How can supply networks increase firm value? A causal framework to structure the answer

Abstract

The recent literature in the field of supply chain management emphasizes the role of inter-organizational networks and the integration of vertical reproduction networks (supply chains) in particular as a key factor for value creation. However, the literature includes little empirical evidence. This situation suggests the need to appraise investments in such networks or supply chains carefully. How can a decision maker reliably assess the effect of investing in inter-organizational network arrangements on firm value? This article takes up this issue and suggests a framework consisting of five components to help answer the question. The task of the framework is to support the structuring and revelation of the causal chain between investments in the network on the one hand and the effect of these investments on firm value on the other hand. The article develops and explains the framework in detail and later on relates extant literature to its components. A finding of this article is that potential causal chains from changes in a supply chain or supply network to firm value can be quite long and hypothetical.

Impacts of supply chain management on company value: benchmarking companies from the fast moving consumer goods industry

“…To help filling this gap, Brandenburg and Seuring [5] suggest a model based on the discounted cash flow (DCF) method to quantify value impacts of changes of working capital and SC cost. This model is in line with an approach proposed by Otto and Obermaier [49].…”

“…Hence, an overview of selective literature indicating the heterogeneity of approaches derived from value-based management (VBM) and concepts for value-based SCM is depicted in Table 1 and briefly interpreted: SCM concepts in the reviewed papers vary from functional [36,62] or company specific [30,31,38] perspectives to network considerations [10,32,49] (see column ''SCM approach'' in Table 1). Value-based SCM is most often linked to EVA and shareholder value [4,5,10,32,37,38,49] (see column ''VBM approach''). Concepts and value drivers in SCM focused in the reviewed papers range from single functions [36], operational SC activities and processes [32,37,49] to SC strategy [10] (see column ''Concept, value driver'').…”

“…Value-based SCM is most often linked to EVA and shareholder value [4,5,10,32,37,38,49] (see column ''VBM approach''). Concepts and value drivers in SCM focused in the reviewed papers range from single functions [36], operational SC activities and processes [32,37,49] to SC strategy [10] (see column ''Concept, value driver''). Empirical aspects are reflected differently (see column ''Empirical aspect'')-some rather theoretical papers give no or few references to industrial examples [10,36,37,49,62], some papers comprise case studies from one or few companies [5,32], some papers extensively evaluate several hundreds of observations [8,30,31,38].…”

Elkötelezett kapcsolatok és nemzetköziesedés – vállalataink innovációs teljesítményének két fontos forrása

“…A relációspecifikus befektetések mérése ezen túlmenően is nehéz feladat. Otto-Obermaier [2009] úgy érvel, hogy a kapcsolatspecifikus befektetések mértékét az ún. ARA-modellel (Håkansson-Johanson [1992]) lehet legátfogóbban operacionalizálni.…”

Mutual trustworthiness as a governance mechanism in business relationships — A dyadic data analysis

“…Our hypothesis focuses on the turnaround effect; we analyze whether mutual trustworthiness can act as a governance mechanism in risky situations, such as sharing sensitive information. These two approaches are not contradictory, because a given level of trustworthiness between partners in a relationship is the result of an ongoing investment process (Otto -Obermaier, 2009). Due to this ongoing investment process, the accumulated level of trustworthiness is both a prerequisite but also a consequence of other relational phenomena.…”