SISTEMATIZACIÓN DE LA INFORMACIÓN

The environmental factors refer to the various external conditions and pressures faced by firms due to changing customer demands, new technological development, and supply uncertainties and the management of what is beyond the reach of individual organisations. The major environmental characteristics faced by firms mainly originate from environmental uncertainties (Mentzer et al., 2000), government policies (Cai et al., 2010), and national culture (Shore, 2001). To mitigate the effect of environmental factors on firm performance, inter-organisational relationship should be established so that they can coordinate their processes through information sharing. Table 3.6 summarises the components of the environmental factors which influence information sharing.

76

Table 3.6: Impact of Environmental Factors on Supply Chain Information Sharing (IS)

Components Context/ Country Results Reference

National culture Various - US Information sharing behaviour varies according to the culture _{of the country} Shore (2001)

Environmental

uncertainty Manufacturing- US

Supplier uncertainty à negative effect on IS; customer

uncertainty and technology uncertainty à no effect on IS Li and Lin (2006)

SC dynamism Manufacturing- US SC dynamism à positive effect on IS

Zhou and Benton Jr (2007)

Environmental uncertainty

Non-service- Finland and

Sweden Environmental uncertainty à positive effect on IS Yigitbasioglu (2010)

Government support Manufacturing- China Government support à positive effect on IS Cai et al. (2010)

Rate of technical change Manufacturing- S. Korea Rate of technical change à positive effect on IS Lee et al. (2010)

Data dynamism Various- China Data dynamism _{effect on template-based IS} à positive effect on proactive IS and no Du et al. (2012)

SC uncertainty PCB Manufacturing- Taiwan SC uncertainty à positive effect on IS Hung et al. (2014)

Environmental uncertainty

Auto parts manufacturing-

77 3.3.4.1 Environmental Uncertainties

Environmental uncertainties refer to the uncertainties in accurately predicting the environment characterised by volatility and versatility (Ganesan, 1994). In a supply chain relationship, a partner’s success or failure is determined by its ability to respond to unexpected variations in demand and supply, technology, or competitive pressures (Stank et al., 1996). Ignoring the effects of uncertainty in the supply chain results in a system that is unable to adapt to future changes and decision making (Beamon, 1999). According to Du et al. (2012), complexity of business depends on their routineness and dependence on other processes. This means that supply chain uncertainty is one the causes of business complexity (Du et al., 2012, Welker et al., 2008) as it affects the company’s routineness and its dependence on other processes (supply/manufacturing uncertainty). Hence, this study will only consider environmental uncertainties as a form of business complexity.

Environmental uncertainties are constantly changing (Lee and Billington, 1992) and are inevitable. According to Gupta and Wilemon (1990), and Davis (1993), the three distinct sources of uncertainty that plague supply chains are: suppliers/manufacturers, customers and the rate of technological change. Customer uncertainty or demand uncertainty refers to the demand variations experienced in the supply chain in terms of quantity, quality, flexibility, and delivery that is difficult to predict (Fynes et al., 2004). Supplier uncertainty occurs as a result of manufacturing downtime, quality, rework and yield problems, shortages of materials, order-entry errors, forecast inaccuracies or logistical malfunctioning (Davis, 1993, Fynes et al., 2004, Yigitbasioglu, 2010). Technology dynamism is the unpredictable changes and development in the technology that might cause the present assets and skills to become obsolete (Bucklin and Sengupta, 1993, Varadarajan and Cunningham, 1995).

Firms facing uncertainties caused by demand, supply and technology, will undergo difficulties in formulating effective strategies as the information required to make such strategies keeps changing (Ganesan, 1994). For supply chains to operate efficiently, the changing data and information needs to be updated frequently (Du et al., 2012). With the increase in environmental uncertainties, the need for information exchange increases (Wong et al., 2011). To make informative decisions, reliable and relevant information is needed (Noordewier et al., 1990). Uncertainties faced by supply chain participants encourage them to establish long-term relationships with each other so that they can share necessary information and help each other in making decisions beneficial for everyone in the chain. Collaboration,

78

coordination and information sharing with business partners is the best way to reduce risks and uncertainties and maintain stability of the supply chain (Mohr and Spekman, 1994, Childerhouse et al., 2003).

3.3.4.2 Government Support

Government of a country plays a significant role in determining business strategies and decision-making of firms. Government mandate is one form of environmental characteristics as it is beyond the control of managers (Cooper et al., 1997a). Some governments have a tendency to exert their influence indirectly through established and transparent industrial policies and regulations, whereas, other governments tend to get directly involved in firms’ decision-making processes and at the same time, provide various types of support such as financial aid, favourable policies and reduced land-use fees (Cai et al., 2010).

Government can reduce uncertainty in business transactions and support organisations by providing and enforcing laws and regulations (Rao et al., 2005) under which organisations form, compete, cooperate and exchange (Fligstein, 1996). When government rules and regulations are unstable and unreliable, trust between business partners is deteriorated due to unfair and ineffective government policies (Rao et al., 2005). This will adversely affect the relationships between them and will be difficult to overcome through building close, long- term reciprocal relationships.

While government policies may affect trust building between supply chain members, they may also have the potential to establish policies that can enhance information technology adoption in supply chains. Information sharing requires intensive resources such as networks, computers, telephone service, internet and skilled personnel (Shore, 2001). The costs of these resources are high and is a major inhibitor of IT adoption (Dedrick et al., 2013). Thus, the government plays a crucial role in establishing national policy for the provision of adequate IT infrastructure, training and maintaining an adequate workforce in order to alleviate communication problems (Shore, 2001, Pradhan, 2002).

3.3.4.3 National Culture

As suggested by Andraski (1994), 80 per cent of the problems that arise in real-world retail supply chains are due to people, not technology. Different societies, organisations and groups have different cultures which they have been preserving and passing on from generation to

79

generation (Hofstede, 1980). The term culture is generally used to signify a nation and thus national culture influences the structure and functioning of a nation (Hofstede, 1980). It influences the way organisations operate their business, the way they establish business relationships with international organisations and the way they communicate with them. National culture is one of the main variables that play a significant role in explaining the nature of supply chain relationships and the degree of information sharing among them (Shore, 2001, Cai et al., 2010, Collins et al., 2012). Cultural differences can be used to explain why organisations in one country may be more inclined to share information with their supply chain partners than those in another country (Shore, 2001).

The cultural differences observed in organisational behaviour are more distinct than the cultural differences observed in individual behaviour (Hofstede, 1980). Moreover, culture has a direct influence on organisations’ goals and objectives, decision-making processes, organisation structure and their formal procedures, and reward systems (Hofstede, 1980) which explains the fact that different firms in different countries have different incentives towards information sharing. Hence, supply chain players from a certain country have different inclination towards information sharing which will affect their willingness towards sharing valuable information needed to make wise decisions (Childerhouse et al., 2003).

3.4 Research Framework

Based on above discussion, a research framework is constructed. The framework as shown in Figure 3.4, illustrates the cause - information sharing - effect model. A range of factors under each category will be tested for their impact on information sharing. The factors that have a significant effect on information sharing will be considered as important factors in the context of Nepal. The second part of the framework will test the impact of information sharing on supply chain performance. Based on this research framework, a conceptual framework will be constructed in Chapter 4 and will be analysed in Chapter 5.

80

Figure 3.4: Research Framework

3.5 Summary

This chapter provided a review of the literature that helped to develop the theoretical foundation of this research. Supply chain collaboration is an essential requirement to manage various entities of the chain and information sharing has been identified as one of the main foundations of collaboration (Barratt, 2004). Sharing information with supply chain partners will help firms to coordinate and collaborate, improve supply chain relationships, reduce

Relationship Factors

Intra-organisational Factors

Inter-organisational Factors

Environmental Factors

Information Sharing Supply Chain Performance

§ Marketing

§ Channel Relationship

§ Supply Chain Management

§ Management Science

§ Organisational Behaviour

§ Channel Relationship

§ Supply Chain Management

§ Decision Support System

§ Technology

§ E-Collaboration

§ Marketing Intelligence

§ Decision Science

§ Management Information System

§ Information Technology & Decision Making

§ Distribution/Logistics Management

§ Channel Relationship

§ Supply Chain Management

§ Manufacturing/Production

§ Operations Management

§ Retail

§ Performance Management

Identify the influential factors of information sharing

Evaluate the effect of information sharing on supply chain performance

81

supply chain costs and improve customer satisfaction. However, there is a reluctance of firms towards information sharing which emphasises the need to identify the factors that influence information sharing. The first section of this chapter explained how systematic review of the literature was carried out to identify a wide-ranging list of factors that influenced information sharing in supply chains.

Previous studies have identified a number of factors that affect supply chain members’ decision towards information sharing. However, the literature review revealed that a comprehensive list was lacking. In addition, there has been a dearth of work to analyse and categorise the factors that have been identified so far. A clear framework was necessary to include all identified factors and to illustrate the relationship between the factors and information sharing. Such a framework would provide a better understanding of how information sharing in the supply chain context is facilitated or impeded, thus leading to the development of strategies to improve information sharing among chain participants. The systematic literature review resulted in 21 factors that were anticipated to enhance or impede information sharing in supply chains. Furthermore, it synthesised the different categories used in the literature and categorised the 21 factors into four main categories.

The literature review shows that limited studies have been carried out in supply chain management and information sharing in small under-developed countries like Nepal that are vastly different from developed countries in terms of information technology availability, development of infrastructure, culture, management styles and policies, and organisational size. The adoption of models which was mainly engendered for developed countries might not bear meaningful results in the context of developing countries. There is a clear need to conduct a study in an under-developed country to test the applicability of the findings from previous studies.

82