Determinants Of Informal Coordination In Networked Supply Chains

Purpose - The purpose of this paper is to empirically examine capability connectivity, relationship alignment and the ability to informally network in the supply chain as determinants for better utilizing capabilities amongst supply chain partners. In particular, the paper focuses on how the above described determinants may impact on operational performance in the supply chain when responding to short-lived demand requirements or highly dynamic markets.Design/methodology/approach - A mixed research methodology is used, including a qualitative exploratory phase to confirm the relevance of the research question to the practitioner, followed by quantitative structural equation modeling, based on a sample of 231 supply chain professionals.Findings - In total, four determinants of informal networking were derived: capability connectivity, describing the ability of supply chain partners to rapidly and informally integrate capabilities, such as IT, to service an ad hoc market requirement; relationship alignment or the ability to informally integrate resources across supply chain partners in the context of highly dynamic market situations; the informally networked supply chain itself, measuring the ability of supply chain partners to respond to transient opportunities in the context of highly dynamic markets; and finally operational performance which measures the effect informal networking has on company performance. Results show that informal coordination of supply chain activities influences operational performance in different ways, and most significantly impacts positively on operational efficiency through supply-oriented informal networking. The study identified that industry rules and regulations have a significant impact on the propensity of supply chain partners to collaborate informally. Finally, it is also shown that relationship alignment between companies is an important factor to achieve both market- and supply-oriented informal networking capabilities.Practical implications - The management of industry rules, regulation, connectivity, and relationship alignment are significant antecedents for informal coordination of supply chain capabilities in business networks. The study shows positive effects of informal networking in supply chains on operational efficiency, and suggests that companies should strive to enable greater flexibility to connect with their trading partners without an abundance of idiosyncrasies. Furthermore, relationship alignment, in combination with process and IT connectivity, is significant in creating the foundation for informal networking in supply chains, in particular for supply-related activities.Originality/value - The paper adds a new concept, the informally networked supply chain, and shows that capability connectivity and relationship alignment may enable new alternative ways of coordinating supply chain capabilities to meet a specific market requirement. As such, it offers a new perspective in relation to flexibility and agility in the supply chain.