The organizational antecedents of a firm’s supply chain agility for risk mitigation and response

Abstract

Today’s marketplace is characterized by intense competitive pressures as well as high levels of turbulence and uncertainty. Organizations require agility in their supply chains to provide superior value as well as to manage disruption risks and ensure uninterrupted service to customers. Thus the cultivation of agility is approached as a risk management initiative that enables a firm to respond rapidly to marketplace changes, as well as anticipated and actual disruptions in the supply chain. Agility is of value for both risk mitigation and response. This research investigates the impact of two cultural antecedents, market orientation and learning orientation, and three organizational practices, all aimed at augmenting the supply chain agility of a firm. A firm’s supply chain agility (FSCA) is defined as the capability of the firm, both internally and in conjunction with its key suppliers and customers, to adapt or respond in a speedy manner to marketplace changes as well as to potential and actual disruptions, contributing to the agility of the extended supply chain. The two cultural antecedents of market and learning orientations are posited to affect the organizational practices of internal integration, external integration with key suppliers and customers, and external flexibility, and eventually impact the firm’s supply chain agility. The external flexibility elements considered are volume and mix flexibility. In addition, the specific organizational characteristics and practices exhibited by firms with high levels of supply chain agility are also investigated. Through the use of the structural equation modeling technique, partial least squares (PLS), it is shown that strong linkages exist among the cultural antecedents, the three organizational practices considered, and the firm’s supply chain agility. All three organizational practices, internal integration, external integration with key suppliers and customers, and external flexibility are shown to have significant positive impact on the firm’s supply chain agility. Market orientation is shown to significantly impact both internal and external supply chain integration, along with the two elements of external flexibility. Learning orientation, on the other hand, is shown to have a strong and direct influence only on the level of internal integration. Firms with high levels of external integration are also shown to have high levels of internal integration, consistent with past research. Internal and external integration efforts are also seen to be unrelated to the levels of external flexibility present. The results serve to establish a set of key drivers for augmenting supply chain agility as a risk management initiative.