Examining the Impact of Supply Chain Leadership on Governance Mechanisms and Suppliers’ Performance in Manufacturing Industries

Despite the growing body of literature recognising the influence of supply chain leadership and governance mechanisms on supply chain practices, studies on these two domains are currently disconnected. Furthermore, while the importance of supply chain leadership is mentioned and highlighted in the literature, less is known about the role of buying firms’ leadership styles as the determinants of governance mechanisms and suppliers’ performance. Drawing upon theories of stakeholder, institutional, transformational-transactional leadership, social exchange and transaction cost economics, this thesis fills some of the gaps in the current literature by examining the effects of supply chain leadership on governance mechanisms and suppliers’ performance.
A number of hypotheses were developed and proposed, and a convergent parallel mixed methods research design was used to examine the effects of supply chain leadership on governance mechanisms and suppliers’ performance in Malaysian manufacturing industries. 190 questionnaire survey responses were collected and analysed using structural equation modelling, while 25 semi-structured interviews were analysed using thematic analysis. The findings reveal that transformational and transactional leadership positively influenced different governance mechanisms with transformational leadership driving towards trust-based governance and transactional leadership pushing towards contract-based governance. The direct positive effects of transformational and transactional leadership towards suppliers’ performance are also evident in this thesis. However, the findings reveal that laissez-faire leadership negatively influenced contract-based governance and suppliers’ performance. Nonetheless, this thesis discovers that the indirect effects of supply chain leadership to suppliers’ performance were partially mediated through governance mechanisms.
The findings provide insights on reconceptualising supply chain leadership. This thesis integrates supply chain leadership and governance mechanisms in one model and reconciles the role of both concepts towards suppliers’ performance. Furthermore, this thesis provides an explanation of the relationships between supply chain leadership and suppliers’ performance by looking into the mediating role of governance mechanisms. By integrating those concepts, the disengagement between supply chain leadership, governance mechanism and suppliers’ performance is minimised. Nonetheless, the findings offer guidance and suggestions to supply chain managers (in both buying firms and suppliers) on the role of buying firms’ leadership styles and their influence towards suppliers’ performance regardless of both parties’ supply chain positions. Findings from this thesis can help the buying firms to re-evaluate their leadership styles as the relationship with each supplier is unique and the idea of relying on a single leadership style has a potential to disrupt the performance of both parties.