Asia Pacific Journal of Marketing and Logistics

The effect of environmental uncertainty, information quality, and collaborative logistics

on supply chain flexibility of small manufacturing firms in India
Vivek Nagarajan Katrina Savitskie Sampathkumar Ranganathan Sandipan Sen Aliosha Alexandrov
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Vivek Nagarajan Katrina Savitskie Sampathkumar Ranganathan Sandipan Sen Aliosha Alexandrov ,
(2013),"The effect of environmental uncertainty, information quality, and collaborative logistics on supply
chain flexibility of small manufacturing firms in India", Asia Pacific Journal of Marketing and Logistics, Vol.
25 Iss 5 pp. 784 - 802
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APJML
25,5 The effect of environmental
uncertainty, information quality,
and collaborative logistics on
784
supply chain flexibility of small
Received 18 September 2011
Revised 15 October 2012
manufacturing firms in India
10 December 2012
7 June 2013 Vivek Nagarajan
Accepted 17 June 2013 College of Technology, PSG Institute of Management, Coimbatore, India
Katrina Savitskie
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College of Business Administration, Savannah State University, Savannah,

Georgia, USA
Sampathkumar Ranganathan
School of Business, University of Wisconsin-Green Bay,
Green Bay, Wisconsin, USA
Sandipan Sen
Department of Management and Marketing,
Southeast Missouri State University, Cape Girardeau, Missouri, USA, and
Aliosha Alexandrov
College of Business, University of Wisconsin Oshkosh, Oshkosh,
Wisconsin, USA

Abstract
Purpose – The purpose of this paper is to investigate the relationship between environmental
uncertainty, information quality, and proactive logistics practices on supply chain flexibility.
Design/methodology/approach – A survey of 75 Indian small-scale manufacturers in Coimbatore
(southern India) was conducted.
Findings – India, which is a thriving emerging economy, is an ideal location for this study. Results
indicate that if managers wish to ensure improved supply chain flexibility, firms must work to
improve information quality.
Research limitations/implications – The small sample size is a limitation of the study, so too is
the narrow sector targeted (small-scale manufacturing).
Practical implications – The results reinforce the fact that supply chain management has many
elements that can impact a manufacturing firm’s responsiveness, which is especially true in an
emerging market like India.
Originality/value – The paper is one of the first to survey small-scale manufacturing executives
Asia Pacific Journal of Marketing and
Logistics regarding their acceptance of and use of supply chain concepts under environmental uncertainty.
Vol. 25 No. 5, 2013
pp. 784-802 Keywords PLS, Global business, Collaboration-coordination, Channels of distribution,
q Emerald Group Publishing Limited International logistics, Logistics operations and management
1355-5855
DOI 10.1108/APJML-09-2011-0065 Paper type Research paper
 Introduction The effect of
Environmental uncertainty poses challenges for supply chains, and business leaders
recognize they need to take action to manage it. Because supply chain flexibility is a environmental
main driver of supply chain performance (Vickery et al., 1999; Sánchez and Pérez, 2005; uncertainty
Aprile et al., 2005; Stevenson and Spring, 2009) firms emphasize supply chain
flexibility more in times of increased uncertainty (Swamidass and Newell, 1987).
Supply chain flexibility improves the performance of supply chains mainly through 785
logistical efficiency and effectiveness (Omar et al., 2012). Supply chain management
includes coordination and collaboration with channel partners and customers (http://
cscmp.org/aboutcscmp/definitions.asp) therefore critical supply chain issues need
to be examined, including the implications of supply chain flexibility on the firm
(Vickery et al., 1999). This study examines the impact of environmental uncertainty on
supply chain flexibility, as it is achieved through partnerships with logistics providers,
specifically the role of quality information and collaborative logistics practices.
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The study focuses on the emerging Indian market. India’s projected economic
growth of 15-20 percent by 2015 (www.supplychains.in), requires even more from the
logistics function (Wu and Cheng, 2008). Furthermore, Indian manufacturers are
spending 12-15 percent of firm revenues annually on logistics (Arshinder et al., 2007)
and given the significance of the manufacturing sector, which has been growing at
approximately 12 percent in recent years (Selko, 2008), more managers are paying
attention to supply chain initiatives. Evaluating the impact of environmental
uncertainty on supply chain flexibility in India will allow companies to focus on the
right resources to improve firm success.

Theoretical framework and research hypotheses

The framework we advance is based on the view that companies increase their supply
chain flexibility as a response to environmental uncertainty; and that supply chain
flexibility is improved through partnerships with logistic providers which is
represented by quality information exchanged among partners and collaborative
logistics (Figure 1). This theoretical framework is grounded in the resource-based view

Partnerships with
Logistics Providers

Information
Quality
H1 H3
IQ

Environmental Supply Chain

Uncertainty Flexibility
EU H2 H4 SCF
Collaborative
Logistics
CL

Figure 1.
Environment Response Result
Study model
 APJML of the firm, which recognizes that a firm is a bundle of resources (e.g. human, physical,
25,5 or organizational capital) which impact firm performance (Wernerfelt, 1984). Resources
include plant and equipment, technology, training initiatives, and even coordinating
and control processes in the firm (Penrose, 1959; Nelson and Winter, 1982; Barney,
1991).
Some researchers have expanded the RBV concept beyond internal capabilities
786 (Barney, 1991) to also include external capabilities (McEvily and Zaheer, 1999; Das and
Teng, 2000), which translates naturally to supply chain operations. There is a growing
realization that some critical resources are outside the firm (Das and Teng, 2000), and
that a combination of relationships between firms influences a firm’s competitive
advantage (Araujo et al., 1999). Mathews (2003) coined the term the “extended
resource-based view of the firm” by suggesting that competitive advantage is derived
from both internal and external assets and a firm’s supply chain is an external
resource. Research in strategic management has reported that inter-firm relationships
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are vital for a firm to acquire the resources and capabilities it lacks (Squire et al., 2009).
Araujo et al. (1999) contend that the interface between two organizations has an impact
on how the firm continues, thus a collaborative relationship with a critical supplier
would impact the flexibility of the entire supply chain by giving a firm greater access
to their suppliers’ capabilities as they make their own operating decisions. In our study,
partnerships with logistics providers are an external capability or the resource firms
use to cope with environmental uncertainty.
Effective use of internal and external resources improves the efficiency and
effectiveness of the firm (Daft, 1983), which is especially important during business
uncertainty (Teece et al., 1997). Therefore, relationships with partners are important
external resources that managers should consider as they strive to be more responsive.
The following sections identify the constructs employed in this study along with the
proposed hypotheses.

Environmental uncertainty
Environmental uncertainty encompasses those events and variables that have a
random and unpredictable variation, impacting the very existence of a business (Lenz,
1980; Turner, 1993). Today’s markets are becoming hyper-competitive as a result of
increasingly demanding customers (Thomas and Griffin, 1996), and environmental
uncertainty has become a major force impacting the supply chain’s competitiveness.
The literature provides multiple classifications of environmental uncertainty.
Aldrich (1979) proposed five dimensions of uncertainty:
(1) capacity;
(2) homogeneity-heterogeneity;
(3) stability-instability;
(4) concentration-dispersion; and
(5) turbulence.
Some researchers classify uncertainty on the basis of the source of the uncertainty; for
example, Miller and Dröge (1986) suggested five sub-dimensions:
(1) volatility in marketing practices;
(2) product obsolescence rate;
 (3) unpredictability of competitors; The effect of
(4) unpredictability of demands and tastes; and environmental
(5) change in production or service modes. uncertainty
Other researchers have suggested different elements to consider, including:
.
diversity (among consumers); 787
.
dynamism;
.
concentration; and
.
capability (Achrol and Stern, 1988; Paswan et al., 1998).

Gupta and Wilemon (1990) proposed four uncertainty factors:

(1) increased global competition;
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(2) continuous development of new technologies that quickly cause existing

products to be obsolete;
(3) changing customer demand needs and requirements which truncate product life
cycles; and
(4) increasing need for involvement of external organizations such as suppliers and
customers.

The literature suggests that collaboration with partners is a typical response to

environmental uncertainty (Wong et al., 2011). Environmental uncertainty is often met
by management’s development of an information sharing system between supply
chain partners and by strengthening strong trust-based collaborative alliances
(McNamara et al., 2002). In a study covering supply chains from the UK, New Zealand,
and Thailand, Childerhouse et al. (2011) found that a majority of firms worldwide are
facing high levels of uncertainty and yet still need to successfully streamline and
integrate their supply chain processes much to their detriment and that of their
partners.
Internal resources and capabilities, however, seem to be a less effective response to
environmental uncertainty than focusing on external resources. It was suggested that
increasing total quality management (TQM) practices impacts organizational
performance under environmental uncertainty (Jaworski and Kohli, 1993; Slater and
Narver, 1994) but Carter et al. (2010) found that quality practices impact firm performance
only under low environmental uncertainty. Carter et al. (2010) concluded that under
uncertain conditions, management may give more importance to other dimensions like
marketing orientation and partnerships than quality practices (Carter et al., 2010).
Similarly, Gravier et al. (2008) proposed that environmental risk will moderate the
relationship between knowledge and overall alliance performance. After conducting a
meta-analysis of previous supply chain literature they found no moderating role for
environmental risk between the different knowledge roles and alliance performance and
concluded that the “alliances may successfully mitigate environmental uncertainty
enough to diminish a strong correlation with alliance performance” (Gravier et al., 2008,
p. 126).
Overall, partnerships with logistics providers, which correspond to external
capabilities and resources, are important to the firm’s ability to respond to changes in
 APJML the marketplace. In the present study, partnerships with logistics providers involve
25,5 two practices: sharing of quality information and collaborative logistics. These two
practices are responses to environmental uncertainty, which, in turn affects supply
chain flexibility. The following sections examine the antecedents and consequences of
supply chain flexibility in more detail.

788 Information quality

Information quality refers to the accuracy, adequacy, timeliness, and credibility of the
information being exchanged among trading partners (Monczka et al., 1998). The mere
quantity of information exchanged is not enough since no information is often
preferred to bad information. Organizations may elect to delay or distort the
information shared with customers and/or suppliers (McAdam and McCormack, 2001;
Metters, 1997) if there is insecurity or uncertainty in the relationship (Mason-Jones and
Towill, 1997, 1999).
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Most of the information shared between firms is strictly on a need to know basis
(Berry et al., 1994). Decision makers are often overwhelmed by the volume of data so
good information should be concise and to the point (Li, 2002). Today firms are
investing in information technology solutions to improve responsiveness (Heinrich and
Simchi-Levi, 2005). Previous research (Mohr et al., 1996; Kumar, 1996; Anderson et al.,
1987) has also shown that frequent, non-coercive, bi-directional collaborative
communication strategies between the members of the supply chain create trust,
satisfaction, goal compatibility, mutual cooperation, and an atmosphere of mutual
support and respect between the channel members (Sahadev, 2008). The real-time flow
of quality information is as important as the efficient flow of goods (Stevenson and
Spring, 2007) and can increase transparency and trust in the manufacturer-supplier
relationship and improve control over production and inventory (Huang et al., 2003;
Sahin and Robinson, 2002). Sharing high quality information in the context of
collaborative supply chain practices also has a significant positive impact on
operational performance (Wiengarten et al., 2010).

Collaborative logistics
Collaborative logistics includes interactions with logistics providers on planning
processes and joint problem solving, and even continuous improvement efforts.
Collaborative logistics indicates the firm’s willingness to work jointly with logistics
providers with a long term perspective to improve supply chain cohesiveness (Bechtel
and Jayaram, 1997). Logistics connects various entities in the supply chain since the
function deals with the movement of products between different entities in the supply
chain. If logistics is included in the planning and problem solving process, they can
provide invaluable suggestions for the entire supply chain. Previous studies like
Bucklin and Sengupta’s (1993) support the fact that alliance-based collaborative
logistics has a greater impact in times of environmental uncertainty.

Supply chain flexibility

A firm’s supply chain flexibility represents its ability to adjust to changing production
levels or product functions/features and the ability to handle nonstandard orders.
Vickery et al. (1999) suggested five flexibility dimensions:
 (1) handling sudden changes in customer specifications and also non-standard The effect of
orders; environmental
(2) producing products with many features; uncertainty
(3) adjusting to sudden changes in customer demand;
(4) reaching a widespread market consistently; and
(5) handling the end customer. 789
Thus, flexibility is a multi-dimensional construct which, in previous supply chain
research, has been extended to more than ten dimensions (Gerwin, 1987; Koste and
Malhotra, 1999; Narasimhan and Das, 2000; Vokurka and O’Leary-Kelly, 2000).
Supply chain flexibility is an important factor for the success of a firm. Vickery et al.
(1999) found a positive relationship between supply chain flexibility and firm
performance in the context of the furniture industry. A link was also found between
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manufacturing flexibility and customer satisfaction by Zhang et al. (2003). Yi et al.

(2011) further proposed that the adoption of an aggressive supply chain flexibility
strategy would help reduce environmental uncertainty by restructuring the firm’s
operations. Supply chain flexibility typically is the reaction of a firm to the uncertainty
in the business environment (Swamidass and Newell, 1987). Considering the
importance of supply chain flexibility, managers should be interested in a better
understanding of the elements that influence supply chain flexibility.

Hypothesis development
Managers are recognizing the importance of flexibility; which when combined with
their collaborative logistics practices enable a more strategic response to environmental
uncertainties (Upton, 1994; Sánchez and Pérez, 2005; Riley and Lockwood, 1997).
Previous research (Sánchez and Pérez, 2005) has shown that increased communication
and knowledge transfer between the suppliers and manufacturers, not only positively
influences the level of flexibility, but also reduces environmental uncertainty. These
benefits have prompted firms to improve the quality of the information they share with
their suppliers. The quality of the information shared is critical in “build-to-order”
supply chains because flexibility, production and scheduling, and the supply chain
members’ ability to respond to order uncertainty are improved (Bilek, 2010). In a
dynamic environment filled with unpredictability, relevant information is absolutely
necessary for a firm to make key strategic decisions (Duncan, 1972). Johnston
(2004) conducted a study with small and medium enterprises (SMEs) and found that
managers/owners utilized non-competitive internal and external networks as
information gathering forums. These forums enable managers to consider different
possible environmental uncertainties and to brainstorm solutions or at least to
determine the types of information needed to better understand the evolving nature of
uncertainty. Environmental uncertainty makes it necessary for supply chain members
to adopt better coordinating and problem solving strategies to reduce conflict (Sahadev,
2008). This leads to the following hypothesis:
H1. As environmental uncertainty increases, the firm’s reliance on the quality of
information shared also increases.
 APJML Sun et al. (2009) conducted a survey among manufacturing firms in Taiwan and found
25,5 firm performance improved significantly when they matched the right supply chain
strategy with a particular environmental uncertainty. The alignment of supply chain
practices with environmental uncertainties makes the firm more agile, responsive, and
flexible to react to a dynamic marketplace and perform well (Lee, 2002). As uncertainty
in the environment increases, so does the effort of companies to mitigate it by aligning
790 their effort more closely. Hence we hypothesize:
H2. As environmental uncertainty increases the firm’s level of collaborative
logistics also increases.
Supply chain flexibility requires internal collaboration and external collaboration with
key suppliers, especially in a time of market uncertainties (Vickery et al., 1999).
Supplier capabilities must include responsiveness to marketplace movements and
uncertainties. This responsiveness could generally be achieved through increased
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information sharing between the collaborating organizations and also careful supplier
selection on the buyer’s part (Squire et al., 2009). The constant flow of information and
effective collaboration enables the partnering firms to be flexible in their operations,
and to be responsive to customer or market demands. Sánchez and Pérez (2005)
surveyed 126 Spanish automotive suppliers and found that a positive relationship
existed between knowledge transfer and supply chain flexibility between the suppliers.
Furthermore, information sharing is a significant part of the comprehensive planning
process (Skipper and Hanna, 2009). A review of 512 Canadian manufacturing
companies showed that improved communication between supply chain partners
reduces instances of supply chain misalignment (Vachon et al., 2009). Sharing quality
information internally and externally, and forging strategic alliances with supply
chain partners leads to improved flexibility, but it also should be recognized that these
objectives are challenging and expensive to implement, especially if the partner lacks
the expertise and resources to overhaul their existing information systems to
synchronize with that of their partners (Sahin and Robinson, 2002). This fact is
especially relevant in a developing country like India where supply chain partners may
have varying capability levels. Therefore, we hypothesize:
H3. A firm’s quality of information has a direct positive impact on supply chain
flexibility.
Stronger ties between supply chain partners can ensure the exchange of detailed
information but also develop strategic mechanisms that will improve supply chain
performance (Hansen, 1999; Reagans and McEvily, 2003). Coordinated information
exchange and ordering processes significantly impact both the cost and service level of
a supply chain (Zhao et al., 2002). Narasimhan and Das (1999, 2000) found that supply
chain practices have a direct impact on a firm’s operational and manufacturing
flexibilities. Active involvement of suppliers, information sharing, and trusting
relationships play significant roles in enhancing flexibility in the automotive sector
(Sánchez and Pérez, 2005). Thakkar et al. (2011) reported that “an alignment of internal
functions with the external players is a must” which is particularly necessary for SMEs
(p. 661). Swamidass and Newell (1987) further concluded that as environmental
uncertainty increases, trust, commitment, and collaborative relationship-based supply
 chain practices enable more flexible operations to meet any challenges caused by The effect of
environmental uncertainty. We hypothesize: environmental
H4. A firm’s collaborative logistics efforts are positively related to the firm’s uncertainty
supply chain flexibility.

Methodology 791
We collected data from the Indian manufacturing sector in Coimbatore (a district in the
state of Tamilnadu in Southern India). Limiting the study to the manufacturing
industry should result in better internal validity of the study. Coimbatore has
experienced growth in the manufacturing sector, and based on information from the
Census of India (2001), Coimbatore is known for its small-scale industries (e.g. wet
grinder or pump manufacturers). There are over 12.34 million small-scale firms in India
employing more than 30 million people. This manufacturing segment contributes six
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percent of India’s GDP, accounts for 34 percent of exports, and thus plays an important
role in the Indian economy (Venkatramaniah and Parashar, 2007).
The Coimbatore District Small Scale Industries Association (CODISSIA) provided a
list (totaling 792 firms) of small-scale manufacturing firms. For this initial study, a
random sample of 80 firm owners was contacted to participate in the study. Firm
owners are most likely to understand a wide range of business issues, especially those
related to supply chain activities. Graduate students visited with each firm owner to
solicit their participation in the study, resulting in 75 completed questionnaires (a 94
percent response rate). To ensure comprehension of the questions, graduate students,
who are knowledgeable of the subject matter, explained the items to participants, as
needed. Table I provides respondent details.
The use of items from existing scales, e.g. Li’s (2002) previously validated scale
items for measuring information quality and supply chain flexibility, facilitated the
development of the questionnaire. The scale items employed in the survey were Likert
type items, with 1 – strongly disagree to 5 – strongly agree (see Table II for the scale
items).

Analysis and results

The reliability for each construct indicates its level of internal consistency and all
scales had a Cronbach’s a above 0.7 which indicated that the scales are reliable
(Nunnally, 1978).
Covariance methods and partial least squares (PLS) path modeling are two
approaches to structural equation modeling. The covariance methodology requires a
strict adherence to indicated assumptions about the required degrees of freedom, the

Description Mean

Number of products manufactured by firms 1.86

Number of years in business 6.48
Number of customers 9.41
Number of suppliers 6.23 Table I.
Profile of study
Note: n ¼ 75 respondents
 APJML
Factor
25,5 Item loading t-value

Environmental uncertainty (AVE ¼ 0.72, F ¼ 0.24-0.32, a ¼ 0.94)

Customers’ requirements regarding product features are difficult to forecast 0.96 126.87
The properties of materials from suppliers can vary greatly within the same
792 batch 0.89 67.06
Suppliers’ delivery time can easily go wrong 0.97 104.98
Suppliers’ delivery quantity can easily go wrong 0.94 118.59
Competitors’ actions are unpredictable 0.70 11.32
Competitors often introduce new product unexpectedly 0.60 9.40
Technology is changing significantly in our industry 0.74 11.30
Technological changes provide opportunities for enhancing competitive
advantage in our industry 0.88 23.30
Information quality (AVE ¼ 0.74, F ¼ 0.24-0.71, a ¼ 0.89)
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Information exchange between our trading partners and us is:

Accurate 0.86 31.91
Complete 0.87 33.13
Adequate 0.86 68.88
Reliable 0.85 30.22
Collaborative logistics (AVE ¼ 0.82, F ¼ 0.31-0.71, a ¼ 0.95)
We regularly solve problems jointly with our logistics providers 0.83 48.76
We have continuous improvement programs that include our logistics
providers 0.83 33.47
We include our key logistics providers in our planning and goal-setting
activities 0.98 173.78
We use our logistics providers for reverse logistics functions also 0.98 334.52
We strive to establish long term relationships with our logistics providers 0.85 33.47
Supply chain flexibility (AVE ¼ 0.82, F ¼ 0.32-0.56, a ¼ 0.89)
Our supply chain is able to:
Rapidly adjust capacity so as to accelerate or decelerate production in response
to changes in customer demand 0.95 115.86
Table II. Rapidly introduce large numbers of product improvements/variation 0.84 58.62
Factor loadings Handle rapid introduction of new products 0.92 20.13

distribution of variables (e.g. requiring multivariate normality) and the needed sample
size of at least 200 (Barrett, 2006). PLS methods are non-parametric in nature and do
not make assumptions about the distribution of the data. Furthermore, the required
sample size is much smaller for model validation and testing. This should not imply
that PLS is less robust than covariance methods. Researchers examined the statistical
power of PLS models with small sample sizes and found that PLS techniques can have
a statistical power of 0.80 with a sample size as small as 15 and the model was able to
detect an effect size of 0.56 with the reflective indicators (Chin, 2000). Wold (1989) was
able to successfully analyze 27 variables and two latent constructs with a data set
consisting of ten cases, which clearly demonstrate the usefulness of PLS when
analyzing small sample sizes. Chin and Newsted (1999) recommend that if one were to
use a regression heuristic of ten cases per predictor then they would need ten times the
largest number of structural paths for a construct in the structural model. However,
they caution that “ideally, for a more accurate assessment, one needs to specify the
effect size for each regression analysis and look up the power tables” (p. 327). Soper
(2012) statistical a-priori power table software indicates that for an effect size of 0.30,
 an a of 0.05 and a statistical power of 80 percent a sample size of 59 are required. The effect of
Hence, we believe that a sample size of at least 70 would be adequate for our study. environmental
In this study, we used SMARTPLS 2.0 software of Ringle et al. (2005) to test
convergent and discriminant validity of the constructs. All variables in this study have uncertainty
an average variance extracted (AVE) higher than 0.5, which indicates that the
variables have convergent validity (Fornell and Larcker, 1981). Also, the AVE for each
variable was greater than the shared variances between the variable and any other 793
variable in the model indicating discriminant validity (Fornell and Larcker, 1981). The
measurement properties of the scales and their descriptive statistics are presented in
Tables II and III.
The research hypotheses were also tested with the SMARTPLS 2.0 software
(Ringle et al., 2005). Test results indicate that with the exception of H4 all other
hypotheses were supported. H1, which hypothesized a positive relationship between
environmental uncertainty and information quality, was supported based on the
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resulting path coefficient of 0.49 and a t-value of 9.36. H2 proposed that environmental
uncertainty is positively related to collaborative logistics. The current study finds
empirical support for this hypothesis since the path coefficient was 0.56 with a t-value
of 17.57. H3, which hypothesized a relationship between information quality and
supply chain flexibility, was supported since the path coefficient was 0.75 and the
t-value was 5.64. A resulting path coefficient of 2 0.07 and t-value of 0.05 yields no
empirical support for H4 regarding a positive relationship between collaborative
logistics and supply chain flexibility. The model explains 56 percent of the variance in
supply chain flexibility, 24 percent of the variance in informational quality, and 31
percent variance in collaborative logistics (Table IV).

EU IQ CL SCF

EU 1.00
IQ 0.49 1.00
CL 0.56 0.84 1.00
SCF 0.57 0.75 0.63 1.00
Mean 3.31 3.47 2.97 2.58
SD 0.70 0.49 0.80 0.53
Table III.
Notes: All correlations are significant; EU – environmental uncertainty, IQ – information quality, CL Mean and correlation
– collaborative logistics, SCF – supply chain flexibility table

Hypotheses Path coefficient t-value R2

H1. Environmental uncertainty ! information quality 0.49 * 9.36 0.24

H2. Environmental uncertainty ! collaborative logistics 0.56 * 17.57 0.31
H3. Information quality ! supply chain flexibility 0.75 * 5.64 0.56
H4. Collaborative logistics ! supply chain flexibility 20.07 0.05
Table IV.
Note: *Significant at: p . 0.01 Results of the path model
 APJML Discussion and implications
25,5 The study explores how the partnerships with logistics providers (i.e. information
quality and collaborative logistics), as a response to environmental uncertainty, affects
supply chain flexibility. A review of the literature provides the foundation for our
research model and the source of the multi-item scales used in the study. Grounded
within the RBV theory of the firm, our study explores how firms use information
794 quality and collaborative logistics to enhance their supply chain flexibility in
conditions of environmental uncertainty.
Environmental uncertainty is a common concern in emerging markets and business
leaders need guidance on where to invest their time and energy to address this
problem. The fundamental question is “how to use firm resources – even those that are
under the control of another company (e.g. critical suppliers) to improve operational
success?” The objective of this research was to examine how environmental
uncertainty, information quality, and collaborative logistics impact supply chain
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flexibility.
The results from both the supported and unsupported hypotheses have implications
for managers and academics alike. The results provide useful insights since they
indicate that environmental uncertainty is an important influencer of information
quality. Furthermore, the findings suggest that the quality of exchanged information
among logistics partners has a strong positive impact on supply chain flexibility. The
results reinforce the fact that under environmental uncertainty, companies turn to their
logistics suppliers (through improved information quality) to enhance the flexibility of
their supply chains (Swamidass and Newell, 1987; Vickery et al., 1999; Sánchez and
Pérez, 2005). The replication of this result in India suggests that companies react in a
similar way to environmental uncertainty, regardless of where in the world they
operate. Therefore, our results validate the premise that companies turn to their
external resources to deal with environmental uncertainty.
Contrary to our expectations, we found no support for the impact of collaborative
logistics on supply chain flexibility. While both constructs were reliable, and had a
high AVE, the predicted relationship did not manifest. There are four plausible
interpretations of this finding. First, this may be the true nature of the relationship, and
there might not be a significant relationship between the variables. However, this is
difficult to justify because the correlation between the two constructs in Table III is
substantial. Indeed, the strong relationship between information quality and
collaborative logistics could indicate that the two variables are interdependent.
According to Olorunniwo and Li (2010), as collaborative practices between supply
chain partners increase, the likelihood that the exchange of critical and quality
information between the companies will enhance their supply chain strategies also
increases. Another plausible interpretation is methodological; the high correlation
between information quality and collaborative logistics, which could be interpreted as
an overlap between the two constructs, led to the suppression of the latter in the
regression. However, the constructs had discriminate validity according to the
accepted standards in the literature and multicollinearity should not be an issue.
The third possible interpretation deals with how relationships in India are
operationalized since our results reflect the current cultural and economic environment
in India. The culture in India is collectivistic, and relationships are an extremely
important part of life there. Collaborative logistics can be viewed as the relationship
 between firms, and perhaps, they are established at the optimal level for the Indian The effect of
society, thus limiting their potential for improvement. Alternatively, the respondents environmental
might have interpreted relationships between firms on a human level and did not
necessarily translate them to represent structural collaborations between firms. Such uncertainty
an interpretation of relationships and collaboration could have detracted from the
intended meaning of the construct, and as a result there was not a significant impact on
supply chain flexibility. Finally, India is a developing market, still improving their 795
infrastructure, and information quality might come closer to capturing the intended
structural, less subjective meaning of relationships with partners. Such a cultural and
structural interpretation of the results could explain why information quality was the
only significant predictor of supply chain flexibility. Therefore, the conclusion should
not be that collaborative logistics practices do not matter at all, but that their impact on
supply chain flexibility is not significant in a regression equation together with
information quality.
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As business leaders in emerging markets strive for more efficient manufacturing

practices, researchers need to continue to study important supply chain management
concepts to facilitate this objective. Indian managers seem willing to employ many of
the primary supply chain practices to expand their operations. This paper has
identified several critical dimensions of supply chain management in the small-scale
manufacturing sector in southern India. The findings suggest that manufacturers in
India should strive to improve information quality with their supply chain partners to
become more flexible. The flexibility of the supply chain enables the firm to be more
responsive to changing environmental conditions.

Managerial implications
From a practical standpoint, managers in emerging markets may require greater
guidance regarding the investment of their limited resources. Consequently, owners of
small-scale manufacturing operations should recognize that information quality is a
vital tool to help manage operations in times of environmental uncertainty. These
findings also imply that manufacturers who invest in IT are more able to respond to
changes in the business environment. This also may have an additional benefit of
encouraging cooperation, thus enabling mutual improvement. Therefore, investing in
tools to ensure the availability of high quality information would be prudent. This
study also found that environmental uncertainty influences collaborative logistics.
Therefore, in situations with high levels of environmental uncertainty, managers are
more reliant on their collaborative logistics activities to survive. Thus, firms recognize
the need to involve logistics partners in decision making to a greater extent when there
is environmental uncertainty.
To mitigate environmental uncertainty and to improve the flexibility of their supply
chains, managers in India should focus their efforts on improving the quality of the
information exchanged among logistics partners. Given the number of firms operating
in the small-scale manufacturing sector and the amount of money spent on logistics,
the quality of information exchanged can go a long way toward providing the firm
with a competitive advantage. While it was not assessed in this study, one could argue
that firms with a reputation for supply chain flexibility are likely able to charge a
premium for their products. Therefore, small-scale manufacturers need to strive for
improved information quality.
 APJML However, emphasizing collaborative relationships in logistics with the goal of
25,5 achieving supply chain flexibility is not predicted to occur. This finding is counter our
hypothesis but it does repeat Sahay and Mohan’s (2003) results, which found that
Indian managers focus on their existing products along with the services they provide,
rather than rapidly responding to volume or feature changes. These results suggest
that the quality of exchanged information is the dominant factor for supply chain
796 flexibility.

Academic implications
This study contributes to the supply chain literature in several ways. First, the
relevance of RBV theory is clearly demonstrated in our evaluation of a critical supply
chain issue – supply chain flexibility. Thus, as researchers seek to better understand
SCM issues, they can continue to utilize RBV theory. A second contribution is an
improved understanding of effective manufacturing practices because companies in
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emerging markets need to incorporate supply chain practices into their operations to
improve efficiency. Effective manufacturing practices are often operationalized once
managers realize that quality information is a vital tool for organizational success.
Supply chain flexibility enables the firm to be more responsive to changing
environmental conditions and managers should strive to improve the quality of
information exchanged with their supply chain partners to become more flexible.
Finally, by using PLS SEM in our study, we reinforced the suitability of PLS SEM in
modeling relatively small sample sizes.
While the model tested explains 56 percent of the variance in supply chain
flexibility, this still means there is room to consider other constructs related to the
elements of the conceptual model, both antecedents and outcomes. There are many
elements that can impact a manufacturing firm’s responsiveness, especially in an
emerging market like India. Understanding the manufacturing environment in
emerging markets is beneficial to Indian managers and to anyone operating in a
comparable manufacturing setting.

Limitations and directions for future research

There are a few limitations which need to be acknowledged. First, given that a single
informant was used to obtain the data, Kumar et al. (1993) have suggested that
carefully selecting the appropriate informant can ameliorate this concern. Before the
survey was administered, careful attention was paid to ensure that the owner of the
small-scale manufacturing operation would be the most informed participant
regarding the relationships and supply chain decisions within the company. The
small sample size is also a limitation of the study, but other researchers have
successfully used small samples with sound results (Auramo et al., 2005; Stank et al.,
1999). However, a larger sample size would ensure a greater representation of the
Indian manufacturing community therefore future researchers should strive for a
larger sample size.
Our model was operationalized in an emerging economy, thus the generalizability of
our study would be confined to small-scale firms operating with less established
supply chain systems. Venkatramaniah and Parashar (2007) argue that small-scale
industries are the backbone of Indian industry and are common in transition economies
like India and China. Therefore, it is critical that managers in emerging markets
 capitalize on capabilities like improved information quality and address the need for The effect of
better supply chain flexibility. This finding is especially relevant because as environmental
Thakkar et al. (2011) note, Indian manufacturing firms are recognizing the need to
improve coordination in the supply chain along with information sharing, but these uncertainty
efforts are disjointed.
As with any study there are opportunities to extend the research. Future studies can
examine mediating factors like the age of the company, the extent of management 797
training, or the level of sophistication of the supply base which may impact research
findings. To further validate the results of this study, researchers should examine the
same model in other emerging markets with a similar small-scale manufacturing
presence. Additionally, future studies may also target large manufacturing firms in the
Indian economy to see if their responses vary. The collaborative logistics construct will
benefit from a refinement of the concept to include an evaluation of the level of
collaboration between supply chain partners which would provide an additional
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dimension of understanding regarding the concept. Researchers may also specifically

target a cost component associated with information quality to determine if the level of
investment in tools to improve information quality has an impact across the supply
chain. Moreover, the consideration of different items for the selected constructs may
offer a more well-rounded assessment of the concepts. Furthermore, additional
information would help refine our understanding of the impact of critical business
concepts like information quality and environmental uncertainty.

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802
Corresponding author
Katrina Savitskie can be contacted at: savitskiek@savannahstate.edu
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