Antecedents and enablers of supply chain value creation : a perspective of SMEs participation in local procurement in Uganda

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.