Abstract:
The purpose of the study was to investigate how small and medium enterprises (SMEs)
involved in local procurement create supply chain value. The study investigated supply
chain value creation (SCVC) by testing three initiators of SCVC: entrepreneurial
competencies; supply chain collaboration; and supply chain trust as well as the moderation
effects of trust on SCVC. Feedback from a cross-sectional survey of 294 respondents in
the construction, furniture and fitting, food processing and agricultural sectors was utilized
to test hypothesized relationships. The study employed factor analysis and structural
equation modelling to conduct analysis. The unit of analysis was an SME and level of
analysis was the SME owner-manager. The results show that building value-driven supply
chains in Uganda’s local procurement context requires SME owner-managers to integrate
competencies, share information with customers, communicate collaboratively with
suppliers and build an optimal level of trust. Supply chain trust is highly regarded in
facilitating the exchange of resources within local communities but the owner-managers’
perspective – which differs in terms of how they view customers and suppliers – alters
how managers assess trusted customers and suppliers, and what different tactics they
may employ in building trust in customer, as opposed to supplier, relationships. The
research findings demonstrate how managers, who trust customers on the basis of
transparency and reliability, by contrast trust suppliers on the basis of operational
flexibility, fairness and market credibility. The study contributes to existing knowledge by
separating out and defining the key competencies most important in the management of
local SME supply chains: opportunity competence and commitment competence. These
are what the study has named Entrepreneurial Supply Chain Value-creating Competences
(ESCVC). In addition, the study illuminates how trust increases the value suppliers create
for the focal firm. Finally, by demonstrating that cost and goal congruence are not key
value drivers, the research provides compelling evidence for why managers
should instead focus on developing competencies, facilitating the flow of information and
building trust in order to optimally benefit from local supply chains.
