Chapter 4. Methodology
4.4 Scale development methodology
4.4.5 Convergent validity
Average variance extracted (AVE) represent the amount of variance that is captured by the construct in relation to the amount of variance due to measurement error (Fornell & Larcker, 1981a) and it is considered a good indicator of convergent validity (Devellis, 2011). Table 4-9 provides the AVE values for the constructs in the study. All constructs had AVE values exceeding 0.50, indicating that a large amount of variance is captured by each construct rather than being explained by measurement error. Convergent validity for could also be assessed by the magnitude and sign of the factor loadings of the measurement items (see Table 4-10). Inspection of the standardized loadings indicate that each was in its anticipated direction (i.e., positive correspondences between constructs and their posited indicators), and was statistically significant at p < 0.05.
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Table 4-12: CFA results - Item loadings
Label Item Description
Std. path loading Std. Error Critical Ratio Mean a Cultural Astuteness
Please indicate the extent to which the following is true for your firm. CA5
Our firm is aware that the norms for business communication could be different in our supplier’s culture
0.806 - - 5.54
CA4 Our firm generally is willing to adapt to cultural
differences between us and our supplier 0.854 0.104 11.563 5.2
CA3 Our firm believes that cultures affect the way firms
conduct their business 0.854 0.102 11.568 5.46
CA2
Our firm values the importance of understanding our supplier’s organizational culture for fostering a healthy relationship
0.907 0.104 12.617 5.35
Bi-directional communication
Please indicate the extent to which your company does the following communication activities. CC5
Our firm and our supplier influence each other’s decisions through discussion rather than formal requests
0.81 - - 4.95
CC4 Our firm and our supplier have several different
channels to communicate 0.777 0.086 10.022 5.3
CC3 Our firm and our supplier believe in having informal
communication 0.832 0.086 11.006 5.25
CC2 Our firm and our supplier have open and two-way
communication 0.844 0.084 11.221 5.58
Operations Astuteness
Please indicate the extent to which the following is true for your firm OA5 Our firm uses site visits as a means of evaluating the
state of our supplier’s manufacturing operations 0.696 - - 5.27
OA4
Our firm commits our supplier to regular sharing of operations information such as inventory levels, daily production, and weekly production plan
0.8 0.122 8.613 5.31
OA3 Our firm always has an employee who understands
supplier operations well 0.828 0.12 8.889 5.46
OA2 Our firm's discussions with the supplier on production
bottlenecks results in useful information sharing 0.807 0.112 8.679 5.26 OA1 Our firm is actively engaged in understanding and
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Social Cognizance
Please indicate the extent to which the following is true for your firm SCG5 Our firm's supplier ‘code of conduct’ is based on an
industry-wide code of conduct standard 0.864 - - 5.46
SCG4
Our firm regularly updates its supplier ‘Code of Conduct’ on the basis of revisions to international standards such as the ILO’s eight core conventions and / or SA8000
0.927 0.076 15.465 5.34
SCG2 Our firm consults industry peers to advance our
knowledge of potential social issues in supply chains 0.804 0.092 11.835 5.01
SCG1
Our firm's supply chain personnel are aware of various international social accountability standards such as SA8000 or the ILO’s eight core conventions on labor and human rights
0.785 0.085 11.353 5.39
SCG6
Our firm's supplier ‘code of conduct’ has operational- level details on social issues such as allowable working hours, labor practices and discrimination
0.882 0.079 14.014 5.28
Firm Social Practices
Please indicate the extent to which the following practices are adopted by your firm. FSP4
Our firm asks our supplier to provide evidence of complying with local / national laws on use of under-age workers
0.857 - - 4.9
FSP6
Our firm asks our supplier to maintain documentary evidence for proof of age upon recruitment of new employees (such as copies of birth certificates or any other government issued identification documents)
0.924 0.077 15.515 4.75
FSP7
Our firm asks our supplier to ensure that its employees are not asked to deposit money, to be returned to them upon completion of a fixed employment period
0.845 0.088 12.995 4.53
FSP3
Our firm asks our supplier to ensure that its employees understand their wage structure as indicated on their wage slips and / or payroll records
0.876 0.079 13.895 4.64
FSP2
Our firm asks our supplier to ensure its compensation system is aligned with the minimum wage set by its country’s labor laws
0.885 0.076 14.178 4.91
FSP9
Our firm asks our supplier to provide evidence that management at all levels can explain their
responsibilities with regard to the company’s OSH program
0.923 0.07 15.487 4.94
FSP10 Our firm asks our supplier to provide evidence that all
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FSP11
Our firm asks our supplier to provide evidence that a mechanism exists to encourage input from workers on OSH issues
0.931 0.064 15.755 4.99
Supplier Opportunism
In a buyer-supplier relationship, sometimes suppliers can exhibit opportunistic behavior when a problem occurs. When a problem occurs, how often will the supplier do the following?
SO2 Our supplier “window dresses” its efforts to improve 0.922 - - 3.7
SO3 Our supplier expects us to pay for more than our fair
share of the costs to correct the problem 0.796 0.067 12.738 3.68
SO4 Our supplier is unwilling to accept responsibility 0.832 0.061 14.009 3.47 SO6 Our supplier fails to provide proper notification of a
problem 0.84 0.07 14.296 3.57
SO1 Our supplier makes hollow promises 0.923 0.049 18.17 3.43
Firm Social Performance
For each of the items listed below, how would rate your firm’s performance in the last two years. FSPf1 Ensuring adherence to supplier code of conduct by tier-
1 suppliers 0.842 - - 5.22
FSPf2 Screening suppliers for potential social concerns during
contract negotiations 0.908 0.084 13.742 5.1
FSPf3 Conducting site audits of tier-1 suppliers for code of
conduct conformance 0.839 0.082 12.038 5.2
FSPf4 Expanding the list of social performance metrics for
suppliers 0.862 0.085 12.588 4.99
Supplier Social Performance
For each of the items listed below, how would rate your supplier’s performance in the last two years. SSP5 Supplier’s collaborative efforts with our firm to develop
a socially responsible supply chain 0.908 - - 4.99
SSP2 Supplier’s improvement in bringing transparency to its
payroll system 0.871 0.068 14.807 4.7
SSP3 Supplier’s improvement towards meeting minimum-age
requirements for hiring workers 0.863 0.069 14.525 4.78
SSP4 Supplier’s improvement in complying with our firm’s
supplier code of conduct 0.806 0.063 12.59 5.09
Operations Performance
For each of the items listed below, how does the performance of your firm compare with its primary competitors?
Qual1 Performance quality (i.e., a product’s primary operating
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Qual2
Conformance quality (i.e., the degree to which a product’s operating characteristics meet established standards)
0.867 0.097 11.173 5.71
Qual3 Product reliability (i.e., the probability of a product
failing within a specified time period) 0.773 0.092 9.795 5.77
Flex1 Being able to provide fast-response deliveries from
order to end customer 0.794 - - 5.43
Flex2 Order fulfillment lead time 0.87 0.086 11.338 5.41
Flex3 Delivery lead time 0.908 0.089 11.914 5.44
Flex4 Ability to rapidly change production volumes 0.687 0.115 8.39 5.23
a Likert-scale responses from 1 to 7.