Supply chain management in emerging markets

• Date: 01 September 2016
• Author: Andy Yeung,S. Viswanathan,Chenting Su,Kevin Zheng Zhou
• Published date: 01 September 2016
• DOI: http://doi.org/10.1016/j.jom.2016.07.007

Editorial

Supply chain management in emerging markets

1. Introduction

As multinational enterprises (MNEs ) increasingly source from

suppliers in emer ging markets, a part icular challenge i s how to

manage their relationships with suppliers within potentially

deleterious insti tutional environme nts. A large body of resea rch

has investigated supply chain management from multiple theo-

retical viewpoints , mostly from transa ction cost econom ics and

relational exchange persp ective (Carey et al., 2011). From these

perspectives, compa nies can use both formal governance mecha-

nisms such as contract s, control, and moni toring as well as

informal governance m echanisms such as tr ust, socializati on,

and relational norms to m anage the relationships with their sup -

pliers (Cao and Lumineau, 2015; Li et al., 2010; Villena et al.,

2011).

However, most extant studies on supply chain management

have overlooked the role of institutional environments in which

companies cooperate with their suppliers (Zhou et al., 2014).

As emerging markets have experienced massive changes in

their economic, so cial, and politic al institutions, institu tional

characteristics grea tly shape the efficacy of supply chain manage-

ment strategies. For exa mple, signing a detailed contra ct may not

be helpful in emerging markets where legal institutions are yet

to be developed. Transac tion cost economics was origi nated

from institutional c ontexts with a long tradi tion of contract

laws and strong legal re gimes. Yet such strong lega l institutions

do not automatica lly appear in emer ging markets (Handley and

Angst, 2015). Indeed, the lack of strong legal inst itutions repre-

sents one of the mos t severe challenges for businesses opera ting

in emerging markets (Pe ng, 2003). Related , the instability of po-

litical regime also challenges supply chain management practices

in emerging markets.

When strong political and legal institutions are absent, informal

institutions based on personal connections and social network play

a pivotal role, because social networks provide access to scarce re-

sources and offer legitimacy status (Yang et al., 2012).However, the

inherent restraint of social networks is the limited number of per-

sonal ties that an individual can possess. Because personal relation-

ships are difficult to build and costly to maintain, they may not be

able to catch up with rapid growing exchange scale in emerging

markets (Peng, 2003).

So how could companies manage their relationships with sup-

pliers in emerging markets, which are characterized by political,

legal, and social challenges? To address this fascinating issue, this

special issue serves as an exemplar for integrating the unique char-

acteristics of emerging economies in conceptual development and

empirical assessment.

2. Overview of the special issue

What makes emerging economi es a unique context to study

supply chain manage ment? Emerging ma rkets are “low-inco me,

rapid growth countri es using economic liberalizat ion as their pri-

mary engine of grow th”(Hoskisson et al., 2000), where ins titu-

tions are undergoing fundamental and continuous changes. The

most unique featu res that serious ly challenge effec tive supply

chain management are institutional voids, including shallow cap-

ital markets, deficient legal systems, lack of independent ac-

counting intermediaries, and etc. (Khanna and Palepu, 1997). In

large emerging marke ts, institutiona l voids also influence

regional economic development, leadin g to subnational varia -

tions within the same country (Zho u and Poppo, 2010). Accord-

ingly, companies must devel op alternative operat ions

management strategies and adjust their stra tegic decisions to

overcome institutio nal voids.

The call for papers generated 50 submissions, among which six

manuscripts were finally accepted after three or four rounds of re-

view. These six papers include survey research, case studies, and

archival data research, and use samples of Chinese firms, Indian

companies, and American firms that outsource in emerging mar-

kets. They also address explicitly the methodological issues (e.g.,

endogeneity and common method bias) indicated by the recent

JOM Editorial (Guide and Ketokivi, 2015).

The papers cover a variety of topics including:

How to deal with role hazard between buyers and suppliers

caused by sub-national institutional distance?

How do social management capabilities help multinational

buyers and their emerging market suppliers respond to stake-

holder pressures, address regulatory gaps, and improve social

performance?

How does institutional deficiency affect contractual inefficiency

and consequently ties utilization of emerging market firms?

How do outsourcing, in-house offshoring, and sales to emerging

markets affect product recalls and inventory performance?

How do buyer-supplier compatibility and institutional envi-

ronment affect product co-development between buyers and

suppliers?

Contents lists available at ScienceDirect

Journal of Operations Management

journal homepage: www.elsevier.com/locate/jom

Journal of Operations Management 46 (2016) 1e4

http://dx.doi.org/10.1016/j.jom.2016.07.007

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