Antecedents and Outcomes of Supply Chain Effectiveness: An Exploratory Investigation *

Supply chains are groups of organizations that collectively process raw materials into finished goods (Hult et al., 2002). Such collaborative relationships have garnered increased attention in management research over the last several years (e.g., Artz and Norman, 2002; Cool and Henderson, 1998; Glisby and Holden, 2005). This increased attention appears merited for at least two reasons. First, purchased inputs can account for up to 75 percent of a firm's operating budget (Quinn, 1997). And second, firms that find ways to lower input costs or increase input quality gain advantages over competitors (Barney, 1991). One way that firms manage reoccurring purchases is referred to as supply chain management (SCM), which is the integration and management of supply chain organizations and activities through cooperative inter-organizational relationships, effective business processes, and high levels of information sharing (Handfield and Nichols, 2002). The implementation of SCM can increase communication and cooperation among firms at successive stages of production. The benefits include decreased costs through reduced inventory and shorter order times, improved quality through better product design, and enhanced innovation through more diverse design process inputs (Elmuti, 2002; Tan, 2002). The benefits of SCM can be large; one estimate posits that SCM can increase value and/or reduce costs by up to 25 percent along a chain (Hughes, 2005). Although there is growing consensus that effective SCM decreases costs and enhances value, scant attention has been paid to the key antecedents of supply chain effectiveness and how effective SCM shapes focal firms' performance. Thus, our central aim is to provide greater clarification into some key antecedents of supply chain effectiveness, and to elaborate on how supply chain effectiveness, in turn, shapes firm performance. Over the last decade, the knowledge-based view (KBV) has emerged as an important perspective informing how firms leverage knowledge to attain higher performance (Acedo et al., 2006). The KBV contends that knowledge is the most critical firm resource (Grant, 1996). Accordingly, a firm's ability to explore and exploit this knowledge through knowledge sharing and knowledge integration is a key source of sustained competitive advantage (Cohen and Levinthal, 1990; Kogut and Zander, 1992). Conceptual and empirical KBV research has emphasized both internal and external knowledge sharing. While research on internal knowledge sharing addresses the exploitation of existing know-how, expertise, and best practices within a firm's network of organizational members (Szulanski, 1996), research on external knowledge sharing focuses on knowledge integration across firms (Lane and Lubatkin, 1998). This latter stream of research emphasizes several factors that facilitate or impede knowledge sharing in the context of joint ventures (Inkpen and Dinur, 1998), franchise systems (Darr et al., 1995), and inter-organizational relationships in general (Dyer and Singh, 1998). All organizations face the fundamental decision to obtain products and services through markets (buy) or hierarchies (make) (Williamson, 1985). Hierarchies (making) enhance predictability and assurance of supply but require large investments and thus limit flexibility. Alternatively, markets (buying) permit flexibility and reduce investment, but increase uncertainty and the risk of a supplier acting opportunistically. Supply chains are inter-organizational relationships that represent a middle ground between markets and hierarchies (Ketchen and Giunipero, 2004). Such relationships create unique knowledge-sharing contexts that blur internal and external knowledge sharing, and as such they form a unique context to study the tenets put forth by the KBV. Researchers have shown an increased interest in knowledge as an important resource in the context of supply chains. Indeed, the role of SCM skills and knowledge (e. …