Supply Chain Disruption Orientation Construct

The first construct that this research will refine and expand to augment understanding of supply chain disruption management knowledge is supply chain disruption

INTERFIRM INTRAFIRM ORGANISATIONAL RESPONSE _BRIDGING BUFFERING TRUST DEPENDENCE SUPPLY CHAIN ORIENTATION PRIOR EXPERIENCE SUPPLY CHAIN DISRUPTION PERFORMANCE P2e P2f P2g P 1d P1b P3i P1a P 1c Motivation to Act Interpretive Postures

▪ Construct One - Supply Chain

Disruption Orientation

▪ Construct Two – Supply Chain

Disruption Performance

▪ Construct Three – Organisational

Response P3h

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orientation, which was first introduced into the supply chain management literature by

Bode et al. (2011) to fill the gap in the research, as identified in the literature review. Supply chain disruption orientation is a new concept and was defined by Bode et al. (2011) as an organisation’s general awareness, consciousness of, concerns about, seriousness toward, and recognition of the opportunity to learn from supply chain disruptions. The stronger the firm’s supply chain disruption orientation, the more importance it attaches to the issue of supply chain disruptions and the more pronounced its need for stability is. The supply chain orientation concept built on previous work in the supply chain risk management literature (Autry and Bobbitt, 2008, Christopher and Peck, 2004, Sheffi and Rice, 2005). Autry and Bobbitt (2008) did look at how a firm was orientated towards risk but there was an emphasis on the security element, with respondents blending their responses to this purely qualitative research on security risk with operational performance. The supply chain security (SCS) has since developed from the risk management literature with an emphasis on an orientation to damage limitation and performance (Lu, Koufteros and Lucianetti, 2017), identifying practice against performance in the wake of incidents, such as the 9/11 attacks, to thwart breaches and restore operations. Supply chain security has an emphasis on prevention rather than concentrating on the reasons due to interpretation and motivation to act by examining mitigation and response actions. Supply chain disruption orientation, in contrast, builds on a firm’s market orientation (Narver and Slater, 1990) and entrepreneurial orientation (Lumpkin and Dess, 1996). Supply chain disruption orientation draws on Daft and Weick (1984) work which explained how a firm’s behaviour was categorised either as active or passive. Whether a firm is active or passive then determines their actions as both proactive and assertive, or to accept the environment as a given and being reluctant to change, therefore making them slower to respond to environmental events.

This argument indicates that if a firm is an active firm with high awareness of disruptions that they would have a strong motivation to act as per resource dependency theory (Pfeffer and Salancik, 1978). As examined in the literature review (Section 2.3), resource dependency theory states that firms seek to assert control over the resources they require to minimise their dependence. So, where a supply chain disruption entails a dependence relationship, it requires action. Furthermore, when a disruption event occurs there can often be a mismatch between the amounts of information available to a firm and its information processing capacity (Huber and Daft, 1987). As per information processing theory (Galbraithe, 1973) , the greater the

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uncertainty a firm faces, the more information it needs to gather and process to achieve a given level of performance. Organisations may be more active in using information to try and influence their environmental stability, and use information proactively. In this way, organisations would be high performing in response to a disruption event causing shortages by using information more effectively. As informed by the literature review, and addressing the first construct of supply chain disruption orientation, the below proposition P1a is developed, where the unit is defined as a pharmaceutical dispensing operation managed by a pharmaceutical lead within an acute secondary care hospital (as described in detail in the Section 6.10 of the research design section). The proposition to be tested is:

Proposition 1a. The stronger the supply chain disruption orientation (SCDO) of a unit, the higher the performance in shortage management.

The original concept of supply chain orientation did not take account of boundary conditions in which a firm makes response decisions. Looking at supply chain redesign for resilience, Carvalho, Barroso, Virginia et al. (2012) stated it is expected that specificities related to the industry context like product type, production process, country and cultural perspectives can impact on the types of resilience and agile practices employed in the supply chain and the effect these practices have on supply chain behaviour; so the decision-making response to disruption is affected by the environment the firm operates in. Simon (1979) originally developed the concept of boundary rationality and considered rational decision-making in business organisations. Bounded rationality refers to the limits experienced by managers in their ability to process and interpret a large volume of pertinent information in their decision- making activities (Simon, 1979). Boundary rationality bias in managerial valuation of real options was considered by (Tiwana, Wang, Keil et al., 2007); they noted that real options theory unequivocally suggests that uncertainty increases options value. Furthermore, the more knowledge supply chain members possess, the greater their awareness that additional knowledge can ultimately enhance outcomes (Hult, Ketchen and Slater, 2004). Mintzberg (1973, 1975) considered decisional roles of managers. He described how decision-making choices and their requirements are determined by the manager’s role, seniority, and availability of information. Bounded rationality thus describes the process of how managers arrive at their assessments (Simon, 1979). Bounded rationality encompasses two central concepts: search and satisfying. Search refers to how extensively a decision maker searches for information to guide decision- making, its perceived organisational benefits, and the technical and business

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uncertainties that might affect its likelihood for successful completion. The search scope is capped by what Simon describes as an aspiration level that defines at the outset of the search process what constitutes a good enough solution. As soon as this aspiration level is reached, individuals terminate the search process and reach a tentative conclusion. Search is guided by heuristics that are tacitly held but consistently used to simplify the cognitive decision-making process (Simon, 1979, Tiwana, Wang, Keil et al., 2007, Hammond, Keeney and Raiffa, 1998).

Managers cope with the potentially large volume of contextual information by focusing on a few salient cues in forming heuristic-driven judgments under uncertainty (Kahneman, 2003, Simon and Houghton, 2003). Individuals then reach a preliminary conclusion after assessing a salient subset of the available information that they see as being most informative and terminate their search (Miller and Chen, 2004, Hilary and Menly, 2006). Management strategy in response to post disruption has to then take into account other factors than explained by resource dependency theory. Having

control over a firm’s resources in traditional strategic management decisions (Child,

1972) is only one aspect of the contingency approach to organisational behaviour (Buchanan and Huczynski, 2004). Taking account of the alternative perspectives using the determinists approach to contingency, for example, (Burns and Stalker, 1961,

Lawrence and Lorsch, 1967) describe ‘contextual’ factors, such as size, ownership,

technology or environment, imposing constraints on managers' choices as also necessary. The environment in which managerial decisions are made in response to disruptions affects the decisions made and so influences the outcomes. The extent of the disruption, the role, and knowledge of the manager making the decisions will influence the response choice and therefore the performance. The next proposition is informed by the gap identified in literature review, where the original supply chain disruption orientation concept excluded boundary rationality, to test how the contextual factors through the role of the actor influence outcome:

Proposition 1b. The lower the role of the actor responsible for making supply chain disruption action decisions, the lesser the shortage management performance

Boundary spanning activities (Thompson, 1967) can either link organisations to other organisations or buffer them from environmental disturbances, as noted by Fennell and Alexander (1987). Given the problem of hierarchical clustering or multiple levels of organisation (Freeman, 1978), organisations can be defined as either independent units or members of larger organisational systems. Fennel and Alexander (1987), in

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their research on organisational boundary spanning in institutionalised environments, found that hospitals in systems are more likely to bridge, probably as a result of corporate policies intended to centralise functions and minimise costs. System membership was reported by Fennell and Alexander (1987) as an important factor in a hospital's selection of bridging or buffering. A hospital which is the sole unit in a hospital trust, as opposed to a hospital in a trust which is made up of a number of trusts, may have a higher tendency therefore to bridge within the trust than the sole unit does. The concept of supply chain disruption orientation is a novel concept in supply chain management research, as discussed in the literature review (Section 2.4.3), and this research aims to give further insights into this concept to fill this academic gap. To develop the concept of supply chain disruption orientation, it is important to identify the response spectrum, taking account of the system, a unit is in (i.e. whether the pharmaceutical dispensing unit in the acute care hospital has opportunity to bridge with other hospitals which are part of the trust or not). The next proposition therefore is:

Proposition 1c. The larger the number of hospitals in a trust, the stronger the supply chain disruption orientation of a unit

Organisational performance in response to disruptions they encounter is not uniform (Hendricks and Singhal, 2005). Hendricks and Singhal (2005) analysed disruptions, including announced shipping delays and other supply chain disruptions reported in the

Wall Street Journal during the 1990s and showed, based on matched sample

comparisons, that companies experiencing such disruptions under-perform their peers significantly in stock performance as well as in operating performance, as reflected in costs, sales, and profits. Firms with a highly developed supply chain orientation should therefore not only out perform their contemporaries but also make better response decisions when the worst of the disruptions occur. The last proposition to examine this construct is:

Proposition 1d. The higher the severity of the disruption, the better the managers with higher supply chain disruption orientation perform

The first construct was concerned with the development of the new concept of supply chain disruption orientation; the second construct further develops supply chain disruption understanding by considering the performance aspect. Performance

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implications, as debated in the literature review (Section 2.4.3), were not considered in previous research on disruption orientation, specifically Bode, Wagner, Petersen et al. (2011) did not go on to examine the performance repercussions of the respective bridging or buffering strategic response choices.