THE IMPACT OF SUPPLIER STRATEGIC PARTNERSHIP IN SUPPLY CHAIN ON ORGANIZATIONAL PERFORMANCE: AN EMPIRICAL STUDY OF SUPPLY CHAIN MANAGEMENT IN AN EMERGING ECONOMY

Abstract

Background: The purpose of this study is to create a theoretical framework for analyzing the causal relationship between supply chain management practices and firm performance, in the FMCG sector of Pakistan. A quantitative research approach was adopted, in which a multi-item scale Web-based survey using a structured online questionnaire was utilized to collect the primary data. A total of 232 questionnaires were collected from a sample of Karachi-based FMCG companies in Pakistan. Confirmatory Factor analysis and internal consistency were used to test the reliability and fitness of the measurement model, and structural equation modeling-SEM was employed to test the proposed hypotheses. Empirical findings reveal that there is a significant positive relationship between SCM practices and firm performance. However, the results of the individual-level analysis of SCM practices appear to vary from practice to practice. Of various SCM practices, supplier strategic partnership SSC with the highest beta value (i.e., ß = 0.488; t-value = 32.381; p _ 0.000) was found to have the greatest impact on firm performance, followed by information sharing customer relationship, and finally the outsourcing. This study will guide supervisors with a more in-depth understanding of SCM practices and their potential contribution to firm performance. The findings also encourage managers to place supplier strategic partnerships and information systems on high priority, on both inter-firm and intra-firm relationships, as prerequisites for achieving superior firm performance. The propositions and results of the study provide managers with guidelines about effective management of upstream supply chain networks and awareness of the potential synergies that arise from suppliers and the information system. This article further enriches the literature in an evolving area of supply chain management practices. Two key factors facing supply chain managers and scholars are addressed, and establish their ability to drive firm performance.