Providers

Providers are enabling increasingly more sophisticated ways for a company to improve its capability to respond to changes or to be ‘agile’. Tseng and Lin (2011) hold that achieving agility requires responsiveness in strategies, technologies, personnel, business processes and facilities. Agility providers should exhibit agile characteristics as well as make them available to others and to determine the agility capabilities of themselves or potential partners. A number

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of studies have been conducted that were intended to identify a set of agility providers from which organisation leaders can select items appropriate to their own strategies. Vázquez-Bustelo et al. (2007) believe that human resources, technologies, practices relating to internal organisation and external relations, to product development and to knowledge management and learning are providers of agility. Yusuf et al. (1999) propose a set of thirty-two agility-providers grouped into four dimensions:

 Core competency management;

 Virtual enterprise;

 Capability for reconfiguration;

 Knowledge-driven enterprises.

It is highly probable that there is no single set of agility providers reflecting all aspects (Tseng and Lin, 2011). Based on these models, the following providers have been selected in this study.

It includes dynamic capabilities, degree of ICT adoption and the ability to join in virtual enterprises.

Teece et al. (1997) define dynamic capabilities as the firm's ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments.

Dynamically renewing the distinctive abilities of competency, and to make network resources heterogeneous, inimitable and rare. Dynamic capabilities reflect an organisation's ability to achieve innovative forms of competitive advantage given the current path dependencies and market positions (Leonard-Barton, 1992). Although Binder and Clegg (2007) view core competencies and outsourcing as the main drivers of a virtual enterprise and Cao and Dowlatshahi (2005) consider core competence to be one of the aligning items of a virtual enterprise to achieve improved business performance, this study envisages the core competence as part of a dynamic pattern. A virtual enterprise should therefore be formed based on the dynamic capabilities that renew competences to respond to changes by exploiting existing internal and external capabilities.

Kidd (1994) views agility as being achieved through the integration of the internal capacities of human resources and ICTs. Sharifi and Zhang (1999) state that agility providers can be derived from four areas of organisation, technology, people, and innovation and the providers need to be fully integrated with the support of information systems/technology. Gunasekaran and Yusuf (2002) envisage that agility must be supported by flexible people, processes and technologies to effect changes in a firm’s systems, structure and organisation with an objective

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of being competitive. This thesis assumes that the firm’s abilities and technologies are a fundamental condition that enterprises need to help them to be able to respond quickly and effectively to the dynamic and unpredictable changes in the business environment.

Unfortunately, there is little evidence from investigations into the impact of dynamic capabilities on the virtual enterprise and its ability to achieve agility through its virtual enterprise strategy in the research domain. To fill this gap in the research, the followings are also hypothesised:

H2a. Dynamic capabilities positively drive virtual enterprise formation.

H2b. Dynamic capabilities positively provide agility in the supply chain.

ICT infrastructures play the intermediary role as a provider of inter-operational abilities between organisations and the support services provided and involved in the virtual enterprise (Camarinha-Matos et al., 2009). It is the basic provider of safe and co-ordinated interactions among the virtual enterprise members. The fast development of ICT is therefore another empowering factor for a virtual enterprise to enable processing large amount of data and save time. ICT is also regarded as a major provider and facilitator of agility. Top management should actively engage in a strategic ICT plan for supply chain agility and for measuring its effect on supply chain performance (Ngai et al., 2011). Liu et al. (2013) propose a model for examining how relevant ICT capabilities (e.g. flexible IT infrastructure and IT assimilation) can affect a firm’s performance through absorptive capacity and supply chain agility and empirically validate the hypotheses. DeGroote and Marx (2013) conducted an empirical survey that investigates the impact of IT on supply chain agility measured by the virtual enterprise’s ability to sense and to respond to market changes, and the impact of the agile supply chain on the firm’s performance.

Many researchers e.g. Cao and Dowlatshahi (2005), Camarinha-Matos et al. (2009), Koçoğlu et al. (2011) and Esposito and Evangelista (2014) agree that ICT and a strategy based on ICT (e.g. virtual enterprise affiliation) are a key to an effective and efficient supply chain by; speeding up the information flow, shortening the response time to customer needs, providing enhanced coordination and collaboration and sharing the risks as well as the benefits.

Although some research has been conducted into the effects of ICT on virtual enterprises (Cao and Dowlatshahi, 2005) and agility in the supply chain (Swafford et al., 2008; DeGroote and Marx, 2013; Liu et al., 2013), it is argued in this thesis that there are still insufficient studies

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of the influences of ICT on the relationship between virtual enterprise strategy and agility capability. Therefore, the next hypotheses are posited:

H3a. ICT positively enables virtual enterprise formation.

H3b. ICT has a positive impact on agility in the supply chain.

Van Hoek et al. (2001) identify virtual integration relating to optimising information flow as one of five dimensions which reflect the more general aspects of an agile supply chain. Kidd (1994) holds that agility is achieved through the integration of enterprises, known as a virtual corporation, based on its core competences, with highly skilled and knowledgeable employees, advanced technologies and intelligent decision-making systems. Agility means using market knowledge and a virtual corporation to exploit profitable opportunities in a volatile marketplace (Naylor et al., 1999). However, empirical studies of how the virtual enterprise enables the agility that affects business performance are rare in the literature. Therefore, the following hypothesis is offered to investigate the virtual enterprise impact on agility in a complex system with other factors affecting and influencing business performance:

H4. Virtual enterprise positively enables agility in the supply chain.