Effecting Supply Chain Performance Through Cost Management: the Role of Ambidextrous Governance, Information System Integration and Absorptive Capacity

This thesis is based on an empirical study of company practice and considers cost management as an imperative to comprehend the dynamics and complexities of supply chains using a multi-theoretical framework. This framework combines theories of what enables firms in a supply chain to safeguard their exchanged cost management resources from a transaction cost economics perspective and sustainably develop these resources using the resource-based view of management.

This present study examines the effect of information system integration and knowledge absorption on cost management efforts between supply chain firms. Coupled with this, the study also deals with the effect of both formal and informal transaction governance mechanisms on cost management resources and how such resources, in turn, impact on management and improving performance in supply chains taking into accounts the potential supplier-buyer differentiating factors in the upstream and downstream segments of the supply chain. Informed by a thorough review of developments in the cost management and supply chain literature, a multi-theoretical model is developed and primary data are collected by means of a questionnaire survey from automotive firms in the UK. Usable replies received from 63 senior supply chain managers are analysed using latest developments in partial least squares-structural equation modelling (PLS-SEM) and relevant software (SmartPLS).

The findings of the current study can be summarised as follows. Information system integration plays a significant role in facilitating cost management resource exchange between supply chain firms. Associated with this is the vital role that absorptive capacity is found to have in developing such resources within trilateral relationships including suppliers, manufacturers and customers in a supply chain. Moreover, the study reveals that contractual governance and partner commitment are pivotal in collaborative cost management efforts in the upstream with suppliers. In contrast, trust and commitment are the most important mechanisms in managing costs jointly with customers. Interestingly, cost management is found to directly impact on the management of the whole supply chain irrespective of which governance mechanism underlies relationships with suppliers or customers, thus indicating how crucial inter-organisational cost management has become the modern manufacturing company.

The present study contributes to the supply chain field by showing which governance mechanisms can be utilised in sustainably protecting and managing cost management resources in supply chains. In addition, the study successfully demonstrates how competitive resources (e.g. information and knowledge) can facilitate and develop cost management resources in trilateral relationships involving suppliers in the upstream part of supply chains, manufacturers in the midstream part and customers in the downstream.