Antecedents to supply chain innovation

Author:Fatma Nur Karaman Kabadurmus
DOI:https://doi.org/10.1108/IJLM-04-2019-0096
Pages:145-171
Publication Date:10 Apr 2020
Antecedents to supply
chain innovation
Fatma Nur Karaman Kabadurmus
Department of Economics,Yasar University, Izmir, Turkey
Abstract
Purpose The purpose of this study is to examine organizational and environmental (competition, capital
scarcity and organization of labor) factors that affect firmsinnovation activities within the supply chain.
Design/methodology/approach This study empirically examines the factors that affect firmsinnovation
activities using firm-level data from the last round of Business Environment Enterprise Performance Surveys
(BEEPS). The analysis covers major supply chain functions: production, delivery and support systems.
Findings The study shows that drivers of innovation vary with the type of innovation activity; as such,
innovation efforts across supply chain functions should prioritize strategic resources that will create
competitive advantages. Our results also reveal that sustainability efforts in the Eastern Europe and Central
Asia (EECA) region should prioritize labor market reforms over capital market reforms.
Originality/value Current research on innovation and supply chain issues does not explicitly analyze
innovations that occur in different sustainable supply chain functions, and empirical studies that focus on the
determinants of innovations in the supply chain network are very limited. The data used in this study cover 30
economies in EECA, many of which are low- and middle-income countries, and thus contribute to the
implementation of sustainable practices in developing countries.
Keywords Innovation, Supply chain, EECA, BEEPS
Paper type Research paper
1. Introduction
Along with the increase in globalization and international competition, the necessity of
companies to adapt to rapidly changing business environments has also increased. Firms in
the 21st century aim not only to increase their competitiveness but also to manage their
supply chains sustainably. Therefore, the importance of sustainable supply chain
management (SSCM) has increased significantly. Seuring and M
uller (2008) define SSCM
as the management of material, information and capital flows as well as cooperation among
companies along the supply chain while taking goals from all three dimensions of sustainable
development, i.e. economic, environmental and social, into account which are derived from
customer and stakeholder requirements.
How can firms/managers create sustainable supply chains? Based on a systematic
literature review, Gao et al. (2017) center on innovation in the supply chain as a means to
achieve sustainability. The authors define supply chain innovation (SCI) as an integrated
change from incremental to radical changes in product, process, marketing, technology,
resource and/or organization, which are associated with all related parties, covering all
related functions in the supply chain and creating value for all stakeholders.
In light of these definitions, this study aims to investigate the factors that affect SCI, which
is at the heart of the implementation of sustainability. Our work contributes to the literature in
several ways.
First, we contribute to the literature on resource-advantage (R-A) theory, where the debate
is on how a firms dependence on comparative advantage in resources helps to achieve
superior performance. Prior literature has argued that for these advantages to be sustainable,
Antecedents to
supply chain
innovation
145
The authors are extremely grateful to two anonymous reviewers for very helpful and constructive
comments and suggestions.
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0957-4093.htm
Received 2 April 2019
Revised 27 August 2019
3 December 2019
24 January 2020
Accepted 9 March 2020
The International Journal of
Logistics Management
Vol. 31 No. 1, 2020
pp. 145-171
© Emerald Publishing Limited
0957-4093
DOI 10.1108/IJLM-04-2019-0096
firms must innovate. We advance this literature by proposing a conceptual model that
explains how both organizational and environmental factors can affect firmsinnovation
decisions within the supply chain and how these innovation activities can contribute to
supply chain sustainability.
Second, empirically, this work is one of the first attempts to explicitly analyze the
determinants of innovations that occur in supply chain functions. Most papers on the subject
are surveys or case studies that use data for single firms (Gao et al., 2017). Researchers
strongly recommend following a survey approach using questionnaires for future studies. By
using firm-level data from the latest Business Environment Enterprise Performance Surveys
(BEEPS) conducted in 20122014, we aim to fulfill this gap. Evidence in our study shows that
how, and to what degree, comparative advantages of resources contribute to innovation
activities depend on the particular SC function. For example, investing in relational resources
in the production and manufacturing function, and firm size in the logistics function,
contribute to competitiveness more. Unfortunately, the lack of data as to the outcomes of SCI
prohibits further examination of sustainability performance.
Third, we contribute to the literature on the organization of labor, and also the literature on
doing more with less.Prior literature presents conflicting results as to the implications of
both for innovation outcomes. Findings of our study suggest putting resources toward labor
improvements vs financial improvements, at least for economies in Eastern Europe and
Central Asia (EECA). As far as we know, this is the first paper that addresses SCI in these
countries. Firms in the region face various environmental barriers including political, social
and human capital constraints (EBRD Transition Report, 2013). Business and human rights
issues are also a big concern, and many reports about the region point to breaches of
workplace health and safety and discrimination and labor rights abuses (Business and
Human Rights in Eastern Europe and Central Asia, 2014). Transition to a sustainable
economy is vital for the countries in EECA, and the shift requires the adaptation of innovative
ideas and technologies. Our findings suggest that labor reforms to promote social
sustainability must be a priority in the region.
The rest of the paper is organized as follows: In Section 2, we review the relevant literature
and develop our hypotheses. In Section 3, we describe the data set, illustrate the econometric
methods used in this study and then present our main findings. Finally, we conclude the
discussion in Section 4 by highlighting some important policy implications.
2. Theoretical background and hypotheses
2.1 Resource advantage theory and SSCM
The R-A theory is a general theory of competition in which innovation is endogenous and
contributes to a firms sustained competitive advantage and superior performance (Hunt and
Morgan, 1996;Hunt and Davis, 2008). Along with financial performance, superior
performance also incorporates social performance (providing products/services of superior
value for consumers) and environmental performance (providing market offerings with more
efficient use of resources). Thus, the R-A theory accommodates the triple bottom line (TBL)
approach, which states that firms should have three bottom lines: financial, environmental
and social (Elkington, 1998;Hunt, 2017).
To achieve sustained competitive advantage and neutralize and/or leapfrog their
competitors, firms engage in innovative activities. These activities may involve acquiring,
imitating or substituting resources, or major innovation, which Hunt (1999) calls reactive
innovation. For example, reactive innovators may target production with green means by
reducing the use of scarce nonrenewable resources such as coal, and thus increase the
perceived value of products for environmentally conscious consumers. To respond to
changing market conditions, supply chain managers may also spot new opportunities and
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