCC

***

0.75

0.55

Control’

SSCC

***

0.69

0.48

Coordination’

SSCC

***

0.21

0.05

Coordination’

SSCC

***

0.25

0.06

One-OffTransactions’

SSCR

***

0.82

0.68

One-OffTransactions’

SSCR

***

0.92

0.85

Cooperative’

SSCR

***

0.83

0.69

Cooperative’

SSCR

***

0.64

0.41

Notes:Estim

ateswithaCRX1.95andasignificance

levelofp¼p0.000representedby***areconsidered

significantly4

0andtherefore

should

stay

inthe

model,even

thoughSMCvalues

maybeo0.2asrecommended,andmay

indicatethey

areverypoormeasuresandshould

bedropped.W

earguethesefactors

andmeasuresare

importantto

themodelandhaveredeemingfeaturesasthey

representtheliterature

andare

reflectiveofattitudes

inthisindustry

toward

thistopicatthistime

Table IV.SEM Model – fit to datastatistics – innovative tonon-innovative supplychain operatives

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The respondents in this study acknowledge these trends, and also provide valuableinsights into the level of importance being placed by agribusiness supply chainmembers on addressing these issues. The study also highlights influential factors thatmay have some effect on take-up of industry-wide agribusiness EBS innovationagendas, including highlighting the complexity of the task, and indicating there arepotential conflicts of opinion within agribusiness supply chains in relation to this typeof innovation which may be a result of the varying degrees of strategic supply chainmanagement capability available to exploit such innovations.

Outcomes from this research reflect both innovative and non-innovative supplychain operators support the three hypotheses argued in this research, albeit to varyingdegrees. Non-innovative operatives have shown that although they may not useelectronic business solutions and the internet in their business, they acknowledge thebenefits that might accrue to the supply chain from utilizing this type of innovation. Ofmost interest is that non-innovative operatives have suggested a higher level offinancial (b¼ 0.82, po0.01) benefits accruing from this type of innovation to thesupply chain than innovative operatives (b¼ 0.54, po0.01), respectively. This maysuggest that initially high levels of financial benefits are anticipated (as indicated bynon-innovative operators) but do not actually accrue at those levels (as indicatedby innovative supply chain operators). Further, results confirm this type oftechnological innovation can be disruptive, and may not accrue the benefits expected,due to its revolutionary rather than evolutionary nature (Assink, 2006), and the factthat development and implementation of disruptive innovation is not well understood(Leifer et al., 2001).

In terms of comparing attitudes to the importance of developing strategic supplychain relationships, innovative operators believe both one-off transactionalrelationships (b¼ 0.68, po0.01) and cooperative relationships (b¼ 0.69, po0.01)have approximately equal weight. Typically, non-innovative operatives, give muchgreater weight to one-off relationships (b¼ 0.85, po0.01) in preference to cooperativeforms of relationships (b¼ 0.41, po0.01). This could be seen as a typical reaction andreflect the fact that non-innovative supply chain operators have less regard for supplychain cooperation, and reflects the fact that they are not participating in this industry-led innovation agenda (which requires coordination, cooperation and collaboration).Non-innovative supply chain operatives obviously seek competitive advantagethrough greater flexibility which they perceive comes from reliance on transacting one-offrelationships and the ability to couple and decouple quickly and without repercussion.

Additionally, findings support earlier studies of this agribusiness industry thatsuggest not all industry-led innovation is being adequately utilized or assessed prior torelease – with calls both to academia and the industry to better understand the issuesthat may inhibit adoption and utilization (Moreland and Hyland, 2010). A cause may bethe lack of regard at the individual firm level to consider the ramifications ofsupporting or not supporting such innovation at the supply chain level. That is, toensure any innovation efforts are well coordinated and aligned across the whole supplychain and not just left to individual firms to decide to participate or not. In this studythis is lack of coordination and alignment is obvious with the notable result that thereis a lack of support from both innovative (b¼ 0.05, po0.01) and non-innovative(b¼ 0.06, po0.01) operators for supply chain synchronization as an indicator ofstrategic supply chain capability. Even though supply chain literature suggests supplychain coordination and alignment (synchronization) are strategic and integral toeffective decision making and efficient supply chain operations (Wadhwa et al., 2008).

505


This point is further supported through joint agreement by both innovative (b¼ 0.03,po0.01) and non-innovative (b¼ 0.03, po0.01) operators that strategic supply chaincapability (measured by the ability to reconfigure, adapt, control, manage complexityand synchronize at the supply chain level) while influencing utilizing industry-ledinnovation for beneficial supply chain outcomes, this influence is minimal. This resultmay evidence a lack of strategic intent (Hamel and Prahalad, 1989) by members of thisagribusiness supply chain to act in the best interests of the supply chain and industry,and that generally they compete as individual entities rather than as a supply chainand an industry. While these agribusiness supply chain practitioners acknowledgebenefits may accrue from developing strategic supply chain relationships andcapabilities and utilizing available industry-led innovations to some degree; findingsalso confirm there are a mosaic of multi-dimensional relationships, capability andoperational complexities within these type of supply chains influencing how well suchindustry-funded and driven innovation is exploited by all members. Preparedness toinnovate or not has only a marginal influence on these findings.

Although taking a strategic supply chain management approach is argued to ensuresupply chain activities support the competitive priorities of improved speed to market,increased cost reductions, improved quality control and maximum flexibility(Ketchen and Hult, 2007a); it is apparent from this study not all agribusinessindustry supply chain members may be able to engage in innovation utilization in anequal fashion. The nature of their relationships within the supply chain and also theirlevel of capabilities to exploit such innovation may expose potential gaps in the level ofengagement possible as global supply chains become more complex (Malik et al., 2011).Especially when agribusiness industries constantly struggle with global competitivepressures stemming from the constant threat of product substitution by the consumers;unpredictable weather events influencing farming operations and supply chainoperations; unexpected trade embargoes and foreign currency fluctuations; and aconstant narrowing of profit margins for producers, manufacturers and logisticsoperators due to increased profit margins sought by large monopolistic global andnational retailers.

It may be important for Government policy makers, agribusiness industry bodiesand industry supply chain members to reconsider how strategic supply chainmanagement practices might be engaged before considering the development ofindustry-level innovation programs that engage at a supply chain level, especiallywhen there appears to be some reflection from these respondents that these types ofsophisticated electronic business and communication system innovations can bedisruptive to supply chain and industry workings. It is obvious some supply chainoperatives are unable to reconfigure and adapt to the required changes, or manage andcontrol the complexities involved in synchronizing and utilizing these types ofsophisticated electronic business technologies and systems, as part of a whole-of-industry agenda due to a lack of either hard or soft infrastructure. Agribusiness supplychains need to be strategic in their design and management of supply chainrelationships and capabilities, if they are to achieve a totally integrated industryinformation and quality management system from paddock to plate. Exploitingsophisticated EBS can “change the game” for existing supply chain businesses ineither a positive or a negative manner (Christensen, 2003; Christensen et al., 2002).Negative results often occur when capability deficiencies and/or incompatibilitiesbetween existing systems and technologies operated by individual supply chainoperatives (Bessant, 2008; Simatupang and Sridharan, 2005b; Malhotra et al., 2005)

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may exist. Additionally, as we have already pointed out, a lack of infrastructure andgeographic isolation, together with the dispersed nature of many other agribusinessindustries, compound these negative effects. High-speed broadband telecommunicationsinfrastructure nation-wide are integral to the strategic and successful utilization andexploitation of these sophisticated EBS, if they are to underpin competitive performanceoutcomes for national agribusiness industries and their related supply chains (Bell et al.,2011). In this instance there is an apparent reluctance by many operatives to get involvedin “shared” electronic information systems and networks or to synchronize the supplychain through varying degrees of systems and process alignment and integration thatensure the supply chain and industry continually meets its competitive goals. For thisindustry, this lack of importance on supply chain synchronization may be at the heart ofthe industry paradox of why millions of dollars invested in innovation results in unevenresults across the industry.

ContributionsThe first contribution of this study is the delineation of key factors in the model,represented by the three latent constructs: strategic supply chain relationships,strategic supply chain capability and industry-led innovation utilization. The secondcontribution is the contradiction by this industry to the literature in recognizing supplychain synchronization as a key indicator of strategic supply chain capability. Theeffective coordination of supply chain activities reduces the “bullwhip” effect andinformation distortions in the supply chain (Lee et al., 1997), which would be ofimportance to any supply chain, yet both innovative or non-innovative operatives inthis industry do not agree. This may indicate a lack of understanding and cohesion bysupply chain practitioners on exactly what defines supply chain synchronization.Much of the current academic literature discusses its attributes, coordination,alignment, integration and cooperation with few, if any, articles actually referring tosupply chain synchronization as a strategic capability made up of those components.Much of the literature that informs this topic relates to information technology andEBS, rather than to strategic supply chain management of relationships, decisionmaking and building successful and coordinated supply chains across an industry.

This research has shown the predictability and inter-relationship of these factors,even though some measures proved more reliable than others, and some factors such assynchronization are seen as more influential than others. Individual and opportunisticone-off transactional relationships vs the more long-standing, complex cooperativerelationships represent strategic internal and external relational states to supply chainparticipants in this industry. Further, as identified in the organizational literature andsupply chain literature, four key supply chain capabilities – supply chain dynamiccapability, supply chain performance differential capability, supply chain synchronizationcapability, and utilizing industry-led innovation capability – are also identified asinfluential and strategic. The framework presented aims to encourage further researchthat extends and addresses potential limitations found in this study, through explorationand examination in other industry contexts and through use of other research methods,such as qualitative or mixed methods, that provide an opportunity for more in-depthknowledge on the topic.

Strategic supply chain management is still evolving as a competency at both theacademic and practitioner level (Hitt, 2011) with potential gaps in the literature inthe areas of knowledge dissemination, practice and research for the near-term future ofsupply chain management (Melnyk et al., 2006; Vokurka, 2011). A final contribution

507


from this study is an integrated framework presented in Figure 6, developed to assistboth academics and supply chain practitioners alike further explore and examine thesefactors and their interlinking relationships.

ConclusionThis study undertook to contribute and extend current thinking in the embryonic area ofstrategic supply chain management and strategic supply chain capability building (Hultet al., 2007) by examining their influence in utilizing industry-led innovation a globalagribusiness industry supply chain, the Australian beef industry. This study comparedtwo types of supply chain operators, innovative vs non-innovative, and their views onutilizing innovation in the form of new and sophisticated industry-wide supply chain EBSand technologies based on internet platforms. The premise of this work argues that inorder to develop greater supply chain competence, in terms of innovating across supplychains, a strategic approach is required. This study defined three latent constructs andexamined their relationships empirically. Specifically, this study examined how creatingbeneficial supply chain outcomes from agribusiness industry-led innovation wasinfluenced by two forms of strategic supply chain relationships identified in previoussupply chain management literature, one-off transactions and cooperative relationships(Lambert et al., 1996), together with a sample of three conceptual strategic supply chaincapabilities also identified in the literature. These included: supply chain dynamiccapability, delineated through indicators, reconfiguration and adaptability capabilityidentified by Ketchen et al. (2007); supply chain performance differentials, delineatedthrough indicators, managing control and complexity in the supply chain identified byCox (1997); and supply chain synchronization, delineated through indicators,coordination, alignment, integration and cooperation identified by Arshinder et al. (2011).

The results show that both innovative and non-innovative supply chain operators inthis industry believe positive relationships exist between developing strategic supplychain relationships, strategic supply chain capability and successfully utilizingindustry-led innovation in the form of sophisticated EBS and communication usingthe internet. However, there are variations between the two levels of operators as to the

Source: Developed for this research by Maree Storer (2012)

Improved

Industry

Performance

Supply Chain

Dynamic

Capability

(Reconfiguration and

Adaptability)

Supply Chain

Performance Differential

Capability

(Controlling and Managing

Complexity)

Supply Chain

Synchronization

Capability

(Coordinating

and Aligning Operations and

Transactions)

Supply Chain

Internal and External

Relationship Types

(On-off Transaction based

relationships vs

cooperative relationships)

Strategic Supply Chain - Reactive Capabilities

Strategic Supply Chain - Proactive Capabilities

Supply Chain

Performance

Benefits

Supply Chain

Innovation Utilization

Capability

(Exploring and Exploiting

New Ideas and Invention) Figure 6.An integrated frameworkfor examining strategicsupply chain managementcapabilities

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IJLM25,3

degree of influence exerted between key variables, and between associated indicatorsand these variables. A key finding was that, while innovative and non-innovativesupply chain operators agree one-off transactional relationships and cooperativerelationships are strategic relational states, non-innovative operators prefer one-offrelationships, whereas innovation supply chain operators indicate they give equalweighting to both one-off and cooperative relationships. Further, findings indicate thatin this agribusiness industry, both innovative and non-innovative operators, foundminimal value in supply chain synchronization as a strategic supply chain capability,nor do they see strategic supply chain capability having a large level of influence on theability to utilize industry-led innovation for supply chain benefit.

As a contribution we have proposed an integrated framework that provides avaluable resource for future researchers and practitioners alike to consider the variousattributes of taking a strategic approach to supply chain management and industrydevelopment, through supply chain innovation, by developing strategic supply chainrelationships and capability. It suggests that supply chains access both reactive andproactive strategic supply chain capabilities that will allow them to respondstrategically to market challenges. It also suggests considering supply chain relationalcapabilities when building the linkages that are required to underpin supply chaincompetitive behavior at any given time and overall industry sustainability. While thesefindings have limited generalization, they do have implications for other agribusinesssupply chains faced with the same issues.

These results suggest a gap still exists between the theoretical literature and theapproach practitioners are actually taking. Further research and analysis could explorehow supply chain relationships are developed and for what purpose – low costprovider or because of a more strategic reason? There may also be low levels of trustacross agribusiness supply chains related to differentiated power relationshipsbetween the various activities of the supply chain which are running contrary toestablishing good levels of coordination, alignment, integration and cooperation acrossthese supply chain? Studies from more sophisticated industry supply chains, such asautomotive, suggest and acknowledge that a high level of coordination and alignmentof relationships, capabilities and innovation, using sophisticated electronic businessand communication systems, are required if supply chain activities are to be trulyglobally competitive (Chandra and Kaumar, 2001; Hahn et al., 2000).

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Appendix. Survey measuresStrategic agribusiness supply chain capability

(Supply chain dynamic capability)

Measure: Reconfiguration

Question 1: Rate from (1) not important to (5) very important, the following statements relating todeveloping strategic supply chain capability that enhances and changes practices in theAustralian beef supply chain for improved performance, and to utilize industry-led innovation inthe form of electronic business solutions through the internet?

(1) We engage in supply chain relationships that encourage the introduction of new products,processes and systems across the Australian beef SC to improve its performance

(2) We learn from our customers and constantly change to ensure the supply chain meetsmarket demand

(3) We learn from our suppliers and constantly change to ensure the supply chain meetsmarket demand

(4) We constantly change to ensure volume continuity

(5) We constantly change to ensure to provide better quality product

(6) We constantly change to ensure timeliness for the customer

(7) We constantly change to ensure timeliness for the supply chain

(8) We constantly change to ensure cost reductions for supply chain members

(9) We constantly change to ensure cost reductions for customers

Measure: Adaptability

Question 2: Rate from (1) not important to (5) very important, the following statements relating todeveloping strategic supply chain capability that allows the Australian beef supply chain toadapt to change in order to enhance performance and to utilize innovation in the form ofelectronic business solutions through the internet?

(1) Supply chain members understand and adjust to market conditions by working together

(2) Supply chain members understand new consumer directions by working together

(3) Research, development and business innovation help the supply chain to adapt to marketchanges

(4) Supply chain member work together to adapt to new banking and finances practices

(5) Supply chain members use information sharing, collective marketing, advertising andpromotional activities to adapt to market changes

(6) Supply chain members adapt through cooperative supply chain strategic planning

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(Supply chain performance differential capability)

Measure: Complexity

Question 3: Rate from (1) not important to (5) very important, the following statements relating tohow important the following activities are in terms of managing the complexity of participatingin the Australian beef supply chain, and utilizing innovation such as electronic businesssolutions through the internet?

. Measuring customer satisfaction; customer complaints; end-user consumer satisfaction

. Measuring supplier performance; On-time deliveries; product quality; production lead-times

. Financial information relating to processing costs; inventory costs; cash flow management;

business profitability

. Transport information relating to transport errors; back orders; stock-out rates; fill rates;

re-order lead times; changes in consumer behavior

. Understanding staff absenteeism; staff moral; staff turnover; workplace health and safety

incidents; skill levels; training requirements

. Ensuring our customers and suppliers understand and support our business

. Sharing sensitive information with our customers and suppliers

. Trusting our customers and suppliers encourage our competitive market position

. Trusting our suppliers

. Trusting our customers

. Trusting suppliers and customers are committed to our business

Measure: Control

Question 4: Rate from (1) not important to (5) very important, the following statements relating tohow important the following activities are in terms of controlling your participation in theAustralian beef supply chain, and utilizing innovation such as electronic business solutionsthrough the internet?

(1) Day-to-day management of internal and external business activities;

(2) Maintaining accurate accounting and financial controls

(3) Strategic business planning

(4) Staff training and education services

(5) Conducting research and industry innovation exercises;

(6) Marketing advertising and promotion activities;

(7) Activities relating to purchasing and procurement

(8) Transport, distribution and warehousing

(9) Stock/inventory management (including livestock; sales; joint scheduling of new equipment,parts and machinery purchases

(10) Assisting customers/suppliers to ensure sales stay buoyant

(11) Access to services such as professional services

(12) Purchasing plant and equipment

(13) Scheduling maintenance of plant and equipment

(Supply chain synchronization capability)

Measure: Coordination/Alignment

Question 5: Rate from (1) not important to (5) very important, the following statements relating tohow important the following activities are in terms of coordinating participation in the

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Australian beef supply chain and benefiting from the utilization of innovations such as electronicbusiness solutions through the internet?

(1) We coordinate with customers and suppliers prior to the purchase of new parts andmachinery

(2) We coordinate with customers and suppliers in the design of business management andcustomer communication practices

(3) We coordinate our operations through the design of staff training and education systems

(4) We coordinate planning purchasing and procurement with customers and suppliers

(5) We coordinate planning transport, warehousing and logistics with customers and suppliers

(6) We coordinate outsourcing operational and sales services with customers and suppliers

(7) We coordinate provisions of professional services to optimize supply chain operations

(8) We coordinate servicing and scheduling of plant and equipment maintenance to optimizesupply chain operations

(9) We coordinate best practice through quality controls and standards of production withcustomers and suppliers

(10) We coordinate production, processing and retail activities across the supply chain

(11) We communicate with customers and suppliers to help us be timely in delivering orders

(12) We communicate with our customers and suppliers help us identify means to reduce costs

Strategic agribusiness supply chain relationships

Measure: One-Off Supply Chain Relationships

Indicate your level of agreement with the following statements (1) Totally Disagree to (5) TotallyAgree about the state of supply chain relationships in the Australian beef supply chain, andutilizing innovation such as electronic business solutions through the internet.

(1) Most people in the Australian beef industry focus on looking after themselves rather thanthe good of the industry

(2) Businesses operating across the Australian beef industry are reluctant to cooperate witheach other

(3) We do not exchange information frequently with our customers

(4) We do not exchange information frequently with our suppliers

Measure: Cooperative Supply Chain Relationships

Indicate your level of agreement with the following statements (1) Totally Disagree to (5) TotallyAgree about the state of supply chain relationships in the Australian beef supply chain, andutilizing innovation such as electronic business solutions through the internet.

(1) There is good communication between people in the beef industry about developing ourindustry

(2) Players in the beef industry jointly plan for our future

(3) People in different sectors of the beef industry generally cooperate well with each other

Industry-led innovation utilization

Indicate the level of agreement you have with the following statements to describe the level ofperformance benefits achieved in the Australian beef supply chain by developing strategicsupply chain relationships and capabilities, and utilizing new electronic business systemsthrough the internet.

Measure: Financial Benefits

(1) Reduced individual operating costs for supply chain participants

(2) Increased supply chain orders and revenue

(3) Reduced overall supply chain costs

(4) Increased profits/business turnover for supply chain participants

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Measure: Operational Efficiencies

(1) Better quality assurance response across the supply chain

(2) Product enhancements as required and on demand

(3) Product and Volume flexibility as required

(4) Delivery and Warehousing flexibility as required

Measure: Growth

(1) New product and service offerings to customers and suppliers

(2) Better overall value-adding to supply chain activities

(3) Offering unique/exclusive products and services

(4) Improved supply chain personal relationships

About the authors

Dr Maree Storer recently received her Doctorate of Philosophy in the field of Supply

Chain Management from the School of Business, Faculty of Business Economics and Law within

the University of Queensland. She was the recipient of a 2007 Australian Cooperative

Research Centre (CRC) for Beef Genetics Technologies PhD scholarship which has supported

her PhD research. She is a self-employed Director/Owner of a small consultancy

company following a successful 13-year career with the Business Innovation Group of the

Queensland Government Department of Science, Information Technology, Innovation

and the Arts. In that role she was awarded the 2011 Australian Business Award for

Innovation and the Department’s Australia Day Award for Innovation in the Public Service.

Her research focus is extending embryonic academic research in the field of strategic supply

chain management in an agribusiness setting to drive supply chain and industry performance

improvements. She is an active member of the International Continuous Innovation Network

(CINet), the Academy of Management (AOM), the Australian New Zealand Academy of

Management (ANZAM), the Australian Institute of Company Directors (AICD), the Economic

Society of Australia (ECA), The Association for Operations Management (APICS), and the

Logistics Association of Australia. Dr Maree Storer is the corresponding author and can be

contacted at: [email protected]

Dr Paul Hyland is a Professor in Management at the Queensland University of Technology.

His research focusses predominantly on innovation management and business development.

He is internationally recognized for his research and has been invited to review funding

applications for the European Science Foundation and the Italian government. He is widely

published in the area of innovation management with over 50 journal articles, 100 conference

papers and five book chapter published in the last 15 years. He is currently working with

the Cooperative Research for Integrated Engineering Asset Management and is an active

member of CINet.

Dr Mario Ferrer is an Assistant Professor of Operations Management at the Alfaisal

University in Saudi Arabia. His research focusses on supply chain relationships and operations

management innovation. He is an active member of the global Continuous Innovation Network

(CINet), Logistics Association Australia and Intellectbase international consortium. He is an

invited reviewer for conferences like Cinet, LACCEI, Intellectbase and ANZAM (Operations,

supply chain and services management) and the Journal of International Business Management

& Research. Prior to Dr Ferrer’s seven years in academia he worked as a Logistics Manger in the

FMCG sector.

Dr Ricardo Santa is an Assistant Professor in Production and Operations Management at the

Alfaisal University in Saudi Arabia. He was previously working as a Lecturer in Business and

Innovation at Charles Darwin University, Australia. He has extensive experience as a Software

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Engineer and in the implementation of enterprise information systems. He has an active interest

in continuous innovation, operations management, management information systems, human

resources management and strategic management. He is also a member of CINet, continuous

innovation network.

Dr Andrew Griffiths is the Dean of the Business School at the University of

Queensland and a Professor/Chair in Business Sustainability and Strategy. He is an

accomplished academic in Australia and internationally recognized for his research both in

Australia, and overseas.

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strategic supply chain factors influencing agribusiness innovation utilization

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