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Keywords Supply chain management, Resources, Operations management, Performance management
Abstract In order to improve performance at the operational level, more and more firms are developing explicit linkages with suppliers and with customers. While the question of "what beneficial impact do linkages with suppliers and with customers have for a firm" has been addressed in numerous studies, the equally important question of "why" this beneficial impact arises deserves further discourse and explication. This paper borrows and applies the Resource-Based View of the Firm, a theoretical perspective prevalent in the strategic management literature, to develop a conceptual framework to describe, explain, and predict the advantages of a firm's linkages with entities in its supply chain on its internal operations. The proposed framework can be used to justify decisions to develop, strengthen, and protect relationships with suppliers on the upstream side and with customers on the downstream side. The framework can also be used to evaluate practices implemented to link a firm to its suppliers and customers and to provide a decision roadmap for firms to better understand how to maximize operational performance benefits from these supply chain linkages.
Introduction
Firms are becoming increasingly cognizant of the interdependencies that naturally exist between a firm's internal operational processes and those of suppliers and customers (Watts and Hahn, 1993). This awareness has encouraged both academia and practitioners to seek to better understand the criticality of developing explicit linkages with suppliers and with customers (i.e. supply chain linkages) and the benefits of such linkages. By "supply chain linkages, we refer to explicit and/or implicit connections that a firm creates with critical entities of its supply chain in order to manage the flow and/or quality of inputs from suppliers into the firm and of outputs from the firm to customers. These linkages are created by implementing practices that include, for example, the involvement of suppliers and customers in product design activities, the investment in enterprise resource planning systems to allow information sharing across the supply chain, JIT II, Web-based system contracting, etc.
A few scholars (e.g. Ellram, 1991; Choi et al, 2001) in studying this phenomenon have borrowed and applied theories from other disciplines (e.g. industrial economics, complexity science) to provide rich insights to better understand the benefits that firms...