Industrial Supplier-Manufacturer Relationship and Environmental Dynamism on Strategic Outsourcing Success: A Conceptual Study

Authors

  • Mohamad Ghozali Hassan School of Technology Management and Logistics, College of Business, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia
  • Mohammed Rizal Razali School of Technology Management and Logistics, College of Business, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia
  • Asmat Nizam Abdul Talib School of Technology Management and Logistics, College of Business, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia

DOI:

https://doi.org/10.11113/jt.v74.3345

Keywords:

Outsourcing success, relational-oriented exchange, environmental dynamism, supplier-manufacturer relations, strategic outsourcing, framework, Malaysian manufacturing

Abstract

Poor outsourcing performance of a manufacturing industry could be improved through relational-oriented exchanges and its antecedents. Researches that examine the link among relational-oriented exchanges and their antecedents, environmental dynamism, and outsourcing performances in the manufacturing industry are still in its early development stage. Owing to high competition and risks in a manufacturing environment, the present study aims at conceptualizing a framework that examines the link between relational-oriented exchanges, the antecedents of relational-oriented exchanges, environmental dynamism, and outsourcing performances by recommending environmental dynamism as a moderator on the link between relational oriented exchanges and outsourcing performances. The research will be beneficial to the practitioners, as it will identify the utilization of environmental dynamism as the supplier’s ability of adapting to novel conditions and to maximize confidence in their partners’ future activities.

Author Biographies

  • Mohamad Ghozali Hassan, School of Technology Management and Logistics, College of Business, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia

    Senior Lecturer

    School of Technology Management and Logistics, Universiti Utara Malaysia

     

  • Mohammed Rizal Razali, School of Technology Management and Logistics, College of Business, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia

    Senior Lecturer

    College of Business

    Universiti Utara Malaysia
  • Asmat Nizam Abdul Talib, School of Technology Management and Logistics, College of Business, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia

    College of Business

    Universiti Utara Malaysia

    Senior Lecturer

References

Malaysia Annual Statistic. 2010. August 22 Retrieved February 16, 2010, from http://www.statistics.gov.my/english/frameset_keystats.php.

US Department of State. 2007. November 3. 2007 Investment Climate Statement–Malaysia.

MIDA. 2010a. Malaysian Industrial Development Authority report. ICT & Electrical Industries Division.

M. Fichman, and P. Goodman. 1996. Customer-supplier Ties In Interorganizational Relations. Research in Organizational Behavior. 8: 285–329.

L. W. Stern, and T. Reve. 1980. Distribution Channels as Political Economies: A Framework for Comparative Analysis. Journal of Marketing. 44(3): 52–64.

I. R. Macneil. 1980. The New Social Contract: An Inquiry Into Modern Contractual Relations.Yale University Press, New Haven.

C. C. Izquierdo, and J. G. Cillan. 2004. The Interaction of Dependence and Trust In Long-term Industrial Relationships. European Journal of Marketing. 38(8): 974–994.

C. J. Lambe, R. E. Spekman, and S. D. Hunt. 2000. Interimistic Relational Exchanges: Conceptualization and Propositional Development Journal of the Academy of Marketing Science. 28(2): 212–225.

C. Oliver 1990. Determinants of Interorganizational Relationships: Integration and Future Directions. Academy of Management Review. 15(2): 241–265.

R. W. Palmatier, R. P. Dant, and D. Grewal. 2007. A Comparative Longitudinal Analysis of Theoretical Perspectives of Interorganizational Relationship Performance. Journal of Marketing. 71: 172–194.

G. Frazier. 1983. Interorganizational Exchange Behaviour in Marketing Channels: A Broadened Perspective. Journal of Marketing. 47: 68–78.

R. M. Morgan, and S. D. Hunt. 1994. The Commitment-trust Theory of Relationship Marketing. Journal of Marketing. 58(3): 20.

J. Mohr,and R. Spekman. 1994. Characteristics of Partnership Success: Partnership Attributes, Communication Behavior, and Conflict Resolution Techniques. Strategic Management Journal. 15: 135–152.

D. Elmuti. 2003. The Perceived Impact of Outsourcing on Organizational Performance. Mid-American Journal of Business. 18(2): 33–37.

K. W. Khong. 2005. The Perceived Impact of Successful Outsourcing on Customer Service Management. Supply Chain Management: An International Journal. 10(5): 402–411.

J. R. Kroes, and S. Ghosh. 2010. Outsourcing Congruence with Competitive Priorities: Impact on Supply Chain and Firm Performance. Journal of Operations Management. 28(2): 124–143.

J.L. Perry, T.A. Engbers, and S.Y. Jun. 2009. Back to the Future? Performance-Related Pay, Empirical Research, and the Perils of Persistence. Public Administration Review. 69(1): 39–51.

D. Miller, and P. Friesen. 1982. Innovation in conservative and entrepreneurial firms: Two models of strategic Momentum. Strategic Management Journal. 3: 1–25.

J. Anderson, and B. Weitz. 1989. Determinants of Continuity in Conventional Industrial Channel Dyads.Marketing Science. 8(8): 310–323.

R. Dwyer, and M. A. Welsh. 1985. Environmental Relationships of the Internal Political Economy of Marketing Channels. Journal of Marketing Research. 22: 397.

R. Narasimhan, S. Narayanan, and R.Srinivasan, 2010. Explicating the Mediating Role of Integrative Supply Management Practices in Strategic Outsourcing: A Case Study Analysis. International Journal of Production Research. 48(2): 379–404.

P. McDougal. 2003. Outsourcing’s on in a Big Way. Communication Convergence. 17.

A. T. Kearney. 2004. A. T. Kearney’s 2004 Offshore Location Attractiveness Index: Making Offshore Decisions.

The Star. 2004. Malaysia Must Move or Lose The Outsourcing Opportunity Retrieved from www.thestar.com.my.

Deloitte Consulting White Paper. 2005. Malaysia's Edge In The Fast Evolving Outsourcing Space. Kuala Lumpur.

P. Medley. 2005. Consumer for 2010: Asian Perspective on the World Extremes. IBM Business Institute for Business Value.

MIDA. 2010b. Malaysian Industrial Development Authority report, Investmentin the Manufacturing Sector- Policies, Incentives and Facilities.

V. K. Lai. 2008. Tightening the Supply Chain. STAR Publications. 10.

C. Lee. 2004. Outsourcing’s Next Big Things-Malaysia Retrieved July 15, 2006, from CNET News.com.

FMM. 2010. Federation of Malaysian Manufacturers Directory, Malaysian Industries. 38th. edition.Kuala Lumpur: FMM.

VentureOutsource.com. 2007. September 15. Malaysia trade minister on industry and globalization. Retrieved Jun 10, 2008, from http://ventureoutsource.com.

O.N. Ndubisi, M. Jantan, C. H. Loo, and A. Salleh. 2005. Supplier Selection and Management Strategies and Manufacturing Flexibility. The Journal of Enterprise Information Management. 19(3): 330–349.

H. Wentzek. 2003. Pull Away from Tthe Pack, The Key to Transformational Growth in the Electronics Industry. IBM Business Consulting Services.

B. H. Quah. 2009, April 20. Deindustrialising for the Wrong Reason. The Star Publication. 10.

T. R. Holcomb, and M. A. Hitt. 2007. Toward a Model of Strategic Outsourcing. Journal of Operations Management. 25: 464–481.

R. T. McIvor, P. K. Humphreys, and W. E. McAleer. 1998. European Car Makers and Their Suppliers: Changes at the Interface. European Business Review. 98(2): 87–99.

K. W. Khong. 2005. The Perceived Impact of Successful Outsourcing on Customer Service Management. Supply Chain Management: An International Journal. 10(5): 402–411.

A. S. Maiga, and F. A. Jacobs. 2004. The Association Between Benchmarking and Organizational Performance: An Empirical Investigation. Managerial Finance. 30(8): 13–33.

K. M. Gilley, and A. Rasheed. 2000. Making More by Doing Less: An Analysis of Outsourcing and its Effects on Firm Performance. Journal of Management. 26(4): 763–790.

T. Bolat, and O. Yilmaz. 2009. The Relationship Between Outsourcing and Organizational Performance. Is it Myth or Reality for the Hotel Sector? International Journal of Contemporary Hospitality Management. 2(1): 7–23.

B. J. Fifarek, F. M. Veloso, and C. I. Davidson. 2008. Offshoring Technology Innovation: A Case Study of Rare-Earth Technology. Journal of Operations Management. 26(2): 222–238.

M. S. Logan. 2000. Using Agency Theory to Design Successful Outsourcing Relationships. International Journal of Logistics Management. 11(2): 21.

M. C. Jensen, and W. H. Meckling. 1976. Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics. 3(4): 305–360.

I. R. Macneil. 1980. The New Social Contract: An Inquiry Into Modern Contractual Relations. Yale University Press, New Haven

R. Dwyer, P. Schurr,and S. Oh. 1987. Developing Buyer-seller Relationships. Journal of Marketing. 51: 11–27.

S. Ganesan. 1994. Determinants of Long-term Orientation in Buyer-seller Relationships. Journal of Marketing. 58: 1–19.

M. Fichman, and P. Goodman. 1996. Customer-supplier Ties in Interorganizational Relations. Research in Organizational Behavior. 8: 285–329.

C. C. Izquierdo, and J. G. Cillan. 2004. The Interaction of Dependence and Trust In Long-term Industrial Relationships. European Journal of Marketing. 38(8): 974–994.

S. S. Andaleeb. 1995. Dependence Relations and the Moderating Role of Trust Implications for Behavioral Intentions in Marketing Channel. International Journal of Research in Marketing. 12: 157–172.

J. Anderson, and J. A. Narus. 1984. A Mçdel of the Distributor's Perspective of Distributor-Manufacturer Working Relationships. Journal of Marketing. 48: 62–74.

R. Dwyer, P.Schurr, and S. Oh. 1987. Developing Buyer-seller Relationships. Journal of Marketing. 51: 11–27.

A. W. Joshi, and R. L. Stump. 1999. The Contingent Effect of Specific Asset Investment on Joint Action in Manufacturer Supplier Relationships: an Empirical Test of the Moderating Role of Reciprocal Asset Investments, Uncertainty and Trust. Journal of the Academy of Marketing Science. 27(3): 291–305.

L. Bucklin, and S. Sengupta. 1993. Organizing Successful Co-marketing Alliances. Journal of Marketing. 57(4): 32–46.

N. Kumar, L. Scheer, and J. B. Steenkamp. 1995. The Effects of Perceived Interdependence on Dealer Attitudes. Journal of Marketing Research. 32(August): 348–356.

S. Kauser, and V. Shaw. 2004. The Influence of Behavioural and Organisational Characteristics on the Success of International Strategic Alliances. International Marketing Review. 27(1): 17–52.

R. O. Large. 2005a. Communication Capability and Attitudes Toward External Communication of Purchasing Managers in Germany. International Journal of Physical Distribution & Logistics Management. 35(6): 426–444.

J. Mohr, and R. Spekman. 1994. Characteristics of Partnership Success: Partnership Attributes, Communication Behavior, and Conflict Resolution Techniques. Strategic Management Journal. 15: 135–152.

K. E. Voss, J. L. Johnson, J. B. Cullen, T. Sakano, and H. Takenouchi. 2006. Relational Exchange in US-Japanese Marketing Strategic Alliances. International Marketing Review. 23(6): 610–635.

B. R. Konsynski, and F. W. McFarlan. 1990. Information Partnerships-shared Data, Shared Scale. Harvard Business Review. 68(5): 114–120.

J.C. Henderson. 1990. Plugging into Strategic Partnerships: The Critical IS Connection. Sloan Management Review. JO(3): 7–18.

R. Dwyer, and M.A. Welsh. 1985. Environmental Relationships of the Internal Political Economy of Marketing Channels. Journal of Marketing Research. 22(November): 397.

R. Achrol, and L. W. Stern. 1988. Environment Determinants of Decision-making Uncertainty in Marketing Channels. Journal of Marketing Research. 25(1): 36–50

T. G. Noordewier, G. John, and J. R. Nevin. 1990. Performance Outcomes of Purchasing Arrangements. Journal of Marketing. 54(4): 80–93.

P. Bender. 1999. Cashing in on competition. Outsourcing Journal Retrieved from www.outsourcingjournal.com/issues.

D. Jennings. 1996. Outsourcing Opportunities for Inancial Services International Journal of Strategic Management. 29(3): 93–403.

J. B. Quinn. 1999. Strategic Outsourcing: Leveraging Knowledge Capabilities. Sloan Management Review. 40 (4): 9–21.

G. Lawrie, and I. Cobbold. 2004. Third-Generation Balanced Scorecard: Evolution of an Effective Strategic Control Tool. International Journal of Productivity and Performance Management. 53(7): 611–623.

R. S. Kaplan, and Norton, D. 1996b. Using the Balanced Scorecard as a Strategic Management System. Harvard Business Review. (January-February). 78–85.

R. S. Kaplan, and D. P. Norton. 1992. The Balanced Scorecard: Measures That Drive Performance. Harvard Business Review. 70: 71–79.

L. Buchanan. 1992. Vertical Trade Relationships: The Role of Dependence and. Journal of Marketing Research. 29(1): 65.

G. Gundlach, and E. Cadotte. 1994. Exchange Interdependence and Interfrm Interaction: Research in a Simulated Channel Setting. Journal of Marketing Research. 3(Nov): 516–532.

N. Kumar, L. Scheer, and J. B. Steenkamp. 1995. The Effects of Perceived Interdependence on Dealer Attitudes. Journal of Marketing Research. 32(August): 348–356.

D. G. Pruitt. 1981. Negotiation Behavior. Academic Press, New York, NY.

O. E. Williamson. 1985. The Economic Institutions of Capitalism. The Free Press New York, NY.

J. Mohr, and R. Spekman. 1994. Characteristics of Partnership Success: Partnership Attributes, Communication Behavior, and Conflict Resolution Techniques. Strategic Management Journal. 15: 135–152.

J. Anderson, H. Hakansson, and J. Johanson.1994. Dyadic Business Relationships within a Business Network. Journal of Marketing. 58(4): 1–15.

J. Anderson, and J. A. Narus. 1990. A Model of Distributor Firm and Manufacturer Firm Working Partnerships. Journal of Marketing. 54(January): 42–58.

R. M. Morgan, and S. D. Hunt. 1994. The Commitment-trust Theory of Relationship Marketing. Journal of Marketing. 58(3): 20.

J. Kapp, and G. Barnett. 1983. Predicting Organizational Effectiveness from Communication Activities: A Multiple Indicator Model. Human Communication Research. 9: 239–254.

J. Mohr,and J. R. Nevin. 1990. Communication Strategies in Marketing Channels: A Theoretical Perspective. Journal of Marketing. 54(4): 36.

A. Menon, S. G. Bharadwaj, P. T. Adidam, and S. W. Edison. 1999. Antecedents and Consequences of Marketing Strategy Making: A Model and a Test. Journal of Marketing. 63(2): 18–40.

P. K., Humphreys,W. L. Li, and L.Y. Chan. 2004. The Impact of Supplier Development on Buyer–Supplier Performance. Omega. 32(2): 131–143.

S. Kauser and V. Shaw. 2004. The Influence if Behavioural and Organisational Characteristics on the Success of International Strategic Alliances. International Marketing Review. 27(1): 17–52.

M. S. Cheung, and M. B. Myers. 2008. Managing Knowledge Sharing Networks in Global Supply Chains. International Journal of Management and Decision Making. 9(6): 581–599.

M. J. Robson, D. Skarmeas, and S. Spyropoulou. 2006. Behavioral Attributes and Performance in International Strategic Alliances: Review and Future Directions. International Marketing Review. 23(6): 585–609.

S. Chapman, and P. Carter. 1990. Supplier/customer Inventory Relationships Under Just-In-Time. Decision Sciences. 21(1): 35–51.

R. B. Handfield. 1993. A Resource Dependence Perspective of Just-In-Time Purchasing. Journal of Operations Management. 11(3): 289–311.

J. Im, and S. Lee. 1989. Implementation of Just-In-Time Systems in U.S. Manufacturing Firms. International Journal of Operations and Production Management. 13(1): 5–14.

A. Raturi, J. Meredith,D. McCutcheon, and J. Camm. 1990. Coping with the build-to-forecast environment. Journal of Operations Management. 9(2): 230–249. Retrieved from http://www.state.gov/e/eeb/ifd/2007/82336.htm.

G. Mercer. 1995. Modular Supply in the 1990s–The Keys to Success. Europe’s Automotive Components Business, 2nd quarter. 112–135.

R. Venkatesan. 1992. Sourcing: To Make or not to Make. Harvard Business Review. 98–107.

Quinn, J. B. and Hilmer, F. G. 1994. Strategic Outsourcing. Sloan Management Review. 43–55.

G. B. Richardson. 1972. The Organization of Industry. The Economic Journal. 883–896.

A. Dubois. 1994. Organizing Industrial Activities–An Analytical Framework. Doctoral dissertation, Chalmers University of Technology, Gothenburg.

J. T. Mahoney, and J. R. Pandian. 1992. The Resource-based View Within the Conversation of Strategic Management. Strategic Management Journal. 13(5): 363–380.

R. Makadok. 2001. Toward a Synthesis of the Resource-based and Dynamic-capability Views of Rent Creation. Strategic Management Journal. 22(5): 387–401.

R. P. Rumelt. 1984. Towards a Strategic Theory of The Firm. In Lamb, R. B. (Ed.). Competitive Strategic Management. Englewood Cliffs, NJ: Prentice-Hall. 556–570.

R. Bettis,S. Bradley, and G. Hamel. 1992. Outsourcing and Industrial Decline. Academy of Management Executive. 6(1): 7–22.

M. Kotabe. 1998. Efficiency vs. Effectiveness Orientation of Global Sourcing Strategy: A Comparison of U.S. and Japanese Multinational Companies. Academy of Management Executive. 12(4): 108–118.

D. Lei,and M. Hitt. 1995. Strategic Restructuring and Outsourcing: The Effect of Mergers and Acquisitions and Lbos on Building Firm Skills and Capabilities. Journal of Management. 21(5): 835–859.

G. G. Dess, A. Rasheed, K. McLaughlin,and R. Priem. 1995. The New Corporate Architecture. Academy of Management Executive. 9(3): 7–20.

C. Manolis, R. Dahlstrom, and A. Nygaard. 1995. A Preliminary Investigation of Ownership Conversions in Franchised Distribution Systems. Journal of Applied Business Research. 11(2): 1–8.

J. P.Cannon, R.S. Achrol, and G.T. Gundlach. 2000. Contracts, Norms, and Plural Form Governance. Journal of the Academy of Marketing Science. 28(Spring): 180–194.

T. G. Noordewier, G. John, and J. R. Nevin. 1990. Performance Outcomes of Purchasing Arrangements. Journal of Marketing. 54(4): 80–93.

O. Joongsan, and S. K. Rhee. 2008. The Influence of Supplier Capabilities and Technology Uncertainty on Manufacturer-supplier Collaboration: A Study of the Korean Automotive Industry. International Journal of Operations & Production Management. 28(6): 490–517.

Downloads

Published

2015-04-12

Issue

Vol. 74 No. 1: May 2015

Section

Science and Engineering

License

Copyright of articles that appear in Jurnal Teknologi belongs exclusively to Penerbit Universiti Teknologi Malaysia (Penerbit UTM Press). This copyright covers the rights to reproduce the article, including reprints, electronic reproductions, or any other reproductions of similar nature.

How to Cite

Industrial Supplier-Manufacturer Relationship and Environmental Dynamism on Strategic Outsourcing Success: A Conceptual Study. (2015). Jurnal Teknologi (Sciences & Engineering), 74(1). https://doi.org/10.11113/jt.v74.3345