An Empirical Analysis of the Relationship Between Supply Chain Complexity and Firm Performance
Keywords:
supply chain complexity, organizational complexity, product complexity, process complexity.Abstract
Companies have become increasingly complex as industries have advanced. In turn, supply chains have also become more complex, with businesses responding to environmental changes by forming strategic alliances or outsourcing to enter new markets and launch new products. Therefore, supply chain complexity has received much scholarly attention. However, earlier studies have not reached a consensus on the components involved in measuring supply chain complexity. Therefore, this study aims to identify the criteria for measuring supply chain complexity. This study classifies and measures complexity based on its form. Form is divided into organization, product, and process. The results of this study show that supply chain complexity has an inverted U-shaped relationship with firm performance. The maximum value found in the inverted U-shaped relationships indicates the specific point at which firm performance no longer increases, but begins decreasing, with an increase in supply chain complexity. This study offers several implications. First, it conducts a detailed examination of the individual variables used to measure supply chain complexity. Second, a new perspective is presented for investigating the effect of supply chain complexity on firm performance. Although some components of supply chain complexity are found to have a negative effect on firm performance, thereby confirming prior studies, other components are found to have a positive effect on firm performance up to a certain point; beyond that point, a negative effect is observed.
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