The effect of information sharing on buyer-supplier relationships in the context of supply chain disruption: Does national culture matter?

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Faculty of Economics and Business MSc Thesis Supply Chain Management

The effect of information sharing on buyer-supplier relationships in the context of supply chain disruption: Does national culture matter?

Xueyi Xiao

Student number: S3191885 Email: x.xiao.2@student.rug.nl

1

^st

Supervisor dr. ir. N.J. (Niels) Pulles

Co-assessor

dr. ir. T. (Thomas) Bortolotti

Word count: 12854

25 Jan, 2021

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Abstract

Purpose: The purpose of this study is to explore how information sharing practices in the midst of supply chain disruption influence buyer-supplier relationships and the role of national culture Method/Design: A multiple case study consisting of nine interviews in five companies from four different industries was conducted.

Findings: First, the findings provide evidence that supply chain disruptions could impact information sharing in several ways. Moreover, national culture has an indirect impact on information quality through willingness to share information. Combined with a low level of uncertainty avoidance, power distance/long-term orientation contributes to a high level of willingness to share information. Furthermore, it reveals specific information sharing practices in the context of the disruption can lead to a closer relationship between buyers and suppliers.

Originality/value: This is one of the first studies to explore the effect of supply chain disruption on information sharing practices and provide in-depth insights into the influence of national culture on information sharing in the case of COVID-19 disruption.

Keywords: Information sharing, buyer-supplier relationships, supply chain disruptions, national culture

Acknowledgements

As this thesis marks the end of my study in the University of Groningen, first and foremost, I would like thank my thesis supervisor Dr. Niels Pulles for his continuous guidance throughout the whole process. Moreover, I would like to express my gratitude to Dr. Thomas Bortolotti for his valuable feedback, which offered me some good ideas in improving my thesis. Furthermore, I would say a heartfelt thank you to my family and friends who have been by my side in this journey.

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1 Introduction

The past few decades have witnessed the development of an interdependent and integrated supply chain network between buyers and suppliers. This significant change has gained operational efficiency and better finance performance for both parties. However, this integrated and interdependent network poses a great threat to companies with international suppliers as they are more likely to be affected by supply chain disruptions (Yu et al., 2009; Scholten &

Schilder, 2015; Gereffi, 2020). For example, the recent outbreak of COVID-19 has created a global supply chain crisis in simultaneous disruption of both supply and demand at a scale that has never seen (Ivanov, 2020). Due to the unique role of China as the “world factory”, very few industries and companies can be exempt from this disruption (Araz et al., 2020). Hence, when confronting disruptions, joint buyer-supplier efforts are required to manage the disruption effectively in order to limit the negative impact on its business performance (Yu et al., 2009;

Ivanov, Mason, and Hartl, 2016).

In responding to disruptions, the value of information sharing has been extensively studied as one of the main risk mitigation strategies (Sarkar & Kumar, 2015). Extant literature has emphasized the importance of information sharing between buyers and suppliers in minimizing the effect of a disruption (Friday et al., 2018; Kleindorfer & Saad, 2005; Riley et al., 2016;

Scholten & Schilder, 2015; Wieland & Wallenburg, 2013). Li et al. (2006) demonstrated that the value of timely information sharing in minimizing the effect of a disruption. Scholten &

Schilder (2015) suggested that sharing real-time disruptive information (e.g., forecast, demand) and communication technologies (e.g., face to face, site visits) between buyers and suppliers are critical to reduced response time and faster recovery from the disruption.

However, it is worth noting that information sharing between buyers and suppliers may be varied as different parties have their own willingness to share information (Colicchia et al., 2019; Hendricks and Singhal, 2005; Kostamis and Duenyas, 2011; Sarkar & Kumar, 2015;

Schmidt and Raman, 2012). Firms are more likely to postpone the release of information regarding supply chain disruptions (Hendricks and Singhal, 2005) or share part of disruptive information which is less harmful to the company (Schmidt and Raman, 2012) or choose not to share real-time information (Blackhurst et al., 2005; Li et al., 2006). One report from New York Times in 2011 discovered that one Japanese supplier failed to share real-time disruptive information to U.S. automobile companies regarding the severity of the disruption caused by the earthquake and tsunami (Bunkley, 2011), leading to the potential shut down of eight plants and production delay of 75,000 vehicles (Sarkar & Kumar, 2015). Hence, underreporting, misinformation or withholding of crucial disruptive information would have a direct influence on comprising supply chain partner’s ability to manage the disruption in the early stage (Ivanov et al., 2017), and therefore adversely affect buyer-supplier relationships.

Nevertheless, after experiencing supply chain disruptions, it remains unclear that what information sharing activities (e.g., how to share information, the frequency of information sharing and what information should be shared) are important to buyer-supplier relationships.

While Scholten & Schilder (2015) stressed the importance of certain types of information and face-to-face communication in the context of a disruption, other scholars indicate that information quality plays a vital role as buyer-supplier relationships can be adversely affected if the quality of information can not be guaranteed (Fawcett et al. 2007: Pandey et al. 2010).

For example, the manager from Chinese culture background may be reluctant to sharing information due to loss of face (Cheng et al., 2012; Jia et al., 2016). When taking a closer look at their decision whether or not to share information, national culture, which refers to a set of shared understandings and behavioral patterns shared by a group of people (Hofstede, 1991), is seen as the critical factor (Dowty & Wallace, 2010; Durach et al., 2017; Revilla and Sáenz, 2014; Shore & Venkatachalam, 2003). Deep-rooted culture shapes how people perceive the disruption and the subsequent ways of handling the disruption, and therefore affect their

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willingness to share information (Dowty & Wallace, 2010; Revilla and Sáenz, 2014; Shore &

Venkatachalam, 2003). Studies have demonstrated that disruptive information can’t be shared on time, it directly leads to the miscommunication among supply chain members (Durach et al., 2017; Revilla & Jesús, 2014). Such miscommunication can result in the failure of managing the disruption on time and therefore cause the distrust between buyers and suppliers. Hence, by taking national culture into consideration, it could be of benefit to understand how supply chain partners from different cultural backgrounds manage information sharing activities.

As a result, this study aims to investigate: 1) the effect of information sharing on buyer-supplier relationships in the face of a disruption 2) the influence of national culture in information sharing. Therefore, it leads to the following research question: How does information sharing affect buyer-supplier relationships in the context of supply chain disruption and what is the role of national culture?

As the goal of this study is to investigate the effect of information sharing on the dyadic buyer- supplier relationships, unlike most previous studies using quantitative tools, a multi-case study will be used as the main method to answer the research question.

This paper will contribute to supply chain management in three aspects. First, this study contributes to the existing literature by providing evidence on the importance of supply chain disruptions. The findings show that supply chain disruptions have a strong influence on information sharing practices. In addition, cultural dimensions are influenced by a high- magnitude disruption as well (Nouri et al., 2013; Sarafan et al., 2020). Moreover, this study sheds light on culture literature by examining the effect of national culture on information sharing in the disruption context. The findings suggest that information sharing could be influenced by multiple cultural dimensions instead of a single dimension (Doetzer, 2020).

Therefore, managers should understand the single and/or compound effect of cultural dimensions when approaching different suppliers. Furthermore, the findings on the details of specific information sharing practices that could be beneficial to buyer-supplier relationships can provide managers with guidance in response to the disruption.

The remaining of the paper will be organized as follows. Section 2 will provide theoretical background for relevant concepts and develop conceptual model. The methodology will be followed in Section 3. Next to that, results will be presented in Section 4. Discussions will be elaborated in Section 5. This paper will end with the conclusion in Section 6.

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2 Theoretical background

This section reviewed the literature on relevant key concepts, namely information sharing, buyer-supplier relationships, supply chain disruptions and the influence of national culture. The conceptual model is followed in Figure 1.

2.1 Information sharing in buyer-supplier relationships

Information sharing describes the flow of critical information among supply chain partners (Li et al., 2005; Monczka et al. 1998). Broadly speaking, it determines “what to share, whom to share it with, how to share, and when to share” (Lotfi et al., 2013). Many researchers have confirmed three key factors to information sharing, namely information content, information quality, information and communication technologies (ICT) (Li et al., 2006; Lotfi et al., 2013;

Zhou & Benton, 2007). Therefore, these three dimensions will be further elaborated in details afterwards.

The role of information sharing has been widely studied in supply chain literature.

Information sharing is seen as the fundamental component to establishing a solid supply chain relationship (Lalonde, 1998). Prior research has proved that efficient information sharing allows the firm to have the access to various data, leading to increased visibility across the supply chain between buyers and suppliers (Hsu et al., 2008; Scholten & Schilder, 2015; Wu et al., 2014). Moreover, it opens up opportunities to achieve maximal operational efficiency by working collaboratively to coordinate shared resources and activities, positively contributing to the relationship between buyers and the suppliers (Hsu et al., 2008; Scholten & Schilder, 2015).

2.1.1 Information content

Information content refers to the type of information exchanged between supply chain members. Rai et al. (2006) suggested that there are three types of information content. The sharing of operational information allows daily production-related information like materials, components, or product orders to flow seamlessly among different members (Wu et al., 2014).

By sharing operational information regularly with its partners, it allows the company to increase the understanding of partner’s daily routine, and thereby build trust over time (Chen et al., 2011).

The sharing of tactical information focuses on coordinating market-related information to make better decisions like planning and forecasting (Lee et al., 2000; Lee and Whang, 2000; Wu et al., 2014). The sharing of strategic information refers to industry or business related information that is used to make long-term strategic decisions (Gunasekaran and Ngai, 2004; Prajogo &

Olhager, 2012). By sharing strategic information which is often sensitive and confidential, it enhances trust and facilitates long-term partnership between buyers and suppliers (Moberg et al., 2002; Wu et al., 2014).

When confronting a disruption, sharing disruptive information like the magnitude, affected operation areas and the expected duration is beneficial to reduce uncertainty among supply chain partners, resulting in lower operational cost and increased trust in buyer-supplier relationships (Sarkar & Kumar, 2015).

2.1.2 Information quality

Information quality refers to the degree to which shared information fits the needs of the firms (Zhou & Benton, 2007). The effectiveness of information sharing is largely determined by information quality (Moberg et al., 2002; Prajogo & Olhager, 2012). Many scholars have developed multiple characteristics of information quality. Closs et al. (1997) and Gustin et al.

(1995) measured information quality by accuracy, timeliness, and proper formatting of the information. Other scholars add several other characteristics, like relevance, completeness, credibility (Monczka et al. 1998; Whipple, Frankel, and Daugherty 2002), accessibility and frequency of information update (Zhou & Benton, 2007). Based on prior study, this study will include six characteristics of information quality: accuracy, timeliness, completeness, accessibility, reliability, and frequency of information update.

Quality information with both accuracy and timeliness plays a positive role in building trust between supply chain partners as it reduces uncertainty along supply chain (Chen et al., 2011;

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Kwon & Suh, 2005). On the contrary, information with low quality would compromise the usefulness and benefits of information sharing (Chen et al., 2011). Especially in the context of a disruption, if accurate risk information can’t be shared between two parties in a timely manner (e.g. incomplete or delayed information), the counterparty could not make the best of information to manage the disruption, and thus has a negative impact on disruption recovery (Chen et al., 2011; Kwon & Suh, 2005; Wu et al., 2014). As a result, trust between two parties would be decreased (Chen et al., 2011; Kwon & Suh, 2005).

2.1.3 Information and communication technologies (ICT)

ICT play a fundamental role in information exchange as information can’t be shared between buyers and suppliers without deploying proper advanced technologies (Kim,2017).

Moreover, as the trend of big data leads to an explosion in both the scope and volume of information (Li et al., 2014), IT enables smooth information flow between supply chain partners, leading to closer collaboration (Doetzer, 2020). Especially during times of a disruption, information synchronization can provide the organization with more visibility, contributing to the better utilization of its data and faster decision-making process.

Communication technologies includes emails, telecommunication, online chat, and other forms of electronic communication. Previous studies have confirmed the value of face-to-face contact and site visits as it is of great help to obtain additional non-verbal information (Carr &

Kaynak, 2007; Wognum et al., 2002) and increase the level of trust between supply chain partners when facing a disruption (Ketkar et al., 2012).

It is worth noticing that due to control responses (social distancing, lockdowns) to contain the virus during COVID-19 pandemic, there is an exponential increase in the use of video conferencing (e.g., Zoom, Google meets). Hence, it is important to start to understand the effect of video conferencing on the relationship between buyers and suppliers.

2.2 Supply chain disruptions and COVID-19 disruption

Supply chain disruptions refers to unanticipated events that interrupt the normal flow of goods, materials and service within a supply chain (Craighead et al., 2007). Disruptions can be caused by man-made (e.g., explosion, strike) and natural disasters (e.g., earthquake, tsunami).

Due to the increased supply chains complexity arising from the development of global outsourcing and the significant increase in the number of natural disasters, firms are more vulnerable to supply chain disruptions than before. As a result, a considerable amount of research has put focus on risk identification and developing mitigation strategies in supply chain literature (Sarkar & Kumar, 2015).

Many scholars have confirmed the value of transparent and accurate information in handling supply chain disruptions (Sarkar & Kumar, 2015; Snyder et al., 2016). Two main streams of research can be drawn from supply chain literature (Colicchia et al., 2019). The first stream concentrates on studying the positive influence of information sharing in recovering from disruptions, reducing response time and the bullwhip effect, and improving supply chain resilience (Colicchia et al., 2019; Costantino et al., 2013; Tao et al., 2016). The second stream addresses how information sharing, combined with other factors like risk contract, can protect companies from supply chain disruptions (Colicchia et al., 2019; Xu et al., 2016).

However, research on how supply chain disruptions could influence information sharing remains underdeveloped. When a disruption occurs, information sharing practices could be influenced by the unique characteristics of a disruption. For example, due to the fast spread of a disruption (Scheibe & Blackhurst, 2018), the timeliness and frequency of information sharing become critical to avoid disruption propagation. Therefore, the importance of timely information can’t be overemphasized. Moreover, Scholten & Schilder (2015) pointed out that communication technology like face-to-face contact and site visits is able to increase visibility to facilitate a quicker response to the disruption, which is particularly effective in handling a disruption. Hence, it is essential to gain an in-depth understanding of the effect of supply chain disruptions on information sharing.

More importantly, the ongoing epidemic outbreak (COVID-19), starting from Wuhan,

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China in Dec, 2019, has led to fundamental changes in global supply chain network. Compared with other disruptions, epidemic outbreak exhibits several distinctive characteristics: (1) long- term disruption with high uncertainty, (2) disruption propagation and pandemic propagation, (3) simultaneous disruptions in supply, demand and logistics (Ivanov, 2020). Furthermore, as the nature of COVID-19 is a public health crisis, supply chain was further influenced by varied control responses like travel ban, lockdown restrictions, quarantine requirements by different countries at different periods (Mcmaster et al., 2020; Nikolopoulos et al., 2021; Sharma et al., 2020). As a result, firms in all industries are forced to redesign their supply chain network or even reexamine their relationship with suppliers to adapt to a post-COVID-19 era. Hence, it is necessary to start to assess the impact of COVID-19 disruption on information sharing practices.

2.3 The influence of national culture differences

As supply chain operates on an international level, information sharing in different countries has received a lot of attention in academia as many scholars have highlighted the influence of national culture on information sharing practices (Chow et al., 1999; Bongsug et al., 2011;

Dawes et al., 2012). National culture is defined as ”the collective programming of the mind which distinguishes the members of one human group from another” (Hofstede 1980, p. 25).

As a result, information sharing practices of firms are affected by deep-rooted values, norms and beliefs. Shin et al. (2007) explored how culture values like collectivism influence information sharing in China. Bongsug et al. (2011) proved that the variations in information sharing practices can be linked to cultural differences like the level of uncertainty avoidance.

Moreover, other scholars pointed out that the differences in cultural values such as uncertainty avoidance or power distance impacts the adoption of information technology implementation in different countries (Gaspay et al., 2008; Straub et al., 1997; Susan et al., 2011). Furthermore, national culture plays a greater role in information sharing activities in disruptive context. Prior study has discovered that national culture shapes the way how the organization perceives the risk and influences their subsequent collaboration decisions with its partner such as information sharing activities in response to the disruption (Bhattacharyya et al., 2010; Ellis et al., 2011;

Revilla & Jesús, 2014).

Though several scholars have come up with different cultural frameworks, the most widely used and influential culture framework in cross-cultural research is proposed by Hofstede (2001). Therefore, this framework is adopted in this study. Three dimensions, namely power distance, uncertainty avoidance, individualism/collectivism, long/short term orientation, are selected in this study as they are most relevant to understand how national culture influences information sharing when a disruption occurs. The other dimension-masculinity is excluded in this study.

Masculinity refers to the cultural preference for “ masculine” or “feminine” values (Hofstede, 2001). In line with the research conducted by Kumar et al. (2015), this study finds no relationship between gender inequity and information sharing in responding to the disruption, thus this dimension is not included.

2.3.1 Power distance

Power distance refers to the level of acceptance regarding unequal power distribution within the organization with its focus on the hierarchical relationship between superior and subordinate.

In countries with high power distance, the hierarchy of authority is favored and members accept the decision from the leader without any questions. By contrast, in low power distance countries, the distribution of power is more equal and members feel more comfortable to express their opinions and their views are heavily involved in the decision-making (Chiu et al., 2018).

Prior research has pointed out the influence of power distance in information sharing. Low power distance positively influences information sharing between supply chain partners (Rivera-vazquez et al., 2009). Due to lack of formal distance, employees feel free to share information between different levels of power without checking with superiors first (Chiu et al., 2018). As a result, the flow of information between employees and its superiors would be much easier. With a conducive culture for information sharing, low power distance would contribute

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to willingness to share information with business partners (Chiu et al., 2018).

In the context of supply chain disruptions, mixed findings can be found in literature. On the one hand, Kumar et al. (2016) held the view that during the disruption, high power distance could bring order and harmony by making the decision based on collective interests whereas low power distance could lead to chaos if there is disagreement between the superiors and employees. On the other hand, Kraude et al. (2018) suggested that the disagreement between the superiors and leaders in low hierarchy environment could lead to better decision-making in response to the disruption.

2.3.2 Uncertainty avoidance (UA)

Uncertainty avoidance measures to what extent the member of a society feels comfortable with uncertain or ambiguous situations (Hofstede, 2001). Usually, countries with high UA have little room for uncertainty and people feel stressed and threatening to confront uncertainty. To the contrary, people from countries with low UA cultures are able to tolerate more risks and proceed in the context of unknown (Pemer et al., 2018).

Prior research has proved that uncertainty avoidance has a strong influence on information sharing (Chang et al., 2015; Doetzer, 2020; Li et al., 2009). Embedded in uncertainty-averse culture, people would be less likely to take the risk of sharing information to avoid ambiguity.

In addition, when countries are exposed to the same level of the disruption, Kraude et al., (2018) confirmed that the differences in UA could have a significant impact on the differences in risk perception, resulting in various actions to reduce the risk. The company located in high UA culture would consider a greater risk, and therefore their willingness to share information would be decreased compared with the company from low UA culture (Chang et al., 2015).

2.3.3 Individualism/Collectivism

Individualism/Collectivism measures the degree to which the culture tends to behave individually or collectively (Doetzer, 2020). In individualistic cultures, individuals are loosely connected in the group and less dependent on others (Hofstede, 2013). They are expected to take greater responsibility for themselves. As individualism emphasizes on individual goal and self-achievement, it is more likely to have opportunistic behavior (Doetzer, 2020; Pemer et al., 2018). Therefore, in the context of supply chain disruptions, firms in individualistic cultures are more likely to put self-interest first instead of sharing up-to-date information with its partner.

If there is a conflict of interest between two parties in the face of disruption, firms in individualistic cultures could hide the information from its partner until it is discovered by its partner.

On the other hand, individuals in collectivistic cultures are closely connected in the group, care for other group members and stay loyal to the group when there is a conflict (Hofstede, 2001). They are more group-oriented and have cooperative interactions (Doetzer, 2020; Pemer et al., 2018). Companies embedded in this culture is more willing to support collaborative activities like information sharing (Doetzer, 2020; Shore & Venkatachalam, 2003). Therefore, their willingness to share information when facing a disruption could be improved to achieve mutual interests.

2.3.4 Long/Short-term orientation

The dimension of long-term orientation refers to the preference for future rewards like perseverance and thrift, whereas short-term orientation cultivates the virtues “related to the past and the present, in particular, respect for tradition, preservation of face and fulfilling social obligations” (Hofstede, 2001, p. 359). As a result, firms with long-term orientation are more likely to make decisions based on their long -term objectives, whilst firms with short-term orientation emphasize on achieving immediate results (Kumar et al., 2016; Venaik et al., 2013).

Li et al., (2015) indicated that firms with a high level of long-term orientation is more likely to share accurate and transparent information with its partner in a timely manner when there is a disruption. Moreover, firms with long-term orientation can facilitate the development of ICT, which requires continuous investment in the long-run (Doetzer, 2020). In contrast, small

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suppliers with short-term orientation are not able to make long-term investments like ICT implementation (Doetzer, 2020). Furthermore, firms with long-term orientation is more likely to invest in low probability events such as supply chain disruptions as it has economical advantage in the long-run (Kumar et al., 2016). As a result, the mechanism of sharing disruptive information could be established as an organizational routine in a long-term relationship (Kumar et al., 2015; Li et al., 2015).

Figure 1: Conceptual model

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3 Methodology

This section describes the method used to answer the research question. Research design, case setting and selection, data collection, measurement, and data analysis.

3.1 Research design

As the goal of this paper is to explore how information sharing influences buyer-supplier relationships in the context of COVID-19 disruption, a multiple case study was employed as it presents several advantages (Eisenhardt, 1989). First, case study is especially appliable for exploring a real-life phenomenon with the focus on answering the “how” question (Yin, 2003), which is in line with research question. Moreover, as the unit of the analysis is buyer-supplier relationships, it is embedded in the supply chain network and is influenced by network, leading to the difficulty in defining the clear boundaries between the context and the phenomenon (Kähkönen, 2014). Therefore, given the nature of this research, case study is more suitable as it allows the researcher to investigate a contemporary phenomenon that is difficult to separate from its context. Furthermore, one important part of this research is to compare how different national cultures influence information sharing practices, the method of multiple case studies is more appropriate as it provides the opportunity to understand similarities and differences of information sharing activities in difference cultural environments and make reliable generalization (Yin, 2003).

3.2 Case setting and selection

As this study was interested in information sharing activities between buyers and suppliers in the face of COVID-19 disruption, manufacturing companies were studied. In total, there were 8 interviews conducted in 5 companies from 4 industries. These companies were selected based on several criteria.

Firstly, the companies have been chosen based on its buyer-supplier relationship. As this study aimed to investigate the relationship between buyers and suppliers, therefore, the chosen company was required to have the collaboration with its suppliers. Additionally, in order to examine the influence of national culture on information sharing practices, the chosen company must have a wide range of suppliers locating at different countries. Secondly, in order to evaluate the impact of COVID-19 disruption on information sharing between buyers and suppliers, it was required that supply chain within chosen companies must has been significantly disrupted by COVID-19. Thirdly, the size of the company was also taken into consideration when choosing the company. Medium to large companies were preferred as they have relative complex and long supply chains, which are more likely to be affected by the disruption. Furthermore, complex and long supply chains required a considerable amount of information sharing with the partner and well-established information technology to facilitate information synchronization, which is of benefit to answer the research question.

All sample cases were manufacturing companies with its operations around the world. The purpose of including four industries was to assess the impact of COVID-19 disruption on information sharing activities across several different industries as almost all industries have been hit by COVID-19 disruption. Moreover, as COVID-19 has become a global pandemic, no country is exempt from its impact. And it could be noticed that different countries have experienced varying levels of disruptions at different periods, which could trigger different levels of supply chain disruptions within buying companies (Mcmaster et al., 2020). For example, China is the first country where COVID-19 outbreak was occurred. As a result, companies in China immediately experienced supply chain disruptions like the drastic decline of supply availability and reduced transport capacities in late Jan (Ivanov, 2020; Kumar et al., 2020). However, supply chains in some European companies was not severely affected until mid-march due to the effect of lockdown (Ivanov, 2020; Mcmaster et al., 2020). Therefore, with buying companies from different countries, it was beneficial to explore how different levels of disruptions affect information sharing activities. The overview of buyers and suppliers

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is presented in Table 1.

Two manufacturing companies in fast-moving consumer goods (FMCG) sector has been selected as characteristics of FMCG sector like short life circle of both raw materials and finished goods and high pressure for product availability make the companies increasingly vulnerable to the disruption (Scholten & Schilder, 2015). Moreover, three companies from other industries like electronics, electrical and automotive were chosen as well. These industries rely heavily on high levels of global collaboration, which makes it particularly vulnerable to supply chain disruptions like COVID-19 global epidemic (Basole & Bellamy, 2014; Donadoni et al., 2019).

Buyer Buyer’s Country

Industry Case Supplier’s

Country

Company A French Electrical Case 1 China

Case 2 Japan

Case 3 Israel

Company B America Electronics Case 4 China

Company C China Sports Case 5 Thailand

Case 6 Malaysia

Company D Netherlands Sports Case 7 Taiwan

Company E Bulgaria Automotive Case 8 China

Table 1: Overview of buyers and suppliers

The multiple case study allowed for theoretical replication as it is expected that different results can be developed from different cases (Yin, 1989). For example, western companies could be more willing to share information than companies in Asian countries.

3.3 Data collection

The primary data was collected by the semi-structured interview as it was of help to gain in-depth understanding of the complex phenomenon while keeping a certain level of flexibility (Yin, 2009).

As the focus of this paper is on the activities of information sharing after supply chain disruptions, interviewees were selected based on their experience on handling COVID-19 disruption with its supplier. Accordingly, there were 8 interviews conducted between November 2020 and December 2020. Due to the social distancing of COVID-19, different approaches of interview (e.g., video conference, face to face communication, phone call) were employed.

Interview protocol development

An interview protocol (Appendix A) is developed to ensure reliable and valid research (Yin, 1984). Based on the key concepts in literature, the interview protocol included four topics, namely information sharing, buyer-supplier relationships, the influence of supply chain disruptions and the influence of national culture. The structure of information sharing is based on prior work of Zhou and Benton (2007). Moreover, willingness to share information is added to the construct of information sharing as prior study emphasized its importance in information sharing as it has a considerable influence on the quality of information (Chang et al., 2015;

Fawcett et al., 2005; Sarkar & Kumar, 2015). Furthermore, the willingness to share information is largely influenced by different national cultures (Chang et al., 2015; Röcker, 2010). Therefore, it is beneficial to gain a deeper understanding of how national culture affects information sharing practices. Two aspects of buyer-supplier relationships are adapted from the work of Hill et al. (2009) and Cao et al. (2010). As there is no clear measurement of supply chain disruption in literature, therefore the definition of supply chain disruption is used to provide the guidance. In line with abovementioned theory, three dimensions of national culture is derived from the work of Hofstede’s.

Table 2 presents an excerpt from interview protocol. The complete interview protocol is

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provided in Appendix A.

Four topics Purpose Construct Example questions

Information sharing

To figure out information sharing practices from supplier side

Willingness to share information; Information content; Information quality; ICT

Could you please tell me how your partners’ willingness to share disruptive information was? What type of disruptive information did you receive from your supplier (operational, tactical or strategic)?

The influence of supply chain disruptions

To understand how COVID-19 disruption affected information sharing

unanticipated events that interrupt the normal flow of goods, materials and service within a supply chain

Compared with normal times, did you see the difference in the quality of information?

Buyer-supplier relationships

To understand the impact of information sharing on the relationship between buyers and suppliers

Trust; Collaboration Could you please tell me what information sharing practices during the disruption affect the trust between two parties in a positive/

negative/ the same direction?

The influence of national culture differences

To understand the role of national culture played in information sharing practices

Power distance; Uncertainty avoidance;

Individualism/Collectivism;

Long/Short-term orientation

How did specific cultural dimension influence information sharing practices between you and your partner?

Table 2: Excerpt interview protocol

Interview protocol execution

Prior to the interview, interviewees were informed about the goal of this study and asked to sign the consent form. When conducting the interview, it started with general questions about the interviewee, the company and its relationship with one supplier. Then, the interviewee was asked open questions about COVID-19 disruption and their response to the disruption. Next to that, the interviewee was asked to explain how information shared between two parties during the disruption. Lastly, the interviewee was asked to examine how different cultural dimensions affect information sharing practices.

All interviews were recorded and transcribed for further analysis within one day (Eisenhardt, 1989). After transcribing each interview, the interpretation of the interview was sent back to each interviewee to enhance validity of this research (Yin, 2009). In addition, additional materials were also collected like internal brochures to ensure data triangulation (Strauss and Corbin, 1998).

Company Industry Interviewee Interviewee

position Case Length of the

interview Company

A

Electrical Interviewee A Procurement engineer

Case 1 100:11

Case 2 (Same interview) Case 3 (Same interview) Company

B

Electronics Interviewee B Global supply planner

Case 4 56:34

Company

C Sports Interviewee C Production analyst Case 5 48:36 Case 6 (Same interview) Company

D Sports Interviewee D Senior logistic

specialist EMEA Case 7 48:23 Company

E Automotive Interviewee E Procurement

Specialist Case 8 47:51

Table 3: Overview of cases and interviewees

3.4 Data analysis

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As the primary method of collecting data was interviews, Excel was used to analyze data.

The structure of analysis is divided into three steps proposed by Miles and Huberman (1994), namely data reduction, data display and conclusion drawing. In the first step, data was reduced to quotes that was closely associated with the key constructs of this study (first-order code).

Next, the data was analyzed in multiple steps. To begin with, in order to identify the influence of COVID-19 disruption, first-order codes were coded into descriptive second-order categories like “disruptions in supply and demand” “disruption propagation” or “unprecedented disruption”. By doing so, third-order codes were deductively created by linking the second- order categories to COVID-19 disruption. Next, first-order codes were analyzed and deduced by linking it to information sharing practices. An excerpt of the coding tree is presented in Table 4. The complete coding tree can be found in Appendix D.

Quote Code Code

group

Link to information

sharing practice Dimension

"In the beginning, it was much worse than before as we could hardly get information from us as the supplier had no idea how to deal with this unprecedent disruption." (Case 1)

Unprecedented severity

COVID- 19 disruption

Less willingness to share information

Willingness to share information

"We had to prioritize the top 6 models of our running shoes." (Case 7)

Disruptions in supply and demand

Adjustments of production priority and forecast

Information content

"The supplier would also keep us updated on policy change. One example is manpower issue, because of factory lockdown and quarantine requirements, it was extremely hard for the supplier to find enough workers." (Case 8)

Factory lockdown and quarantine requirements

Additional information

“Basically, we had daily video call with them to keep track of

production process.” (Case 1) Disruptions in

production

Higher frequency of information update

Information quality

"Things changed so fast in this disruption. When you get one piece of information from the supplier, you have no idea if it’s the complete story, so it is really hard for you to make the right call." (Case 7)

Fast spread of the disruption

Difficult to get accurate and reliable information

"We have well-integrated information system with our supplier. So, reliable, accurate and timely information can be ensured to make faster decision to minimize its effect." (Case 4)

Limit disruption propagation

Well-developed information system

"Since the shutdown of factory, this supplier just went disappeared ICT and we haven’t heard from them for quite some time. Later, we realized that their employees don’t have computers." (Case 5)

Factory shutdown

No remote working equipment

Table 4: Excerpt coding tree of the effect of COVID-19 disruption on information sharing Secondly, in order to analyze the impact of national culture on information sharing, first- order codes were coded into descriptive second-order categories like “short-term focus” “has high tolerance for uncertainties” or “a strict hierarchy”. In this way, third-order codes were deductively created by linking the second-order categories to different dimensions of national culture. Then, first-order codes were analyzed and deduced by linking it to information sharing practices. An excerpt of the coding tree is presented in Table 5. The complete coding tree can be found in Appendix E.

Thirdly, in order to explore the effect of information sharing on buyer-supplier relationships, first-order codes were coded into descriptive second-order categories like “information on time”, “essential information”, or “withhold information”. Thereafter, third-order codes were deductively created by linking the second-order categories to three dimensions of information sharing. In the second step, first-order codes were analyzed and deduced by linking it to trust and collaboration in buyer-supplier relationships. An excerpt of the coding tree is presented in Table 6. The complete coding tree can be found in Appendix F.

Moreover, the analysis of each dimension of information sharing is conducted per case. An excerpt of information sharing practice is presented below in Table 6.

After the coding process, two independent analysis were conducted. The analysis of individual cases was carried out to make preliminary conclusions. Next, a cross-cases analysis was performed across all cases to look for patterns and structures.

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Quote Code Code groups

Link to information

sharing practice

Dimension

“It was very obvious that a top-down structure made information sharing easier for us to some extent. With the top management of this supplier is willing to share information, then the rest of the employees just do the execution part.” (Case 2)

Top-down structure

Power distance

Reliable transparent and timely information

Information quality

“Their employees don't have much influence in the decision-making. As long as the top management is willing to share information, employees just execute what they are told to do-share information with us." (Case 6)

Follow the instruction from the top management

Willing to share information

“This supplier is afraid of taking any risks. When facing this disruption which is not like what we have seen before, they just get scared and feel anxious by sharing "bad news" with us.” (Case 1),

Afraid of taking risks

Uncertainty avoidance

Unwilling to share information

“As this supplier was comfortable to proceed with uncertainties, their feedback was always very speedy instead of taking days long. (Case 4)

High tolerance for uncertainties

Complete and timely information

Information quality

"As we have been collaborating for quite some time, therefore, it was our mutual interest to go through this crisis as soon as possible. So, they would love to share any information with us." (Case 4)

Long time cooperation

Long-term orientation

Willing to share information

"As their goal is to build long-term relationship with us, they were very active in sharing all kinds of information with us and provide the feedback as soon as possible." (Case 6)

The intention to build long-

term relationship

Complete information and speedy feedback

Information quality

“Long-term relationship allowed us to work on system improvements.

Actually, we have been working together over the last few years to improve the efficiency and smoothness of information transfer.” (Case 4)

Long-term relationship

Improve system integration

ICT

Table 5: Excerpt coding tree of the effect of national culture on information sharing

Link to buyer-supplier relationships

Quote Code Code groups

Trust

“Delivery schedule like ETD, ETA, location of the goods in transit and their

quantity and manpower issue.” (Case 8) Operational

information Information content

“Their information was quite accurate and reliable. It saved us a lot of time without double checking, so it was possible for us to respond to the disruption in a faster manner.” (Case 4)

Accurate and reliable information

Information quality

“Site visit definitely was the turning point for us. Before site visit, we could hardly get any information from the factory. But site visit has helped our supplier build trust, so our supplier was willing to be honest and open afterwards. (Case 1)

Site visit

ICT

Collaboration

“Mainly operational, like order status, transportation capacity and production capacity.” (Case 4)

Operational information

Information content

“If they let us know what they were struggling with or something they were not able to figure out, we would share best practices with our supplier.” (Case 4)

Buyer share best practices

“Their information was quite accurate and reliable. It saved us a lot of time without double checking, so it was possible for us to respond to the disruption in a faster manner.” (Case 4)

Accurate and reliable information

Information quality

“As there is no system that could provide full visibility of the production in the factory, we have to develop order booking system to monitor production status.” (Case 7)

Develop a

temporary system

ICT

Table 6: Excerpt coding tree of the effect of information sharing on buyer-supplier relationships

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4 Results

This section provided the results of how COVID-19 disruption influences information sharing and how national culture influences information sharing in the midst of COVID-19, and therefore how information sharing in the context of COVID-19 disruption influences buyer- supplier relationships. The results indicated that COVID-19 disruption had a strong influence on information sharing practices. For example, the willingness to share information was negatively impacted by COVID-19 disruption. In addition, the results also indicated that the significant influence of power distance, uncertainty avoidance and long-term orientation on information sharing practices in the context of COVID-19 disruption. Furthermore, the bilateral flow of information, high quality information with a high frequency of information, a high level of system integration and the appropriate communication technology positively impacted trust and collaboration in buyer-supplier relationships.

4.1 The impact of COVID-19 disruption

The results indicated that the severity of COVID-19 disruption to supply chain is unprecedented as all interviewees all choose 9 or 10 if the severity is ranked from 1 to 10. The interviewee from company E stated the following: “Our supply chain was completely turned upside and down, so did our daily operation”. The interviewee from company B: “this disruption is not like any disruptions we have seen before. I think the disruption which could be worse than this one is a global war.” The overview of the results is presented in Table 7 and explained as follows.

Information sharing The influence of COVID-19 disruption Willingness to share

information

Negatively affected by the disruption in most cases

Information content

➢ Information content is only limited to operational and tactical information in all cases

➢ Risk event-related information becomes an essential part of information exchange

Information quality

➢ Experience various levels of difficulties in getting accurate, timely and reliable information

➢ High frequency of information update ICT

➢ A fully integrated information system is in urgent need

➢ Remote working technology is required

➢ The dramatic increase in the use of video conferencing Table 7: Overview of the impact of COVID-19 disruption

4.1.1 Willingness to share information

Overall, supplier’s willingness to share information is negatively affected by COVID-19 disruption in most cases. In cases 1, 3, 5, 7 and 8, willingness to share information is significantly reduced due to COVID-19 disruption. Interviewee A: “In the beginning, it was much worse than before as we could hardly get information from us.” Interviewee C: “Their willing was quite low. Most times, they just went disappeared.” However, it is worth mentioning that willing to share information has increased during the COVID-19 disruption in case 6.

Interviewee C: “To be honest, it was quite a surprise to that they were very active in sharing all kinds of disruptive information with us from the beginning.”

4.1.2 Information content

Our results showed that COVID-19 disruption has affected information content in two ways.

Firstly, information content is only limited to operational and tactical information in all cases during the disruption as the main goal is to solve urgent issues and anticipate disruption propagation. Interviewee C: “Mainly operational like order status, manpower, delivery

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schedule, and raw material inventory from the supplier.” As most countries have taken control measures such as factory shutdowns or border closures, suppliers had tremendous difficulties with keeping up with initial production schedule due to the lack of manpower, raw material and transportation capacity. Hence, adjustments for forecast and supply planning is updated as well.

Interviewee D: “we had to prioritize the top 6 models of our running shoes.”

Secondly, COVID-19 disruption highlights the importance of risk event-related information.

Risk event-related information refers to government policy, travel ban, sanitation and quarantine requirements. Though it can’t be categorized as operational, tactical or strategic information, it has a direct and significant impact on supply chain operations. Interviewee B:

“the supplier would also keep us updated on policy change. This is so crucial in this disruption because it’s so closely linked to our operations. One example is manpower issue, because of factory lockdown and quarantine requirements, it was extremely hard for the supplier to find enough workers. Our production was immediately delayed.” This was complemented by other interviewees from case 4, 7 and 8 as they would also receive regular policy update from their supplier. Therefore, risk event-related information becomes an essential part of information exchange.

4.1.3 Information quality

Due to swift response required by COVID-19 disruption, all cases except for case 4 have experienced various levels of difficulties in getting accurate, timely and reliable information.

Interviewee D: “Things changed so fast in this disruption. When you get one piece of information from the supplier, you have no idea if it’s the complete story, so it is really hard for you to make the right call.” And the difficulty is multiplied by supply chain complexity.

Interviewee C: “It really took ages for us to get feedback from the supplier. We understand that they need some time to find out the situation and even sometimes, they need to wait for the feedback from their suppliers. But time is money in the disruption, if information can’t be delivered to us on time, it is not useful any longer.” Another significant impact is in the frequency of information exchange. Due to the fast spread of COVID-19 disruption in different countries, high frequency of updating information is noticed in most cases to ensure rapidly evolving situations in different regions can be shared between both sides as early as possible in order to make the most informed decision.

4.1.4 ICT

Our data showed that COVID-19 disruption has affected information technology in two aspects. Firstly, the need for a fully integrated information system is outlined in most cases due to its great value in achieving supply chain visibility and recovering faster from the disruption.

In case 4, interviewee B: “We have been working together over the last few years to continuously develop software and modules to achieve a higher level of integration. With these improvements, we are able to have high-quality information. This helped us gain an advantage in the fight against Covid.” In contrast, if there is no fully integrated system in place to provide visibility, it takes much longer time to alleviate the effect of the disruption. An example of this was found in case 7. Interviewee E: “Though we have developed order booking system, it still took us one extra month to have reliable data. So, production delay was quite serious.”

Secondly, remote working technology is required to ensure smooth operation and real-time information exchange. With the new mode of working from home, system stability and network robustness have a direct impact on the timeliness of information update. Examples of this were found in case 5 and 8. Interviewee E mentioned that: “As we start to employ a home office mode of working, we are constantly facing system’s shut-downs and enormous decrease of the system speed, which have a high impact on the way we work with our suppliers.”

In terms of communication technology, the most profound change led by COVID-19 disruption is the dramatic increase in the use of video conferencing. Video conferencing has allowed both sides to get virtual interaction and get issues addressed effectively. Interviewee D stated the following: “Though we are not able to do factory visit, video call is a good substitute as it was quite effective to discuss and fix urgent issues. More importantly, it has helped us

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connect with our supplier in a more human way as we can feel their worries, fears and anxieties.”

4.2 The influence of national culture

The results highlighted the importance of taking national culture into consideration when operating in multiple countries as seen in several cases (Case 1, 3, 4, 7 and 8). Companies have experienced major challenges caused by national culture differences. Interviewee A: “Their uncertainty-averse cultural mindset was a total disaster for us in the face of a global pandemic.

This has caused one of our major products delay for a long time and triggered our highest alert.”

The overview of the results is presented in Table 8 and explained as follows.

Information sharing

Power distance Uncertainty

avoidance Collectivism Long-term orientation

➢ Positively influence combined with a low level of uncertainty avoidance

➢ Negatively influence combined with a high level of uncertainty avoidance

Negatively influence when uncertainty avoidance is high

/ ^➢ Positively influence with a low level of uncertainty avoidance

➢ No influence with a high level of uncertainty avoidance

Information

content / / / /

Information quality

Indirectly influence through willingness to share information

Indirectly

influence through willingness to share information

/ Indirectly influence

through willingness to share information

ICT / / / Positive influence

Table 8: Overview of the influence of national culture

4.2.1 Power distance

The impact of power distance on information sharing can be recognized in all cases except for case 3. High power distance plays an important role in information sharing combined with the influence of uncertainty avoidance. When there is a low level of uncertainty avoidance, high power distance would lead to the increase of supplier’s willingness to share information. With a leader who are not afraid of uncertainties, the decision to share information would be accepted by employees without any questions immediately. Examples of this were found in case 2, 4 and 6. Interviewee C: “As the mindset of the top management was in favor of taking risks and managing the disruption proactively, then employees would just follow the decision and be active in sharing all kinds of information.” In contrast, when the level of uncertainty avoidance is high, high power distance would negatively influence supplier’s willingness to share information as the leader with uncertainty-averse mindset would be more reluctant to share information. Instead of challenging manager’s decision, employees would just keep information to themselves internally. Examples of this was found in the early stage of case 1, 5, 7 and 8. Interview A: “this supplier has a very strict hierarchy. So, when the boss was afraid of sharing information with us, it was extremely hard to get update about factory situation from their employees.” Also, the influence of power distance on information quality is through willingness to share information.

4.2.2 Uncertainty avoidance

The impact of uncertainty avoidance can be noticed in all cases. As seen case 1, 3, 5, 7 and 8, high uncertainty avoidance directly leads to supplier’s unwillingness to share information.

Interviewee C: “This supplier has been quite conservative. They are very afraid of taking any risks. When facing this disruption which is not like what we have seen before, they just get scared and feel anxious by sharing problems with us.” Interestingly, the level of uncertain

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avoidance within the supplier could be decreased. In case 1, 7 and 8, after the buying company took the initiative and provided the supplier with the guidance, supplier’s fear of the disruption was reduced dramatically, resulting in much higher willingness to share information. Moreover, uncertainty avoidance is indirectly associated with information quality through willingness to share information in a negative way. High level of uncertainty avoidance leads to the unwillingness to share information, and thereby, resulting in low quality information.

Interviewee A: “This is definitely related to their uncertainty avoidance. But I think the direct impact comes from their willingness to share information. As their level of uncertainty avoidance was so high, it had a direct impact on their willingness to share information. So, that explained why we were so hard to get needed information from them. However, the quality became much better when they were willing to share information with us.”

4.2.3 Long-term orientation

Long-term orientation plays an important role in willingness to share information combined with the influence of uncertainty avoidance. When the supplier has a low level of uncertainty avoidance in facing the disruption, long-term orientation would contribute to a higher level of willingness to share information. Examples of this were seen in Case 2, 4 and 6. Interviewee B:

“As we have been collaborating for quite some time, therefore, it was our mutual goal to go through this crisis as soon as possible. So, they would be willing to share information with us as long as it would be beneficial to the recovery.” However, the influence of long-term orientation is not evident when the supplier presents a high level of uncertainty avoidance.

Examples of this were seen in Case 1, 7 and 8. Interviewee A: “Though they have this long- term collaboration mindset, they still got overwhelmed when facing this unprecedented disruption. So, the fear of taking risk to share information with us overweighted their long-term orientation.” Moreover, like power distance and uncertainty avoidance, its influence on information quality is through willingness to share information.

Furthermore, in general, long-term orientation affects ICT in a positive direction.

Maintaining long-term relationship is more likely to invest in the development of information system. Interviewee B: “Long-term relationship allowed us to work on system improvements.

Actually, we have been working together over the last few years to improve the efficiency and smoothness of information transfer between two parties.”

4.3 The influence of information sharing on buyer-supplier relationships

The results provided details on how a bilateral flow of information, high quality information, a high level of system integration and the appropriate communication technology contribute to trust and collaboration between buyers and suppliers. The overview of findings is

illustrated in Table 9 and explained as follows.

4.3.1 Trust

The results indicated that the ability to provide risk event-related information, high quality information, and the appropriate communication technology positively influence the trust between buyers and suppliers.

Information content

The ability to provide risk event-related information has a positive influence on trust. By sharing extra information such as factory shutdown, border closure, travel ban or quarantine requirements, the supplier can be considered as trustworthy due to its competence to offer information based on the needs and benefits of the buyer and its commitment to support the buyer in an extreme situation. Interviewee B: “We really appreciate that they have been active in gathering all kinds of information. So, we can have a better understanding of local situation and how it would factory operations.”

The effect of information sharing on buyer-supplier relationships in the context of supply chain disruption: Does national culture matter?

Faculty of Economics and Business MSc Thesis Supply Chain Management