the role of supply chain processes and information sharing in supply chain management

THE ROLE OF SUPPLY CHAIN PROCESSES AND
INFORMATION SHARING IN SUPPLY CHAIN MANAGEMENT

DISSERTATION


Presented in Partial Fulfillment of the Requirement for
the Degree Doctor of Philosophy
in the Graduate School of The Ohio State University


By
Honggeng Zhou, B.S., M.S., M.A.

*****
The Ohio State University
2003


Dissertation Committee: Approved by

Professor W.C. Benton, Advisor

Professor Glenn Milligan _____________________________
Advisor
Professor David Schilling Graduate Program in Business Administration

Copyright by
Honggeng Zhou
2003

ABSTRACT



Supply chain process and information sharing play critical roles in today’s supply
chain management. Previous research in supply chain management has studied various
supply chain processes and different aspects of information sharing separately. Therefore,
this dissertation proposes a comprehensive framework to study the relationships among
supply chain process, information sharing, supply chain dynamism, and business
performance.
The dissertation starts with mathematical models and simulation models to better
understand the relationships among the variables. The theorems derived from the
mathematical models are tested in more generalized supply chain settings. The results
from the mathematical models and simulation models provide several managerial insights
and help develop the empirical models.
The empirical part of this dissertation uses a cross-sectional survey method.
Structural equation modeling is used to explore the relationships among five supply chain
processes, four aspects of information sharing, supply chain dynamism, and five
dimensions of business performance. Responses from 120 executives in manufacturing
industries, representing a 18 percent response rate, suggest that both effective supply
chain process and effective information sharing are necessary to achieve optimal business
performance. When supply chain dynamism increases, effective information sharing
ii


becomes more important. Information sharing does not have direct positive impact on
business performance, but it has positive impact on business performance through
effective supply chain process. Effective supply chain process has positive influence on
all performance dimensions, but the degrees of positive influence vary for different

performance dimensions.
The analytical methodology tests three of the six research hypotheses proposed in
this dissertation, one of which can not be tested by the empirical methodology. The
empirical methodology tests five of the six research hypotheses, three of which can not
be tested by the analytical methodology. The analytical and empirical research
methodologies corroborate and complement each other. The results of this dissertation
research show that both effective supply chain process and effective information sharing
are necessary for achieving optimal business performance under alternative supply chain
dynamism. Effective information sharing is important for assimilating supply chain
dynamics information and using that information to guide the use of effective supply
chain process. Effective supply chain process is important for mediating the influence of
effective information sharing on business performance. Executives must balance the
investment in information sharing and supply chain process.






iii

Dedicated to My Grandfather, My Father, My Mother, and My Sister


献给我的外公丁方丈, 我的父亲周强, 我的母亲丁招弟, 和我的妹妹丁添娟

iv








ACKNOWLEDGMENTS


I am forever grateful to my advisor, Dr. W.C. Benton, who provided guidance, support,
and love throughout the research. Dr. Benton taught me not only how to conduct
scholarly research, but also how to become a better person. Without his help, this
dissertation as well as my future career would never be possible.

I would like to thank the committee members, Dr. Glenn Milligan and Dr. David
Schilling, for their critical insights, suggestions, and support throughout my education at
the Ohio State University.

I also would like to thank Drs. William Berry, David Collier, Nicholas Hall, Keong
Leong, and Dr. Peter Ward for their guidance and help during my coursework and in my
research.

Further thanks are extended to my dear colleagues, especially Dr. Hojung Shin, Dr. Carol
Prahinski, and Eric Olsen. And for those friends, family, and students who provided me
fun in my non-academic life, thank you very much.

v





VITA

October, 19, 1974 ………………………… Born Hangzhou, Zhejiang, P. R. China
1993-1997 ………………………………… B.S., Computer Science and Engineering
Zhejiang University, Hangzhou, P.R. China
1997-1999 ………………………………… M.S., Statistics and Computer Science
University of Memphis, Memphis, TN
1999-2002 ………………………………… M.A., Business Administration
The Ohio State University, Columbus, OH



FIELDS OF STUDY
Major Field: Business Administration
Concentration: Operations Management
Minor Field: Management of Information Systems




vi

TABLE OF CONTENTS

Page

ASTRACTS…………………………………………………………………. ii
DEDICATION………………………………………………………………. iv
ACKNOWLEDGEMENT…………………………………………………… v
VITA…………………………………………………………………………. vi
LIST OF TABLES………………………………………………………… xi
LIST OF FIGURES…………………………………………………………. xiii

CHAPTER 1: RESEARCH OVERVIEW…………………………………… 1
1.1 Introduction…………………………………………………………… 1
1.2 Research Background and Motivation…………………………………. 3
1.3 Research Objectives……………………………………………………. 5
1.4 Overview of Research Methodology………………………………… 6
1.5 Contributions and Findings…………………………………………… 9
1.6 Summary……………………………………………………………… 12

CHAPTER 2: LITERATURE REVIEW……………………………………. 14
2.1 Introduction……………………………………………………………. 14
2.2 Supply Chain Processes……………………………………………… 16
2.2.1 Supply Chain Operations Reference (SCOR) Model………… 16
2.2.2 “Plan” Process…………………………………………………. 19

2.2.3 “Source” Process………………………………………………. 23
2.2.4 “Make” Process……………………………………………… 26
2.2.5 “Deliver” Process……………………………………………… 31
vii


2.2.6 “Return” Process………………………………………………. 33
2.2.7 Relationship between Supply Chain Processes and Business
Performance…………………………………………………….
34
2.3 Information Sharing……………………………………………………. 34
2.3.1 Information Sharing Support Technologies…………………… 35
2.3.2 Information Content…………………………………………… 37
2.3.3 Information Quality……………………………………………. 39
2.3.4 Information Sharing and Supply Chain Processes…………… 42
2.3.5 Information Sharing and Business Performance………………. 44
2.4 Supply Chain Dynamism………………………………………………. 48
2.4.1 Supply Chain Dynamism………………………………………. 48
2.4.2 Supply Chain Information Sharing System Dynamics……… 50
2.5 Business Performance…………………………………………………. 52
2.6 Summary………………………………………………………………. 54

CHAPTER 3: RESEARCH PROBLEM FORMULATION AND
RESEARCH PLAN…………………………………………
65
3.1 Introduction……………………………………………………………. 65
3.2 Research Problem Formulation……………………………………… 65
3.2.1 General Research Problem Formulation……………………… 66
3.2.2 Analytical Problem Formulation……………………………… 68
3.2.3 Empirical Problem Formulation………………………………. 70

3.3 Analytical Research Plan………………………………………………. 73
3.4 Empirical Research Plan……………………………………………… 76
3.4.1 Prior Structural Equation Models……………………………… 76
3.4.2 Instrument Design and Development………………………… 85
3.4.3 Data Collection……………………………………………… 94
3.5 Summary……………………………………………………………… 97


viii


CHAPTER 4: ANALYTICAL MODELS………………………………… 98
4.1 Introduction……………………………………………………………. 98
4.2 Research Motivation and Model Description…………………………. 98
4.3 Two Suppliers…………………………………………………………. 102
4.4 Three Suppliers………………………………………………………… 112
4.5 Many Suppliers………………………………………………………… 118
4.5.1 Model Description…………………………………………… 119
4.5.2 Experimental Results………………………………………… 124
4.6 Summary……………………………………………………………… 130

CHAPTER 5: MEASUREMENT VALIDATION RESULTS OF THE
EMPIRICAL STUDY………………………………………
134
5.1 Introduction……………………………………………………………. 134
5.2 Sample Demographics…………………………………………………. 134
5.2.1 Characteristics of the Respondents and Their Firms………… 135
5.2.2 Missing Data and Model Assumption Checking……………… 136
5.2.3 Non-response Bias…………………………………………… 138
5.3 Measurement Validation and Results………………………………… 147

5.3.1 Measurement Validity…………………………………………. 147
5.3.2 Measurement Reliability………………………………………. 148
5.3.3 Item Deletion Process…………………………………………. 149
5.3.4 Sampling Adequacy and Correlation Matrix Sphericity Testing 166
5.4 SUMMARY…………………………………………………………… 167

CHAPTER 6: TESTING THE STRUCTURAL EQUATION MODELS
AND HYPOTHESES………………………………………
169
6.1 Introduction…………………………………………………………… 169
6.2 Fit Indices……………………………………………………………… 169
6.3 COST Model………………………………………………………… 171
6.4 FLEXIBILITY Model…………………………………………………. 177
ix


6.5 RESPONSIVENSS Model…………………………………………… 181
6.6 DELIVERY Model……………………………………………………. 185
6.7 FINANCIAL Model…………………………………………………… 189
6.8 Summary………………………………………………………………. 193

CHAPTER 7: RESEARCH FINDINGS, CONTRIBUTIONS, AND
IMPLICATIONS…………………………………………….
196
7.1 Introduction…………………………………………………………… 196
7.2 Research Findings and Managerial Implications………………………. 197
7.2.1 Methodological Contributions………………………………… 198
7.2.2 Influence of Supply Chain Process on Business Performance… 202
7.2.3 Influence of Information Sharing on Supply Chain Process and
Business Performance……………………………………………

205
7.2.4 Influence of Supply Chain Dynamism on Supply Chain Process
and Information Sharing…………………………………………
210
7.3 Summary……………………………………………………………… 215

CHAPTER 8: CONCLUSION………………………………………………. 218
8.1 Introduction…………………………………………………………… 218
8.2 Research Overview…………………………………………………… 218
8.3 Research Findings……………………………………………………… 220
8.4 Limitations…………………………………………………………… 221
8.4.1 Limitations of Empirical Study…………………………………. 221
8.4.2 Limitations of Analytical Study………………………………… 223
8.5 Future Research ……………………………………………………… 224

Bibliography…………………………………………………………………. 226

Appendix:
A: Survey Questionnaire………………………………………………… 242
x








LIST OF TABLES

Table
Page
2.1 Summary of Literature on Supply Chain Process, Information Sharing,
Supply Chain Dynamism, and Business Performance…………………
55
2.2 Research Hypotheses Addressed in Analytical and Empirical Models 63
3.1 Summary of Responses……………………………………………… 97
4.1 Overview of Six Cases in Two Suppliers Model……………………… 102
4.2 Total Costs of the Three Cases in the Three Suppliers Model………… 115
4.3 Simulation Factors and Factor Levels…………………………………. 120
4.4 Percentage of Cost Saved in Hypothesis A…………………………… 125
4.5 Percentage of Cost Saved in Hypotheses B……………………………. 126
4.6 Percentage of Cost Saved in Hypothesis C…………………………… 127
4.7 Percentage of Cost Saved in Hypothesis D…………………………… 128
4.8 Critical Mass Number of Suppliers in Hypothesis E………………… 129
5.1 Reported Average Number of Employees in the Responding
Companies………………………………………………………………
136
5.2 Manufacturing Process Technology…………………………………… 136
5.3 Annual Sales Value of the Responding Companies…………………… 137
5.4 Public or Private Company……………………………………………. 137
5.5 Summary of Measurement Scales……………………………………… 139
5.6 Comparing Early to Late Respondents………………………………… 146
5.7 Original Factor Loadings of Information Sharing Support Technology. 152
5.8 Original Factor Loadings and CITCs of Manufacturer’s Information…. 153
5.9 Original Factor Loadings and CITCs of Supplier’s Information………. 154
5.10 Original Factor Loadings and CITCs of Plan Scale……………………. 154
5.11 Original Factor Loadings of Source Scale…………………………… 155
5.12 Original CITCs of Deliver Scale……………………………………… 155

5.13 Original CITCs of Return Scale……………………………………… 156
5.14 Original CITCs of Supply Chain Dynamism Scale……………………. 156
5.15 Original Factor Loadings and CITCs of Responsiveness Scale……… 157
5.16 Item Deletion Process………………………………………………… 158
5.17 Final Results of Measurement Validation……………………………… 160
6.1 Desirable Ranges of Fit Indices……………………………………… 171
6.2 Estimations of Measurement Model Parameters for the COST Model 174
6.3 Measures of Overall Model Fit for the COST Model………………… 175
6.4 Summary of Statistical Tests for the Hypotheses in the COST Model… 175
6.5 Estimations of Measurement Model Parameters for the FLEXIBILITY 178
xi


Model…………………………………………………………………
6.6 Measures of Overall Model Fit for the FLEXIBILITY Model……… 179
6.7 Summary of Statistical Tests for the Hypotheses in FLEXIBILITY
Model…………………………………………………………………
179
6.8 Estimations of Measurement Model Parameters for
RESPONSIVENESS Model…………………………………………
182
6.9 Measures of Overall Model Fit for the RESPONSIVENESS Model… 183
6.10 Summary of Statistical Tests for the Hypotheses in
RESPONSIVENESS Model…………………………………………
183
6.11 Estimations of Measurement Model Parameters for DELIVERY
Model…………………………………………………………………
186
6.12 Measures of Overall Model Fit for the DELIVERY Model…………… 187
6.13 Summary of Statistical Tests for the Hypotheses in DELIVERY Model 187

6.14 Estimations of Measurement Model Parameters for Financial Model… 190
6.15 Measures of Overall Model Fit for the Financial Model………………. 191
6.16 Summary of Statistical Tests for the Hypotheses in Financial Model…. 191
7.1 Research Hypotheses and related Analytical and Empirical Results… 199
7.2 Positive Network Externality Property of Supply Chain Information
Sharing………………………………………………………………….
213

xii








LIST OF FIGURES




Figure
Page
1.1 Dissertation Overview…………………………………………………. 13
2.1 The Conceptual Model………………………………………………… 15
2.2 Supply Chain Operational Reference (SCOR) Model………………… 18
2.3 The Conceptual Model with Research Hypotheses…………………… 61
3.1 Empirical Models……………………………………………………… 71
3.2 COST Model………………………………………………………… 79
3.3 FLEXIBILITY Model…………………………………………………. 80
3.4 RESPONSIVENESS Model………………………………………… 81
3.5 DELIVERY Model……………………………………………………. 82
3.6 FINANCIAL Model ………………………………………………… 83
4.1 Flow Diagram of the Simulation Model………………………………. 124

4.2 Critical Mass Number of Suppliers in Hypothesis E …………………. 130
5.1 Overview of the Empirical Analysis Procedures……………………… 135
5.2 Item Deletion Process…………………………………………………. 151
6.1 Overview of the Structural Equation Model Analysis………………… 170
6.2 COST Model………………………………………………………… 176
6.3 FLEXIBILITY Model…………………………………………………. 180
6.4 RESPONSIVENESS Model………………………………………… 184
6.5 DELIVERY Model……………………………………………………. 188
6.6 FINANCIAL Model .………………………………………………… 192


xiii


1



CHAPTER 1

RESEARCH OVERVIEW

1.1 INTRODUCTION
Recently, supply chain management and information technology management
have attracted much attention from both practitioners and researchers. As technology
develops, firms tend to become more integrated. Therefore, integrating supply chain
management with up-to-date information technology becomes critical. “A recent survey
of purchasing managers suggests that the wave of new online business-to-business
activities is far from cresting … New technologies for supply-chain management and
flexible manufacturing imply that businesses can perceive imbalance in inventories at a

very early stage – virtually in real time – and can cut production promptly in response to
the developing signs of unintended inventory building.”
1
In addition to inventory
reduction, information technology can benefit many other areas of supply chain
management such as purchasing and delivery.
The concept of supply chain management extends the operations within a single
business unit to the entire supply chain. A supply chain consists of a set of processes that
coordinate independent business units in a supply chain. Since supply chain members are
independent, they tend to optimize their own performance objectives, without considering


1
By Federal Reserve Board Chairman Alan Greenspan before the Senate Banking Committee in Feb. 2002

2
the impact on the entire supply chain. Thus, it is important to manage supply chains from
an entire supply chain perspective rather than an individual supply chain member
perspective.
In this study, an industrial supply chain is defined as a set of independent firms
that participate in different activities to produce a product or service for an ultimate
customer. This definition is broad enough to incorporate both the supply and the
customer side of a chain. This dissertation focuses on five supply chain processes:
planning process, sourcing process, production process, delivery process, and product
return process. A supply chain process is regarded as an effective process if a set of
selected best practices has been implemented.
Information technology management is another focus of this dissertation. During
the past decade, information technology investment in Corporate America has increased
significantly. The Aberdeen Group estimates that information technology spending which
includes hardware, software, and services totaled $462 billion in the United States in

2001 (Supply Chain Council, 2002). As information technology has developed in the past
decade, it has had an impressive impact on supply chain management. While the concept
of information technology management covers many aspects of a supply chain, the focus
of information technology management in this dissertation is information sharing among
supply chain members. In particular, this study focuses on three aspects of information
sharing: information sharing support technology, information content, and information
quality. Information sharing support technology includes the hardware and software
needed to support information sharing. Information content refers to the information
shared between suppliers and buyers (manufacturers). It includes two directions of

3
information flows: (1) the information that suppliers share with their manufacturers; and
(2) the information that manufacturers share with their suppliers. Information quality
measures the quality of information shared between suppliers and manufacturers. In sum,
the three aspects of information sharing measure the technologies used to support
information sharing, the information shared among supply chain partners, and the quality
of information shared.
In today’s industry, effective supply chain process and effective information
sharing are two major approaches to improve business performance (Piszczalski, 2002).
While some companies emphasize improving supply chain process capabilities, others
emphasize leveraging information technology such as Enterprise Resource Planning
(ERP). Since these two major approaches are not independent, firms should work on both
supply chain processes and information sharing simultaneously. A good example is
Toyota which is well known for its effective processes. Realizing the importance of
information sharing, Toyota began to implement SAP in late 1990 and work on both
effective processes and information sharing. However, extant research provides very little
guidance on the role of supply chain processes and information sharing in supply chain
management, which is the focus of this dissertation.

1.2 RESEARCH BACKGROUND AND MOTIVATION

Both supply chain processes and information sharing are important to improve
business performance for today’s companies. Furthermore, it is important to integrate
supply chain processes with information sharing. Supply chain processes focus on
material movement (Chopra and Meindl, 2000), while information sharing focuses on

4
information flow (Premkumar and William, 1994). In practice, information sharing is
important in supply chain management. Japanese-style supply chain relationships result
in better performance because partnering firms share more information and are better at
coordinating interdependent tasks (Fruin, 1992). Michael Dell of Dell Computer states
that the companies that position themselves to take advantage of the Internet to build
information partnerships with their suppliers and customers have the potential to
fundamentally change the face of global competition and change the definition of the
value provided to customers and constituents.
2

A good example of leveraging information sharing in supply chain management is
Covisint, which was jointly developed by Daimler-Chrysler, Ford, and GM in 2000. "Co"
stands for cooperation and communication, "vis" is for visibility and visions, and "int" is
for Internet and international. The Big Three automotive manufacturers hoped to use
Covisint to purchase materials electronically from most of their suppliers. A global
business-to-business supplier exchange was developed. Among the Big Three, GM is the
most aggressive user of Covisint. In 2001, GM purchased $96 billion dollars from
suppliers through Covisint. Daimler-Chrysler purchased $3 billions dollars of goods and
services through Covisint during the same period. Moreover, Ford announced that it
saved $70 million during 2001 as a direct result of using Covisint. While the owners of
Covisint are reaping benefits from this online transaction space, most auto suppliers are
still not willing to subscribe to Covisint
3
. To date, 2000 of the 5000 automotive suppliers

acknowledge the use of Covisint for their transaction. In addition, Covisint as an
independent entity still has not become profitable yet. The reasons why the majority of


2
Presentation at the Fisher college of Business duing the Spring of 2001
3
See Freep.com, Feb. 2002

5
auto suppliers are not willing to sign onto the system are still not clear yet. One possible
reason is that most suppliers may not have the information technology capabilities
required for the Covisint system. Another possible reason is that most suppliers believe
that Covisint may not be economically beneficial to their firms. It is unclear whether auto
suppliers can benefit from using Covisint.
Although practitioners are enthusiastic about integrating supply chain processes
with information sharing, no comprehensive scholarly research has yet investigated the
role of information sharing and supply chain processes in supply chain management
under alternative supply chain dynamism that includes both supply chain business
environment dynamics and supply chain information sharing system dynamics. The
purpose of this dissertation is to investigate the influence of supply chain processes and
information sharing on business performance under alternative supply chain dynamism.

1.3 RESEARCH OBJECTIVES
The purpose of this dissertation is twofold. First, from the practitioner viewpoint,
this study addresses an important practical question: how should manufacturing firms
make investment in information sharing and supply chain processes? Especially, how
should firms balance the investment in information sharing and supply chain processes?
To date, there are no clear answers. Hopefully, the results of this study provide managers
with some guidance on this question. Second, this dissertation is expected to make the

following contributions to academic literature:



6
• It provides complementary analytical and empirical models that explore the
relationships among information sharing, supply chain processes, supply chain
dynamism, and business performance. In particular, it provides insights on the
following research questions:
1. How does information sharing enable effective supply chain process?
2. How do effective supply chain process and effective information sharing affect
business performance?
3. How does supply chain dynamism impact effective supply chain process and
effective information sharing?
• It contributes to the theory development in supply chain management research. The
results of the analytical and empirical studies help better understand the different
roles of information sharing and supply chain processes in supply chain management.
• It develops and validates several new high order multidimensional constructs for
information sharing and supply chain process as well as several first order constructs.

1.4 OVERVIEW OF RESEARCH METHODOLOGY
To achieve the research objectives, this research utilizes both analytical and
empirical research methodologies, corroborating and complementing each other. The
analytical methodology provides insights and intuitions of the research problem and helps
formulate the empirical models. The empirical methodology confirms the results found
by the analytical methodology and adds the generality of the findings. Chapter 2 of this
dissertation reviews the literature and proposes six research hypotheses. Chapter 3
formulates the research problem and lays out the research plans for both analytical and

7

empirical studies. Three of the six research hypotheses are addressed by the analytical
models in Chapter 4, and five of the six research hypotheses are addressed by the
empirical models in Chapter 5 and Chapter 6. The three hypotheses that are not
appropriate to test with analytical models are tested with the empirical models. The
hypothesis that is not appropriate for empirical models to test is tested in the analytical
models.
Chapter 4 of the dissertation uses mathematical models and simulation models to
consider the value of sharing production progress information in supply chains. The
particular supply chain practice considered is Vendor Managed Inventory (VMI). The
source of supply chain dynamism is supply lead-time uncertainty. The performance
criterion is the sum of inventory holding cost and inventory shortage cost. Mathematical
models are used to explore the value of sharing production progress information among
two and three suppliers. Next a simulation approach is used to extend the mathematical
models to many suppliers. The theorems derived from the mathematical models are
verified by the simulation models in more generalized supply chain environments. The
analytical models evaluate the impact of information sharing and supply chain dynamism
on business performance in the presence of a good supply chain practice – Vendor
Managed Inventory.
Chapter 5 and Chapter 6 of the dissertation use an empirical approach to
comprehensively test the relationships among supply chain processes, information
sharing, supply chain dynamism, and business performance. The supply chain processes
considered in the empirical models include supply chain planning, sourcing, production,
delivery, and product return. Information sharing includes information sharing support

8
technology, information quality, information that manufacturers share with suppliers, and
information that suppliers share with manufacturers. Supply chain dynamism includes the
dynamics of both product and process. Business performance includes both financial
performance and operational performance such as cost, flexibility, responsiveness, and
delivery.

A sample of 414 business executives from tier 1 automotive suppliers was
surveyed for the pilot study. These business executives primarily hold the position of
CEO, COO, president or vice president at firms that supply Daimler-Chrysler, Ford,
General Motors and Honda. Thirty two responses were received for a 7.7% response rate.
The large-scale cross-industry survey was conducted in manufacturing industries. Three
hundred thirty one companies were surveyed. One hundred and two responses were
received for a 31% response rate.
The three research methods (mathematical modeling, simulation, and empirical
survey research) have their own advantages and disadvantages. They corroborate and
complement each other. The mathematical modeling method is the most rigorous method
and provides good insights and intuitions. The mathematical modeling method is a good
starting point for this dissertation research, because it helps the research design of
simulation models and empirical models. The simulation method is more flexible than
mathematical modeling and models much more realistic supply chain environments. It
extends the two and three suppliers mathematical models to many suppliers (up to sixty
suppliers) and validates the theorems derived from mathematical models. In sum, the
simulation models provide more insights and generalize the findings from the
mathematical models. It is a good research method to complement the mathematical

9
modeling and the empirical research. The empirical research uses the real world data to
test the research hypotheses, thus improving the generality of the findings. While the
pilot study focuses on the first tier suppliers in auto industry, the large-scale study is
based on a cross-industry survey.

1.5 CONTRIBUTIONS AND FINDINGS
This study attempts to address the role of effective supply chain process and
effective information sharing in improving business performance under alternative supply
chain dynamism. The research shows that it is important to balance the investment in
supply chain process and information sharing. Both effective supply chain process and

effective information sharing are necessary for achieving optimal business performance.
A firm is unlikely to improve business performance by having only effective supply
chain process or only effective information sharing. The findings of the research
questions addressed in this dissertation are summarized as follows.

Research Question 1: does effective supply chain process improve business performance?
This dissertation shows that effective supply chain process has positive influence
on all performance dimensions, but the degrees of influence are different on different
performance measures. This finding suggests that firms do not have to sacrifice some
performance dimensions to improve others, which contradicts the traditional wisdom
(Skinner, 1974, Abernathy, 1978). Skinner (1974) suggests that firms should focus on
performance dimensions one by one. Abernathy (1978) questions whether it is possible to
achieve both efficiency and flexibility.

10
Research Question 2: does effective information sharing enhance effective supply chain
process?
This study shows that effective information sharing significantly enhances
effective supply chain process, which implies that effective supply chain process is
necessary for leveraging the value of effective information sharing, because the result of
research question 3 below shows that effective information sharing does not have direct
positive impact on business performance.

Research Question 3: does effective information sharing improve business performance?
While the analytical study shows that effective information sharing improves
business performance in the presence of effective supply chain process, the empirical
study shows that effective information sharing does not have direct significant positive
impact on business performance. One possible reason for the difference between the
analytical study result and empirical study result is that the analytical study considers
only the benefits of sharing information, not the costs of sharing information. Since many

costs of information sharing are intangible, it is hard for the analytical study to consider
costs of information sharing. However, the empirical study considers both benefits and
costs of sharing information by measuring financial return performance, thus
corroborating the analytical study.

Research Question 4: does high supply chain dynamism require effective information
sharing?
Both analytical study and empirical study show that higher supply chain
dynamism requires more effective information sharing. Since higher supply chain

11
dynamism usually accompanies with more information sharing needs, the importance of
information sharing increases when supply chain dynamism increases. Firms need to
have appropriate level of information sharing to capture the dynamics in supply chains.

Research Question 5: does high supply chain dynamism require effective supply chain
process?
This dissertation shows that high supply chain dynamism does not have direct
positive impact on effective supply chain process. This finding implies that effective
information sharing is necessary for firms, because firms need to use the information
captured from dynamic supply chain environment to guide effective supply chain process.
Without effective information sharing, firms are not likely to have effective supply chain
process or coordinate with other supply chain members effectively.

Research Question 6: how does the value of information sharing change as the number of
supply chain members participating in information sharing change?
The study shows that the value of information sharing increases as the number of
supply chain members participating in information sharing increases. This corroborates
the positive network externality property and suggests the importance of having enough
supply chain members joining the information sharing system when initially establishing

the system.

Besides the above research findings, this dissertation also validates several
important new constructs for future research. Multidimensional scales are developed for
information sharing and supply chain process. The information-sharing construct