A Contingency Perspective on Centralization of Supply Chain Decision-making and its Role in the Transformation of Process R&D into Financial Performance

Konstantin V. Krotov and Richard N. Germain

No 811, Working Papers from Graduate School of Management, St. Petersburg State University

Abstract: The research examines whether centralized supply chain decisionmaking within the firm plays a role in how the firm transforms investments in process research and development (R&D) into financial performance. This transformation includes the process investment - financial performance chain, which consists of process R&D funds, applied supply chain knowledge, supply chain process variance, and financial performance. In addition, the model includes production technology routineness, size, and integration. The results, based on a sample of 204 manufacturers operating in the United States, suggest that centralization cleaves the process investment - financial performance chain at the connection of supply chain process variance and financial performance. The net effect is that firm scale, production technology routineness, integration, and process R&D investment predict financial performance only when supply chain decision-making is decentralized within the firm. Firm scale, production continuity, integration, and process R&D investment confer no performance advantage in centralized firms.

Keywords: centralization of supply chain; contingency perspective (search for similar items in EconPapers)
Date: 2011
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