Supply chain natural resource scarcity strategies and their implications for ogranisational performance.:an empirical study of manufacturing companies.

Abstract

Concerns about natural resource scarcity are growing as some of these resources are critical for the successful functioning of firms. Research into the appropriate strategies for minimising dependencies caused by the scarcity of natural resources is still insufficient in the field of supply chain management. Whilst there is a growing recognition of the need to handle the issue of natural resource scarcity, there is limited empirical work on investigating what supply chain strategies should be utilised. This research provides insights from manufacturing companies and explores the conditions under which a specific natural resource will lead to buffering and/or bridging strategies and the implications for organisational performance. The research attempts to contribute to theory development by developing a Resource Dependence Theory based framework. The framework identifies the contingency factors that determine companies’ dependence that leads to specific supply chain strategies. This study contributes further into the identification of the impacts of these strategies on organisational performance. The proposed conceptual framework is validated through the means of exploratory research. The empirical research included the collection of qualitative data from thirteen companies that use different natural resources. In order to manage and analyse the 31 semi-structured interviews content analysis was conducted using the qualitative analysis software NVivo. After the qualitative first stage, quantitative research followed to validate the findings. Responses from 183 logistics, purchasing and supply chain managers were collected and analysed by using the partial least squares (PLS) method to verify the relationships between the constructs in the framework. The study reveals that there are three main contingent factors, namely; the importance of the scarce natural resource (e.g. the price of the natural resources), the supplier substitutability of the scarce natural resource (e.g. number of suppliers) and the discretion over the scarce natural resource (e.g. legislation and geopolitical risk). This is leading companies to natural resource dependencies thus to specific supply chain NRS strategies (i.e. buffering strategies and bridging strategies). The research has shown that the two strategies can improve both resource efficiency and a company’s competitive advantage.