The Influence of Governance Mechanism on Supply Chain Performance in Developing Economies: Insights from Ghana

Abstract

Drawing on the Transaction Cost Economics (TCE) and taking the perspective of a developing economy, the study examined the impacts of governance mechanisms (GM-formal control and social control) on supply chain (SC) performance (operational efficiency and service & market performance). Data were collected using questionnaires from 152 firms operating in the most industrialized regions of Ghana. Structural equation modelling technique (using LISREL 8.5) was employed in estimating the study's model. The study finds significant positive associations between formal control and operational efficiency; and between social control and service & market performance. The study also finds that within the research context, social control is antecedent of (adherence to) formal control; and that the effect of social control on operational efficiency is fully channelled via formal control. These findings imply that firms' ability to institute and implement GMs would present them opportunities to enhance the performance of their SCs. Theoretically, the results suggest the potential mediating role of formal control in the link between social control and SC performance; which means that having in place formal controls is necessary for firms in this part of the world (who mostly rely on social control) to better experience benefits arising out of social relationships.

How interfirm governance mechanisms and capabilities determine supply chain responsiveness in small businesses: Evidence from an African market

“…First, the punitive element in formal control prevents supply chain partners from pursuing their selfish interests (Um & Oh, 2020;Um & Kim, 2019). Formal control ensures compliance and helps exchange parties to overcome opportunistic behaviors that undermine collaborative initiatives in supply chains (Anin et al, 2016;Lumineau & Malhotra, 2011;Li et al, 2010). Second, in a manufacturer-channel member relationship, formal control can address issues relating to delivery times, quantity flexibility, quantity and price discounts, reservation policy, sales rebate, buyback, and revenue sharing (Dekker et al, 2019;Arshinder et al, 2011).…”

“…We adapted four items from Anin et al (2016), Huang et al (2014), andCai et al (2009) to measure formal control (α = .950). All items were evaluated using a seven-point scale that ranged from "strongly disagree (=1)" to "strongly agree (=7)".…”

“…In collectivist societies (e.g. Ghana), social control may be predisposed to taken-for-granted attitudes such as negligence, compromise of responsibilities, abuse of privileges, and impunity (Anin et al, 2016). Thus, in the absence of the intervening condition of collaboration, social control itself might contribute little to coordination.…”

“…An argument is that IGMs could help reduce opportunism and its associated relational hazards inherent in supply chain relationships (Um & Oh, 2020;Hawkins et al, 2008). However, literature also indicates that IGMs alone do not always benefit interfirm relationship performance outcomes (Tse et al, 2019;Anin et al, 2016;Osmonbekov et al, 2016;Huang et al, 2014;Li et al, 2010;Hoetker & Mellewigt, 2009). Moreover, previous research says little about how small businesses can utilize IGMs to improve performance (Cao et al, 2018).…”

The Implications of Managed-Workforce Diversity on Internal Supply Chain Integration and Business Performance

“…Business performance within SC literature has often been related to the positive consequences of SC practices (Anin, Essuman, & Sarpong, 2016). In most studies, some of the common positive consequences of SC integration have been on operational performance (e.g.…”