The impact of information sharing on supply chain adaptability and operational performance

• DOI: https://doi.org/10.1108/IJLM-11-2020-0439
• Published date: 27 September 2021
• Date: 27 September 2021
• Pages: 590-619
• Subject Matter: Management science & operations,Logistics
• Author: Lu Yang,Baofeng Huo,Minhao Gu

The impact of information sharing

on supply chain adaptability and

operational performance

Lu Yang

School of Management, Zhejiang University, Hangzhou, China, and

Baofeng Huo and Minhao Gu

College of Management and Economics, Tianjin University, Tianjin, China

Abstract

Purpose –This study looks beyond firm boundaries to depict supply chain (SC) adaptability and classifies it

into internal, customer and supplier dimensions to investigate their performance implications, respectively.

This study also examines the enablers of SC adaptability based on information processing theory.

Design/methodology/approach –This study applies the structural equation modeling method to

investigate relationships among SC information sharing, SC adaptability and operational performance using

data collected from 216 manufacturers in China.

Findings–Internal informationsharing has a positive impact on three dimensions of SC adaptability, whereas

supplier and customer information sharing only have a positive impact on supplier adaptability. Customerand

supplier information sharing interact to positively influence the three dimensions of SC adaptability, while

internal and customer information sharing interact to negatively affect customer adaptability. We also find

that all the three dimensions of SC adaptability can enhance operational performance.

Originality/value –This study contributes to providinga holistic definition of SC adaptability and classifies

it into three dimensions. It also investigates antecedents and performance outcomes of SC adaptability.

Keywords Supply chain information sharing, Supply chain adaptability, Operational performance,

Information processing theory

Paper type Research paper

1. Introduction

In orderto survive and achieve long-termgoals in dynamic environments,firms needto develop

supply chain (SC) adaptability, which is defined as the ability to reconfigure resources and

routines to effectively respond to long-term changes (Ecksteinet al., 2015;Lee, 2004). This has

become especially relevant in light of the vulnerable business environment under COVID-19

pandemic (Cohenand Kouvelis, 2020). Firms are likelyto encounter unexpected changes,such

as disruption in order quantities, fragilities in network structures and severe demand

fluctuationsin different nodesof an SC (Ivanov and Dolgui,2020). Reconfiguring processesand

routines among internal functions and with SC partners not only enables firms to ensure

continuous material supply and stable product delivery in an SC, but it is alsocritical for firm

survival and competitive advantage during the outbreak of COVID-19 (Cohen and Kouvelis,

2020). Some Chinese companies, such as JD.com, SF Express and Haier, were quick to

reconfigure and respond to changes, and thus gained market growth under COVID-19

pandemic. Furthermore, the digitalization movement also poses new challenges for

manufacturers that they have to ad apt their SC designs to address the evolving

environment (Makand Max Shen, 2020). SC adaptability is becomingincreasingly important

in recent days. We therefore need to comprehensively investigate SC adaptability and its

enablers andperformance outcomes as well, thusproviding guidelines for industrial practices.

IJLM

33,2

590

This research was supported by the National Natural Science Foundation of China (#72002151,

#72091210/#72091214, #71821002).

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 19 November 2020

Revised 25 April 2021

21 July 2021

Accepted 6 September 2021

The International Journal of

Logistics Management

Vol. 33 No. 2, 2022

pp. 590-619

© Emerald Publishing Limited

0957-4093

DOI 10.1108/IJLM-11-2020-0439

Although there is no commonly accepted definition, it is generally agreed that SC

adaptability isthe capabilityto respond to structuralchangesby reconfiguringSC design. Given

the advantages of SC adaptability, many studies have investigated it and its performance

implications (Eckstein et al., 2015;Aslam et al.,2018). Most of the extant SC adaptability

literature, however,considered SC as a whole and conducted analysesfrom the perspectiveof a

single company. They ignored the interacted relationships and collaborative behaviors of

entities in an SC (Dubey et al., 2018;Whitten etal., 2012;Lee, 2004), thus failing to c apture the SC-

related characteristics of adaptability based onSC relationships, which is extremelyimportant

in definingSC adaptability.Since theability to respondto structural changesare supposedto be

established both within thefirm and across its boundary with its SC partners (Malhotra et al.,

2007;Gulati et al.,2005;Feizabadi et al., 2019;Wan g and Wei, 2007), it is necessaryto considerthe

collaborative featureof SC entities in the definition anddissemble SC adaptability into internal,

customer and supplier adaptability based on the relationship nodes in the SC. Furthermore,

althoughthe extant literaturehas examined the impact ofSC adaptability on firm performance

(Dubey et al., 2015;Eckstein et al., 2015;Aslam et al.,2018), the empirical evidence of the

performance outcomes of different dimensions of SC adaptability is lacking.

Furthermore, as the importance of SC adaptability has been extensively emphasized,

many studies have investigated the enablers of SC adaptability. Some studies suggested that

SC integration enables firms to develop SC adaptability (Ivanov et al., 2010;Zacharia et al.,

2011), while market sensing capability was also suggested to be beneficial for firms to adapt

to changes (Aslam et al., 2018). Even though, not all firms are successful in developing this

capability in practice. It requires a continuous effort in, such as assessing customer needs,

identifying emergent markets and creating flexible designs (Whitten et al., 2012). Most

importantly, it is difficult and risky for firms to reconfigure their processes and routines with

their SC partners because their transactions are highly routinized and any reconfiguration

will bring operational uncertainties (Chan and Chan, 2010;Bode et al., 2011). This situation

will become more serious if firms have limited information from their suppliers and

customers, because they have greater difficulties in assessing and analyzing the changing

situation, as well as in understanding both the upstream and downstream operations to

appropriately reconfigure and adapt to the changing environment (Dubey et al., 2018;Huo

et al., 2015;Whitehead et al., 2019). For example, if insufficient information is shared with

suppliers and customers, firms will have difficulties in adjusting their production processes

and plans when raw materials supply and customer demand fundamentally changes. During

the COVID-19 crisis, Haier, which is a company leading the global household appliance

industry, relied on its solid information technology (IT) linkage with its global SC partners to

share real-time information and effectively reconfigure daily production and sales planning.

This can be understood that integrating and updating information internally and

externally is the key foundation of being adaptive (Malhotra et al., 2007;Dubey et al., 2018). On

the one hand, information sharing within the SC allows for efficient information flows and

enhances visibility, which helps the manufacturer to effectively reconfigure in response to

changes (Dubey et al., 2018). Specifically, various real-time information sharing enables

managers to better understand the changing situation and both the upstream and

downstream operations and thus reconfigure among internal functions and with SC partners

in a structurally adaptive manner (Malhotra et al., 2007;Dubey et al., 2018;Schoenherr and

Swink, 2015). On the other hand, according to information processing theory (IPT),

reconfiguration toward changes increases the need for information processing that firms

have to fit with increased information-processing capabilities (Galbraith, 1974). Information

sharing between SC entities is regarded as an effective approach to increasing firms’

information-processing competences that contribute to reconfiguring and adapting to

changes (Zhou and Benton, 2007;Galbraith, 1974;Premkumar et al., 2005). Through

information sharing both within and beyond firm boundaries, Haier effectively integrated

Impact of

information

sharing on SC

adaptability

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