Omega 36 (2008) 665 – 679

www.elsevier.com/locate/omega

Supply chain management in the US and Taiwan:

An empirical study夡
Wing S. Chowa,∗ , Christian N. Madub , Chu-Hua Kueib , Min H. Luc ,
Chinho Lind , Hojung Tsengd
a Department of Finance and Decision Sciences, School of Business, Hong Kong Baptist University, Hong Kong, Hong Kong
b Department of Management and Management Science, Lubin School of Business, Pace University, 1 Pace Plaza, New York, NY 10038, USA
c Management and Marketing Department, School of Business Administration, Monmouth University, West Long Branch, NJ 07764, USA
d Department of Industrial and Information Management, Institute of Information Management, College of Management Science, National
Cheng Kung University, Tainan 701, Taiwan

Received 2 December 2004; accepted 31 January 2006

Available online 5 May 2006

Abstract
This study uses an empirical survey of middle-line managers in the US and Taiwan to study the association of supply
chain management components and organizational performance. Through structural equation modeling, critical components of
supply chain management are found to have considerable effects on organizational performance. The findings of the study are
summarized as follows:
• Supply chain competencies have positive effects on organizational performance in both the US and Taiwan. Supply chain
competencies are developed around quality and service, operations and distribution, and design effectiveness. The goal of
supply chain competencies is to satisfy customer requirements.
• Supply chain practices, which are made up of supply chain features, integration, and customer services, have direct impact
on organizational performance in Taiwan, but they have only indirect impact in the US.
• Supply chain practices and competencies are significantly associated in both the US and Taiwan. However, supply chain
concerns and practices are associated in the case of the USA only.

These results help middle-line managers in both the US and Taiwan to know which components and practices of supply chain
management to focus on to improve organizational performance. They also show some of the similarities between the two
regions and note differences that may be situation-dependent. However, what is measured here is the perception of middle-line
managers. The actual practices may be different from these perceptions.
䉷 2006 Elsevier Ltd. All rights reserved.

Keywords: Supply chain management; Organizational performance; Structural equation model

夡 This manuscript was processed by Area Editor Prof. B. Lev. 1. New competition and supply chain management
∗ Corresponding author.
E-mail addresses: vwschow@net1.hkbu.edu.hk (W.S. Chow),
ckuei@pace.edu (C.-H. Kuei), mlu@monmouth.edu (M.H. Lu),
Enterprises around the world are faced with intense
linn@mail.ncku.edu.tw (C. Lin), Tsen9578@ms14.hinet.net.tw competition. In the new economy, customers require
(H. Tseng). business enterprises to offer better and cheaper products,

0305-0483/$ - see front matter 䉷 2006 Elsevier Ltd. All rights reserved.
doi:10.1016/j.omega.2006.01.001
666 W.S. Chow et al. / Omega 36 (2008) 665 – 679
shorter response times, more product lines, and higher
service levels. Business executives and managers rec-
ognize that the ultimate success of any enterprise is no
longer built around a firm’s capability and capacity, but
on a supply chain’s capability and capacity. To respond
to these challenges, it is important to integrate supply
chain processes and listen to the voice of the customer.
Supply chain management is a holistic and strategic
approach to demand, operations, procurement, and lo-
gistics process management [1,2]. Ogulin [3,4] suggests
three distinctive waves of supply chain management in
the new economy: operational excellence, supply chain
integration and collaboration, and virtual supply chains.
Enterprises along the supply chain need to develop
organizational, procedural, technical, and strategic ca-
pabilities and capacities to respond to four emerging
requirements: customer focus, technology adoption,
relationships management, and leadership styles [3].
Ballou et al. [5] note that there are three dimen-
sions of supply chain management: inter-functional
coordination, intra-functional coordination, and inter-
organizational coordination. Ganeshan [6] proposes a
four-step hierarchical process in managing a supply
chain: designing the supply chain, optimizing the sup-
ply chain, planning the material flow, and processing
transactions. Taylor [7] supports the notion that compe-
tition in the new economy has been shifting to supply
chains. Enterprises, as a result, have to tear down the
barriers between the functional silos and promote cross-
boundary activities. Anderson et al. [8] identify seven
principles of supply chain management: segmenting
customers based on service needs; customizing the lo-
gistics network to the service requirements; listening
to signals of market demand and planning; assembling
the final product as close to the final marketplace as
possible; managing sources of supply strategically to
reduce the total cost; developing a supply chain-wide
technology strategy; and adopting supply chain-wide
performance measures to gauge collective success.
In the digital age, a key challenge to supply chain
networks is for enterprises to evolve from their tra-
ditional practices to a supply chain network that will
combine many components and entities such as pro-
duction, fulfillment, replenishment, demand manage-
ment, product development, and customer engagement
to form an integrated supply chain [2,9]. Some of the
changes the enterprises may go through in managing
such a supply chain network include supplier selection,
information sharing, partnership management, product
life-cycle management, integration issues, and inven-
tory management. To gain competitive advantage, as
pointed out by Walker et al. [10], enterprises need to
master the challenges of speed, convenience, and re-
liability. Zara, the Spanish apparel manufacturer and
retailer, for example, learned to introduce more than
11,000 products per year. From the drawing board to
store racks, new fashions can be brought into markets
in 2 weeks. Zara’s supply chain system can deliver new
shipments to its 600 or so stores around the globe ev-
ery few days [10]. SCM is a key determinant of Zara’s
success. It helps Zara to become efficient, improve its
productivity, and respond rapidly to customer needs.
Supply chain management is a hierarchical and strate-
gic approach to planning supply and demand, sourcing
raw materials and components, making products and
parts, tracking inventory and order fulfillment, and de-
livering to the customer and end user. An important
input for business executives and managers is knowl-
edge of essential components of supply chain manage-
ment and the profound impact of those components on
the organization’s performance. This way, emphasis is
placed on those components that add value to the or-
ganization. In today’s highly competitive environment,
it is important to devote the firm’s limited resources to
creating value and to improving productivity and ef-
ficiency. Customer satisfaction can be achieved when
value is created. Thus, the following research questions
are explored in this paper:
• What are the components of supply chain manage-
ment?
• What effect do the critical components of supply
chain management have on organizational perfor-
mance? If so, how are US supply chain characteris-
tics similar to or different from that of Taiwan?
2. Research background
A typical supply chain is very complex. However
complicated, as noted by Lambert et al. [11], Lambert
[12], Lambert and Cooper [13], and Lambert et al.
[14], a supply chain could be implemented through
three elements: the supply chain processes, the supply
chain network structure, and the management compo-
nents. A supply chain involves a variety of processes:
customer relationship management, customer service
management, demand management, order fulfillment,
manufacturing flow management, supplier relation-
ship management, product development and com-
mercialization, and returns management [12,13]. Two
process-oriented supply chain management frame-
works, namely, Global Supply Chain Forum (GSCF)
and Supply-Chain Operations References (SCOR),
are evaluated in Lambert et al. [11]. In planning and
 W.S. Chow et al. / Omega 36 (2008) 665 – 679
optimizing a supply chain network structure, three as-
pects are considered to be of major importance by Lam-
bert and Cooper [13]: the members of the supply chain,
the structural dimensions of the network, and the dif-
ference types of process links (e.g. physically efficient
network and market-responsive structure) across the
supply chain. Six criteria are identified by Fisher [15]
for the purpose of comparison between a physically
efficient network and market-responsive structure: pri-
mary purpose, manufacturing focus, inventory strategy,
lead-time focus, approach to choosing suppliers, and
product-design strategy. The management components
in the supply chain setting include physical/technical
management components and managerial/behavioral
management components. The former centers around
supply chain planning and control methods, work flow
structures, organization structures, communication in-
frastructures, and product flow facility structures, while
the latter calls for a focus on supply chain management
methods, leadership models, and supply chain climates
[12,13].
A somewhat different view of the main issues of sup-
ply chain management was given by Simchi-Levi et al.
[16]. They suggest three hierarchical groupings for sup-
ply chain management, namely, strategic, tactical, and
operational. Swaminathan et al. [17] placed emphasis
on configuration, coordination, and contracts to enhance
supply chain quality and competitive position. Configu-
ration deals with issues related to the network structure
of a supply chain. Coordination is associated with oper-
ations and transaction issues such as order fulfillment,
inventory control, and information exchange. Contracts
deal with issues such as supplier reliability, supplier se-
lection, demand forecast mechanisms, and flexibility to
change commitments. These studies, however, did not
formally test causal linkages or any form of associa-
tion between these critical factors and organizational
performance.
One key factor required to increase quality and en-
hance competitive position is the development of the
supply chain competence within and along every as-
pect of the supply chain. Supply chain competence
is a portfolio of organizational, managerial, technical,
and strategic capabilities and skills developed by enter-
prises over time. Adequate supply chain competence
enables enterprises to respond reliably to market de-
mands at any time, in any place, and in any variety.
As enterprises adopt supply chain practices and cope
with concerned areas of supply chain implementa-
tion, they would develop diverse supply chain skills
and expertise and would learn to better integrate their
social and technical systems. This collective learning
667
experience is the key to improved business perfor-
mance. Putting that in the context of supply chains,
Kuei et al. [18] identify fifteen indicators pertaining to
supply chain competence. Analysis of the data suggests
that adoption of continuous improvement programs
play a significant role in effecting the supply chain
competence. Spekman et al. [19] stress the importance
of continuous learning as a foundation for developing
supply chain competence. Their model is composed
of nine constructs: learning encouragement, learning
structure, integrative mechanisms, shared culture, com-
mitment, trust, communication, joint decision making,
and win–win approach.
Nuthall [20] identifies four main supply chain objec-
tives. They are operational cost, time and response, cus-
tomer services, or profitability and margins. Improve-
ment in service levels and reduction in costs are neces-
sary in improving organizational performance [5]. Tan
[21,22] notes the short-term objective of supply chain
management is to increase productivity and reduce in-
ventory and cycle time, while the long-term objective
is to increase customer satisfaction, market share, and
profits. Six supply chain performance measures were
identified as: on-time delivery, acceptable incoming ma-
terials, number of suppliers, supplier certification, sin-
gle source items, and total cost of purchased parts. Sim-
ilarly, Beamon [23] suggests that there are three major
performance measures: resources, outputs, and flexibil-
ity. These measures focus largely on costs and return
on investments. A multi-dimensional assessment model
was presented by Lummus [24]. This model assesses
supply chain capability in terms of metrics such as trans-
portation/warehousing systems, customer service, infor-
mation sharing, and e-business readiness. Krause et al.
[25] and Mentzer et al. [26] offer similar metrics for
measuring supply chain performance. Thus, identifica-
tion of metrics for supply chain performance measures
has been widely done. The findings are similar, how-
ever, there is a greater focus on costs and profitability
measures. Shin et al. [27] observe that an improvement
in the areas of supply chain management improves both
suppliers’ and buyers’ performance. Suppliers’ perfor-
mance can be characterized by cost, quality, delivery re-
liability, lead time, and on-time delivery, while buyers’
performance includes product features, product perfor-
mance, product reliability, product conformance, and
product durability. Thus, the goal of improvement in
supply chain performance is increased customer satis-
faction.
Lambert and Pohlen [28] also note that there is a need
to adopt channel-spanning performance measures. They
provide a framework for such a task. Examples such
668 W.S. Chow et al. / Omega 36 (2008) 665 – 679

as order fulfillment, customer relationship management, components will be briefly defined in the next section.
and supplier relationship management are provided to As we have noted before, one of the primary focuses of
demonstrate how to develop supply chain metrics. Gary this study is to test the association of the critical com-
[29] urges all firms to track supply chain performance ponents of supply chain management to each other and
along four basic dimensions: service, assets, efficiency, their influences on organizational performance. The in-
and speed. Three levels of operations need to be taken fluences of routine supply chain practices and on-going
into account in an effort to better understand a sup- learning and competence building on the overall sup-
ply chain’s true position: the unit/functional level, the ply chain success are also of particular interest in this
process/cross-unit level, and the cross-enterprise level. study. Such relationship is therefore examined through
In an empirical study of supply chain quality manage- the use of the structural equation modeling (SEM) ap-
ment and performance, Lin et al. [30] use three indi- proach. Taiwan and the US are selected for the purpose
vidual survey items to track corporate performances: of this study.
product quality, competitive position, and customer ser-
vice. Gunasekaren et al. [31] present a framework to 3. Methodology
measure the financial and non-financial performance
The survey instrument developed in this study con-
metrics of the three hierarchical levels of management
sists of three main sections. The first section is intended
in a supply chain structure.
to identify the supply chain components, namely, sup-
The impact of global competition on the development
ply chain practices, supply chain concerns, and supply
of supply chain management has been profound. Since
chain competencies. This part of the questionnaire con-
the turn of the century, business executives have been
sists of 56 survey items, which were extracted from the
interested on how to effectively manage supply chain
literature. Section 2 is designed to capture middle-line
processes. They are usually faced with the problems
managers’ perceptions on corporate performances. Sec-
of implementation and the competence required to run
tion 3 is about the characteristics of the firms, such as
a global supply chain. Managers would be in a better
the size of the company, years of operations, whether
position to meet the challenges of global supply chain
the firm has initiatives in the areas of quality, technol-
processes if they understand the implementation issues
ogy, and supply chain management or not.
and their roles on supply chain effectiveness. Kuei et al.
The survey instruments used in this study have been
[32] note that social and technical systems of a supply
used in other supply chain research studies and have
chain are essential to improving supply chains’ overall
been fully tested and validated. These survey instru-
success. A good social system enables enterprises to en-
ments were further tested in this study to confirm their
hance supply chain coherence, while a solid technical
validity and reliability. In the subsections that follow
infrastructure helps a supply chain to gain competitive
below, we discuss the research instruments for the dif-
positions. Lin et al. [30] identify the factors that influ-
ferent supply chain components.
ence the social side of supply chain systems. They show
The focus of this study is on middle-line managers
that the quality of supply chain practices is significantly
because they are the executors of key business policies.
correlated with the supplier participation strategy and
They deal directly with the supply chain processes,
influences tangible business results and customer satis-
the supply chain network structure, and the techni-
faction levels. In another study, Lin et al. [33] focus on
cal/behavior components of management systems. It
the technical side of the supply chain system. Informa-
is thus important to understand the perceptions of
tion infrastructure development was seen to be central
middle-line managers on issues such as practices, con-
to supply chain management, which in turn would help
cerns, and required competencies to facilitate concerted
to meet manufacturing objectives. Current trends in the
supply chains.
design and the implementation of supply chain plan-
The study’s focus is on the US and Taiwan. It aims
ning and scheduling systems were reviewed by Kreipl
to understand the practice of supply chain management
and Pinedo [34]. Ferdows [35] also urges international
in both regions. The US is the world’s biggest economy
firms to investigate the full potential of their foreign
and often may act as a benchmark to other countries.
factories. Enterprises thus need to focus on both social
However, there are some reasons why Taiwan is be-
and technical systems of a global supply chain.
ing compared in this study. These reasons are outlined
Previous discussions within the context of supply
below:
chain management have focused on three critical com-
ponents: supply chain practices, supply chain concerns, 1. Taiwan has similarity to the US in terms of technol-
and supply chain competencies. These three critical ogy. Much of its technology was transferred from
 W.S. Chow et al. / Omega 36 (2008) 665 – 679
the US. Also, there has been a considerable knowl-
edge transfer from the US to Taiwan, with many
Taiwanese managers educated in the US. This ex-
posure may or may not have an effect on cultural
transformation in the workplace.
2. Taiwan is the world’s biggest manufacturer of
dozens of computer-related products such as
modems, motherboards, notebook computers,
palm scanners, and Wireless Local Area Network
(WLAN) (www.moeaidb.gov.tw). It is currently
ranked third in computer manufacturing and fourth
in the semiconductor industry in the world. Further,
the US is Taiwan’s number two machine tool export
market, while the US is the number two machine
tool supplier to Taiwan. Taiwan is therefore a major
trading partner of the US in the technology area.
3. According to the US Department of Commerce
(www.state.gov), in 2004 the total trade amount
between Taiwan and the US was $49.6 bil-
lion. The Bureau of Foreign Trade in Taiwan
(cus93.trade.gov.tw) also reports that the first five
top trading partners of Taiwan include China/Hong
Kong, US, Japan, Singapore, and Korea. So, there
is a significant business association between the US
and Taiwan.
4. The Asian economy is booming. Even though
China has had a rapid economic growth in the re-
gion, Taiwan, whose economy is modeled closely
to the US, is a more representative economy for
comparison.
5. There is an increased presence of US-based firms
in Taiwan. Many of the US multinational firms, in-
cluding Hewlett-Packard (HP), have manufacturing
firms or partners in Taiwan. It is important to under-
stand the supply chain network in Taiwan since that
may influence organizational effectiveness. Also, by
comparing Taiwan to US, a global firm may know
what processes to adapt in transferring its supply
chain practices from the US to Taiwan.
6. The authors for this paper are primarily based in
Taiwan and the US, thus, making it easier in terms
of data collection. Convenience is also a factor in
selecting the countries.
7. The Taiwan culture (business climate) parallels that
of other Asian countries such as China and are
somewhat different from the US culture (business
climate). Understanding the influence of culture in
Taiwan’s supply chain processes would help US
firms to understand how supply chain operation may
be affected in similar Asian countries. However, we
shall restrict our conclusions to the regions that are
studied.
669
A more comprehensive version of research variables
and constructs, research hypotheses with conceptual
model, and empirical assessment are presented in the
sections that follow.
4. Research variables and constructs
4.1. Supply chain practices
We use Tan’s [21] 25 survey items for measuring
supply chain practices and include Anderson et al.’s [8]
principles of supply chain management. This part of the
questionnaire as a result consists of 32 survey items. The
original survey items are presented in the last column of
the appendix. The 32 survey items were further grouped
using statistical analyses (see Section 6). The resulting
groups are relabeled and shown in both Tables 1 and 2,
and the second column of the appendix.
SCM practices involve suppliers in strategic and oper-
ational decision making, encouraging information shar-
ing and searching for new ways to integrate upstream
activities. It also involves developing customer con-
tacts through the use of customer feedback to inte-
grate the downstream activities and delivering orders
directly to customers at points of use. To effectively
achieve these goals, it is necessary to locate closer to
the market, help suppliers and vendors develop JIT ca-
pability, create a compatible information platform, and
create SCM teams for quality and operational efficiency
[21,22,36–42]. Tan [21] suggests that, in general, supply
chain practices are related to supply and materials man-
agement issues, operations, information technology and
sharing, and customer service. Those activities need to
be managed effectively to realize supply chain’s strate-
gic position. McMullan [43] suggests that the most im-
portant supply chain practices include technology, cost
competitiveness, inventory management, and external
infrastructure and regulation. For the main part of our
survey instrument, Tan’s [21] survey items are adopted.
Factor analysis is applied to group items into appropri-
ate categories.
4.2. Supply chain concerns
Tan’s [21] nine original survey items were used to
investigate supply chain concerns. The grouping and la-
beling process is also applied here to reduce the number
of dimensions of constructs. Knolmayer et al. [41] pro-
vide a list of issues that might adversely impact supply
chain performance. They report that the integration of
supply chain partners may be affected by insufficient
flow of information, lack of trust, lack of know-how,
670 W.S. Chow et al. / Omega 36 (2008) 665 – 679

Table 1
Scaling—US data

Variables Constructs Cronbach  Loading range No. of items

Supply chain practices Customer and supplier mgt. 0.8729 0.723–0.763 4

Supply chain features 0.8286 0.616–0.744 3
Communication and speed 0.8005 0.554–0.746 5
Information sharing 0.8177 0.657-0.728 4

Supply chain concerns Coherence 0.8334 0.574–0.856 5

Geographical proximity 0.9319 0.890–0.900 2

Supply chain competence Quality and service 0.8634 0.504–0.887 6

Operations and distribution 0.8680 0.558–0.802 5
Design effectiveness 0.8671 0.666–0.893 4

Table 2
Scaling—Taiwan data

Variables Constructs Cronbach  Loading range No. of items

Supply chain practices Integration and customer service mgt. 0.9115 0.607–0.802 7
Supply chain features 0.8384 0.529–0.808 6

Supply chain concerns Coherence and information systems 0.8334 0.633–0.853 6

Geographical proximity 0.8421 0.790–0.814 2

Supply chain competence Quality and service 0.9275 0.540–0.813 8

Operations and distribution 0.8422 0.630–0.788 3
Design effectiveness 0.8510 0.807–0.826 3

lack of flexibility, management problems, lack of cost
visibility, partners not being EDI capable, lack of re-
liability, and low quality. Also, attempts to reengineer
supply chain processes may face barriers such as re-
sistance to change, lack of proven advantages, lack of
know-how, cost, failure rate, and risk. Similar concerns
have been identified by other authors [21,32].
4.3. Supply chain competence
Supply chain competencies were investigated using
instruments from Kuei et al. [18]. In total, 15 survey
items are adopted.
Supply chain competence is needed to respond to
market uncertainties and to excel in supply chain op-
erations. SCM is operationally and functionally stable
when supply chain practices are endorsed by partici-
pants and concerned areas are addressed. SCM compe-
tence requires the ability to take full control of supply
chain operations regardless of the environmental chaos.
As noted by Spekman et al. [19], Prahalad and Hamel
[44], and Stratman and Roth [45], core competencies
of a firm can be described as the collective learning of
the organization. The emphasis is on how to coordinate
diverse skill sets and integrate them into the technical
system. Fisher et al. [46] argue that corporations need
to develop four capabilities in today’s business envi-
ronment: forecasting, inventory planning, supply chain
speed, and data accuracy. These capabilities form the
business foundation required to adapt to supply chain
challenges of having the right product in the right place
at the right time and at the right price. Reynolds [47] and
Taylor [7] suggest that supply chain capabilities should
include supply chain planning, order management, ful-
fillment, and procurement. Allvine and Gore [48] focus
on conducting supply chain diagnostics on: integrated
systems, balanced performance measurements, aligned
organization structure, efficient distribution, demand-
driven planning, agile manufacturing, and the order to
cash process. Corporations should initiate and promote
supply chain improvement projects based on their capa-
bility assessment reports. Kuei et al. [18] showed how a
variety of continuous improvement initiatives in a sup-
ply chain setting might be associated to supply chain
competencies.
5. Research hypotheses and conceptual model
The conceptual framework presented as Fig. 1 is
drawn from the SEM approach. This framework is used
 W.S. Chow et al. / Omega 36 (2008) 665 – 679
Supply Chain
Concerns (SCC)
H1 H3
H2 Supply Chain
Supply Chain
Competence
Practices (SCP)
(SCCO)
Overall
Performance H5
H4
(OP)
Fig. 1. Conceptual model—structural equation modeling (SEM) rep-
resentation.
to address the primary objective of this paper. In other
words, the interest is on the associations between the
three critical components of supply chain management,
namely, supply chain concerns, supply chain practices,
and supply chain competence; and how they influence
organizational performance. In the proposed model,
each unobserved (latent) variable (i.e., supply chain
concerns, supply chain practices, and supply chain
competence) consists of a number of constructs. For
example, for the US data, supply chain practice might
be represented by the following four constructs: cus-
tomer and supplier management, supply chain features,
communication and speed, and information sharing
(see Table 1). Similarly, the constructs for the other la-
tent variables are presented in Table 1. Each construct
consists of a set of measurement or survey items. Ap-
pendix A presents definitions of these constructs. For
the purpose of this study, supply chain management
practices, supply chain concerns, and supply chain
competencies are considered latent-independent (ex-
ogenous) variables, while organizational performance
is used as the latent-dependent (endogenous) vari-
ables. From this model, a number of hypotheses are
developed.
The first set of hypotheses relates to the interrela-
tionships between supply chain practices, supply chain
concerns, and supply chain competencies. Tan [21], Tan
et al. [22], Lummus and Vokurka [24], Lin et al. [30],
Lin et al. [33], Kreipl and Pinedo [34], Kuei et al. [18],
Tan et al. [39], and Stratman and Roth [45] have con-
sistently argued that supply chain management is more
than just making some routine practices. There are many
components that must be combined to form a complete
supply chain management. Based on the literature, we
generate the following hypotheses:
H1: Supply chain practices and supply chain concerns
are associated.
671
H2: Supply chain practices and supply chain compe-
tencies are associated.
H3: Supply chain concerns and supply chain compe-
tencies are associated.
Tan [21] contends that supply chain practices are as-
sociated with the performances of supply chains. Some
aspects of supply chain practices such as supply chain
integration, supply chain characteristics, information
sharing, strategic location, JIT capability, and customer
service management, contribute to the success of sup-
ply chains. Kuei et al. [18] showed a positive link
between supply chain competencies and organizational
performance. Lin et al. [33] postulated a similar rela-
tionship between supply chain capability development
and organizational performances. Kannan and Tan [49]
found that commitment to quality, and understanding
of the dynamics of supply chain has the greatest ef-
fect on business performance. Thus, our second set of
hypotheses is
H4: The level of supply chain practice positively influ-
ences the degree of overall performance.
H5: The level of supply chain competence positively
influences the degree of overall performance.
The SEM was used to empirically test the proposed
hypotheses. This model helps to test for causality as
proposed above.
6. Empirical assessment
The sample in the US is made up of middle-line man-
agers of firms in the mid-Atlantic region who were en-
rolled in an MBA program at a suburban institution dur-
ing the 2003–2004 academic year. Tan [21]’s already
validated questionnaire was administered. A total of 101
managers met the criteria to be included in this project.
In Taiwan, a mail survey was used for collecting the
data. The questionnaire used in the US was translated
into Chinese by a bilingual research associate and re-
fined and verified for its translation accuracy by two
academics. The instrument was further examined by
two middle-line managers for content and face validity.
Questionnaires were sent to the firms randomly selected
from Taiwan’s top 600 manufacturing firms as listed in
the top 1000 manufacturing corporations by the China
Credit Information Service Ltd. Consequently, 109 ef-
fective responses (18.17%) were recorded.
A 5-point interval rating scale system was used in the
study, with 5 equaling the highest extent or degree. A
reliability and validity test was then applied to examine
672 W.S. Chow et al. / Omega 36 (2008) 665 – 679

Table 3
Summary results of the measurement model—US data

Variables Constructs Estimate t-value Code used

Supply chain practices Customer and supplier mgt. 0.722 7.655* VUS 11
Supply chain features 0.756 8.087* VUS 12
Communication and speed 0.811 – VUS 13
Information sharing 0.648 6.729* VUS 14

Supply chain concerns Coherence 0.706 – VUS 21

Geographical proximity 0.523 3.459* VUS 22

Supply chain competence Quality and service 0.798 7.672* VUS 31

Operations and distribution 0.754 – VUS 32
Design effectiveness 0.699 6.752* VUS 33

Overall performance Product quality 0.740 – YUS 1

Competitive position 0.712 5.702* YUS 2
Customer service 0.634 5.298* YUS 3
∗ p < 0.05.

Table 4
Summary results of the measurement model—Taiwan data

Variables Constructs Estimate t-value Code used

Supply chain practices Integration and customer service mgt. 0.646 – VT 11

Supply chain features 0.796 8.597* VT 12

Supply chain concerns Coherence and information systems 0.676 – VT 21

Geographical proximity 0.638 6.399* VT 22

Supply chain competence Quality and service 0.841 – VT 31

Operations and distribution 0.810 11.188* VT 32
Design effectiveness 0.805 11.163* VT 33

Overall performance Product quality 0.837 – YT 1

Competitive position 0.816 12.552* YT 2
Customer service 0.889 14.064* YT 3
∗ p < 0.05.

these three latent-independent variables and their con-
structs [30,33,18]. The Cronbach’s  test was used to
assess the internal consistency of the constructs, while
factor analysis was used to measure the extent to which
all survey items in a construct measure the same mul-
tivariate construct. When applying these tests, we re-
moved any survey items that might be noted as not being
part of specific constructs. Tables 1 and 2 present the
summary of loading ranges and  reliability estimates
for each construct identified and used in the US and
Taiwan, respectively. It is noted that all of our research
constructs have Cronbach’s alpha larger than 0.8, which
reveals high reliability of our measurement instruments.
Further, all the factor loading scores are higher than 0.5,
indicating an acceptable validity level.
Lin et al.’s [30] use three individual survey items
to measure organizational performances. They are
product quality, competitive position, and customer
service. The test of the proposed conceptual model
was carried out using the SEM approach. Following
the details of the SEM process described by Anderson
and Gerbing [50], Anderson and Narus [51], Bentler
[52], Tan [53], and Lin et al. [30], the measurement
model and structural model were assessed to ensure
that the results were acceptable and were consistent
with the underlying conceptual model. As noted by
Tan [53], the former model (i.e., the measurement
model) is concerned with the reliability and validity
of the constructs in measuring the latent variables,
while the latter model (i.e., the structural model) deals
with the direct and indirect relations among the latent
variables. Tables 3 and 4 show the summary results
of the measurement model for both countries. Our re-
sults showed that four variables, namely, supply chain
 W.S. Chow et al. / Omega 36 (2008) 665 – 679 673

Table 5
Summary results of the structural model—US data

Path Description Hypothesis Estimate t-value

SCP–SCC SC practices–SC concerns H1 0.347 2.349*

SCP–SCCO SC practices–SC competence H2 0.579 6.882*
SCCO–OP SC competence–overall performance H5 0.690 2.525*
∗ p < 0.05.

Table 6
Summary results of the structural model—Taiwan data
Path Description Hypothesis Estimate t-value

SCP–SCCO SC practices–SC competence H2 0.347 12.941*

SCC–SCCO SC concerns–SC competence H3 0.241 9.472*
SCP–OP SC practices–overall performance H4 0.330 3.197*
SCCO–OP SC competence–overall performance H5 0.700 2.025*
∗ p < 0.05.

Geographical
Proximity Coherence

0.523 0.706

Supply Chain
Concerns
Customer and
Supplier Mgt.
0.347 Quality and Service
0.722 0.798
Supply Chain 0.756 0.579
Features Supply Chain Supply Chain 0.754
0.811 Operations and Distribution
Communication Practices Competence
and Speed 0.648 0.699

Overall 0.690 Design Effectiveness

Information Sharing Performance

0.634
0.740 0.712
2
X = 69.73; All item loadings and
Product Competitive Customer
path coefficients significant at 0.05 Quality Position Service
RMSR = 0.048; AGFI = 0.849; GFI = 0.907;
CFI = 0.952; NFI = 0.866

Fig. 2. Summary of findings—US data.

practices, supply chain concerns, supply chain com-
petencies, and performances, were all valid measures
of their respective constructs due to their constructs’
parameter estimates and their statistical significance.
Tables 5 and 6 show the results of hypothesis testing
of the structural relationships among latent variables in
the regions studied. Figs. 2 and 3 further depict the fi-
nal results of measurement and structural models. It is
observed that, for example, the overall fit measure of
US data has 2 equaling (2 = 69.73, p > 0.05). A thor-
ough examination of alternative goodness-of-fit indices
yielded support for the hypothesized mode (RMSR =
0.048; AGFI = 0.849; GFI = 0.907; CFI = 0.952; NFI =
0.866). Similar conclusions are derived for the Taiwan
data set (2 = 78.583, RMSR = 0.028; AGFI = 0.829;
GFI = 0.908; CFI = 0.952; NFI = 0.921).
Figs. 2 and 3 suggest that supply chain practices and
competencies are largely related in the theoretically pre-
dicted manner. In the US data, it is further observed that
there is a statistically significant association between
supply chain practices and concerns. However, in the
Taiwan data set, there is no association between supply
chain concerns and supply chain practices. In Figs. 2
and 3, the connected lines show association while the
674 W.S. Chow et al. / Omega 36 (2008) 665 – 679
Geographical
Proximity
0.638
Integration and
0.646
Customer
0.347
Service Mgt. Supply Chain
Practices
Supply Chain
Features
0.796
0.330
X2 = 78.583; All item loadings and
path coefficients significant at 0.05
RMSR = 0.028; AGFI = 0.829; GFI = 0.908; Product
Quality
CFI = 0.952; NFI = 0.921
Fig. 3. Summary of findings—Taiwan data.
disconnected lines show lack of association. Further, our
sample data from the US did not support the hypothesis
that supply chain practices have any direct impact on
organizational performance (H4). Hypothesis 5, that the
level of supply chain competence positively influences
the degree of overall performance, is supported. In the
case of Taiwan, both hypotheses 4 and 5 were accepted.
These results are further discussed in the next section.
The differences between the US and Taiwan data may
suggest different managerial perceptions of how supply
chain components are related to each other and to or-
ganizational performance. More importantly, they may
suggest that perceptions of how these components in-
fluence organizational performance may be affected by
different worldviews and perhaps cultural differences
that may exist in different parts of the world. Thus, the
association between supply chain components and orga-
nizational performance may differ from place to place.
7. Managerial implications
This study emphasizes the interrelationships of sup-
ply chain practices, supply chain concerns, and supply
chain competencies, and possible positive contributions
of those supply chain management components to orga-
nizational performance. Middle-line managers’ percep-
tions of current supply chain practices/concerns, and the
competence requirements could provide valuable infor-
mation on how to enhance a firm’s competitive posi-
tion. The current study concurs that certain supply chain
practices/characteristics do create a long-term competi-
tive advantage as perceived by the middle-line managers
Coherence and
Information
System
0.676
Supply Chain
Concerns
0.241 Quality and Service
0.841
Supply Chain 0.810
Operations and Distribution
Competence
0.805
Design Effectiveness
Overall 0.700
Performance
0.837 0.816 0.889
Competitive Customer
Position Service
who deal with supply chain operations. The practice of
supply chain as perceived by middle-line managers in
Taiwan, for example, is different from that of the US
Taiwan’s middle-line managers view supply chain fea-
tures, and integration/customer service management, as
the major factors in achieving significant improvement
in corporate performance, and middle-line managers in
both regions see a strong link between supply chain
practices and supply chain competence. However, US
middle-line managers view supply chain competence
rather than practices as the primary factor in achieving
better corporate performances.
The observations are elaborated in details as follows:
First, in pursuit of better organizational performance
and competitive advantage, our empirical results show
that supply chain competencies do play an important
role in supply chain management setting. As noted,
hypothesis H5 is accepted in both regions. As we noted
earlier, one of the objectives of this study is to guide
managers on how to develop supply chain competences
in today’s global environment. Based on our findings,
enterprises engaged in competence development in in-
ternational markets need to look into three strategic di-
rections to improve organizational performances. These
three areas are quality and service, operations and dis-
tribution, and design effectiveness. The key competence
development issues in both regions are: matching criti-
cal supply chain competence to customer requirements,
exercising continuous learning and improvements, im-
plementing the best practices of operations and distri-
bution, and allocating resources accordingly to design
the supply chain of future. This focus might have the
 W.S. Chow et al. / Omega 36 (2008) 665 – 679
potential of creating a performance advantage in the lo-
ng run. This conclusion is consistent with that of Wisner
et al. [54], Kannan and Tan [49], and Madu and Kuei [2].
Second, supply chain practice is essential for overall
supply chain success as well. The proposed hypothesis
H4, that supply chain practices have a direct, positive
influence on organizational performance, is accepted in
the Taiwan region. The important practices in this case
include supply chain features and integration and cus-
tomer service management. The observed causality may
be partly due to the motive and incentive of manufactur-
ing firms in Taiwan, which rely heavily on international
trades and supply chain efficiencies. Given the lim-
ited natural resources in the island, international trade
is often perceived as the key to success and survival.
Manufacturing firms in Taiwan cannot gain competi-
tive advantage in the global market if their supply chain
systems are unreliable. There is, therefore, a need to de-
velop appropriate infrastructure, customer service man-
agement, and JIT practices. Although hypothesis H4 is
rejected in the US data set, our data illustrates that the
proposed supply chain practices have indirect impact
on organizational performance. This indirect impact is
0.3995 (that is 0.579×0.690). Further analysis and Post
hoc assessment is recommended in future studies to de-
termine why supply chain practices play an intermedi-
ary role in the US area.
Third, data sets indicate that there is significant asso-
ciation between supply chain practices and supply chain
competencies. This finding implies that enterprises need
to promote and reinforce both quality supply chain prac-
tices and competencies, directly or indirectly, to achieve
supply chain effectiveness and realize supply chains’
full potential. As noted by previous research studies,
implementing supply chain management systems across
a complex supply network is an ongoing challenge for
enterprises.
Fourth, there is a statistically significant association
between supply chain concerns and practices in the US
data set, providing support for hypothesis H1. The in-
direct effect of supply chain concerns on organizational
performance is 0.1386 (that is 0.347 × 0.579 × 0.690).
Supply chain practice is a mediator for this path. On
the other hand, the link between concerns and compe-
tencies is also significant in the Taiwan data, supporting
hypothesis H3. The indirect effect of supply chain con-
cerns on performance is 0.1963 (that is 0.241 × 0.7 +
0.241×0.347×0.33). Although our study shows a gen-
eral tendency and managers’ perceptions regarding crit-
ical supply chain management components in the US
and Taiwan, follow-up studies are needed to further ex-
amine these significant paths.
675
In this study, we tested our proposed model in two
regions. Although the settings are different, similar out-
comes are observed in some cases. Both data support
the hypothesized relations H2 and H5. H1 is supported
in the US data set, while H3 and H4 are accepted in
the Taiwan data set. As a final note, this project is ex-
ploratory at this stage due to the small sample sizes and
the differences in the sampling frame.
8. Conclusions
This study is among the first group of studies to
define and test critical supply chain management com-
ponents and their influences on organizational perfor-
mance. It also addresses supply chain characteristics in
different cultural environments to see if there are any
differences. Middle-line managers were chosen for this
study because they are the executors of strategic deci-
sions. They effectively implement supply chain prac-
tices in a firm or an organization. They also interact with
top management in laying out the supply chain plans.
Based on middle-line managers’ perceptions in both
the US and Taiwan, and through empirical assessment,
we have demonstrated the links between critical supply
chain management components and their individual,
or combined, effects on organizational performance
through the use of SEM approach. By empirically
testing, we have a better understanding of the supply
chain process, supply chain practices, and management
components in the two regions studied. Supply chain
success may involve a constant cycle of conceptual and
continuous learning among best practices, competence
development, and implementation road blocks. With
an identified list of confirmed issues that might im-
pact on the fate of a supply chain system, managers of
global supply chains are more able to deal with supply
chain challenges in different environments. Our study
shows that the practice of supply chain management
may be structurally or situation-dependent. So, there
may be different perceptions from country to country
on how to effectively manage a supply chain. Thus,
it is not the case of “one size fits all.” Each country’s
situation may be different and would need to be under-
stood to effectively manage the supply chain. The evi-
dences presented in this study reinforce the notion that
effective supply chain management would enable enter-
prises to become competitive in the new economy and
significantly improve their performance. Supply chain
competence has positive influence on organizational
performance. Managers need to focus attention on
developing such competencies.
676 W.S. Chow et al. / Omega 36 (2008) 665 – 679

In summary, our results are as outlined below:
• Supply chain competencies have positive effects
on organizational performance in both the US and
Taiwan. Supply chain competencies are developed
around quality and service, operations and distri-
bution, and design effectiveness. The goal is to
satisfy customer requirements.
Appendix A
• Supply chain practice has direct impact on orga-
nizational performance in Taiwan and shows only
indirect impact in the US Supply chain features,
integration, and customer service make up supply
chain practices.
• Supply chain practices and competencies are sig-
nificantly associated in both the US and Taiwan.
Supply chain concerns and practices are found to
be associated in the US.
Constructs and survey items—US data

Variables Constructs Survey items

Supply chain practices Customer and supplier On-time delivery directly to your firm’s points of use; con-
mgt. tacting the end users to get feedback; aiding suppliers to
increase their JIT capability; participating in the sourcing
decisions of suppliers
Supply chain features Listening to signals of market demand; assembling the final
product as close to the final marketplace as possible; adopt-
ing a supply chain-wide performance measures to gauge col-
lective success
Communication and speed Reducing response time across the supply chain; communi-
cating your firm’s future strategic needs; identifying addi-
tional supply chain needs; communicating customers’ future
strategic needs; developing a supply chain-wide technology
strategy
Information sharing Creating supply chain management teams to include dif-
ferent companies; use of informal information sharing; de-
termining customers’ future needs; segmenting customers
based on service needs
Supply chain concerns Coherence Lack of trust among supply chain members; lack of cooper-
ation among supply chain members; lack of ability in man-
aging supply chain inventories; lack of interest among your
suppliers or customers; your firm’s lack of leverage within
your supply chain
Geographical proximity Your customers’ geographical distance; your suppliers’ ge-
ographical distance
Supply chain competence Quality and service The ability to respond to request in a timely manner; the
ability to make high-quality products; the ability to deliver
high-quality services; the ability to respond to the needs of
key customers; the ability to work with key suppliers; the
ability to have better asset utilization
Operations and distribution The ability in managing supply chain inventory; the ability
to meet promised delivery date; the ability in filling orders
with improved accuracy; the ability to forecasting sales with
greater accuracy; the ability to issue advanced notice on
shipping delays
Design effectiveness The ability to design low-pollution production process; the
ability to design low-pollution delivering process
 W.S. Chow et al. / Omega 36 (2008) 665 – 679 677

Appendix B

Constructs and survey items—Taiwan data

Variables Constructs Survey items

Supply chain practices
Supply chain concerns
Supply chain competence
Integration and cus-
tomer service mgt.
Supply chain features
Coherence and infor-
mation systems
Geographical proximity
Quality and service
Operations and dis-
tribution
Design effectiveness
Improving the integration of activities across your supply
chain; reducing response time across the supply chain; on-
time delivery directly to your customers’ points of use; on-
time delivery directly to your firm’s points of use; contacting
the end users to get feedback; segmenting customers based
on service needs; listening to signals of market demand
Searching for new ways to integrate supply chain manage-
ment activities; use of a third-party supply chain specialist;
assembling the final product as close to the final market-
place as possible; managing sources of supply strategically
to reduce the total cost; aiding suppliers to increase their JIT
capability; customizing the logistics network to the service
requirements
Lack of trust among supply chain members; lack of coop-
eration among supply chain members; lack of sophisticated
information system; lack of ability in managing supply chain
inventories; lack of interest among your suppliers or cus-
tomers; your firm’s lack of leverage within your supply chain
Your customers’ geographical distance; your suppliers’ ge-
ographical distance
The ability to fill orders with improved accuracy; the ability
to forecast sales with greater accuracy; the ability to issue
advanced notice on shipping delays; the ability to respond
to a request in a timely manner; the ability to make high-
quality products; the ability to deliver high-quality services;
the ability to respond to the needs of key customers; the
ability to work with key suppliers
The ability to manage supply chain inventory; the ability to
meet a promised delivery date; the ability to enhance supply
chain’s position in terms of integrity
The ability to design low-pollution production process; the
ability to design low-pollution delivering process; the abil-
ity to enhance supply chain’s position in terms of social re-
sponsibility

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