The impact of resources and supply chain relationships on product-mix, process and relationship changes in the agricultural food industry

Abstract

Substantive strategic developments are frequently made by New Zealand firms involved in the processing or trading of food products of agricultural origin. Changes to product-mix, processes and supply chain relationships, which often appear related, are typical of such strategic developments. Many of these firms are similar and operate in similar environments, yet they make fundamentally different strategic change decisions. The objective of this research was to identify the drivers of strategic change and to ascertain the role of supply chain relationships in these changes.

Supply chains have been discussed in research with limited consideration for product-mix and process changes. Likewise, literature explaining strategic changes has largely been void of a consideration for supply chain relationships. In fact, research has not addressed the drivers of strategic change comprehensively. This study addressed this gap by developing a theoretical model based on the resource-based view of the firm. Resources were categorised into assets, capabilities and dynamic capabilities, and key relationships between resources and strategic changes, and between strategic changes and supply chain changes were hypothesised. Survey data from 291 respondents were used to conduct exploratory factor analyses. Testing of the hypothesised relationships was accomplished with structural equation modeling. Multi-group analysis in structural equation modeling was used to test several moderator relationships

Results indicate that resources drive strategic change. Furthermore, resources form a network of interdependent relationships as confirmed by Structural Equation Modeling.

Interestingly, many resources deemed important in previous research did not manifest themselves as distinct constructs in this study. Only technology and marketing capabilities emerged as drivers of strategic process and product-mix change, respectively. Results show that process change and marketing capabilities can account for 92 percent of the data variance in product-mix change, with process change accounting for the largest proportion. Technology capabilities explain 14 percent of the variance in process change.

Strategic change leads to the formation of new supply chain relationships. Product-mix change accounted for 38 percent of the variance in customer change. Process change and competitive intensity accounted for 34 percent of the variance in supplier change.

Collaborative supply chain relationships (customer and supplier collaboration were conceptualised as dynamic capabilities) did not reduce firms' tendency to seek out new relationships. Such collaborative relationships did not enhance a firm's ability to implement strategic change but neither did they lock firms into particular strategic paths. In the case of collaborative customer relationships, firms' marketing capabilities as drivers of strategic product-mix change became insignificant. This may constitute the explanation for supply chain changes. For firms to be able to make substantial strategic changes they probably need to form new customer and supplier relationships, because existing relationships do not support strategic change. Thus, firms pursue their own strategic initiatives and if needed they will establish new supply chain relationships. The findings have significant theoretical and managerial implications.