Effect of Supply Chain Collaboration on the Strength of Business-to-Business Relationship amongst Information and Communication Technology of Small and Medium Enterprises in Kenya

Abstract

The purpose of this study was to investigate the effect of supply chain collaboration on strength of business-to-business relationship among information and communication technology small and medium enterprises in Kenya. Research has shown that in an environment of cutthroat mass customization and shortened product lifecycles, organizations may benefit from adopting supply chain collaboration and business-to-business e-commerce models in their pursuit of sustainable competitive advantage. Information and communication technological advances have contributed to creation of new innovative products, which in turn leads to the formation of collaborative advantage. Most firms seek to remain competitive in today’s marketplace, often by looking externally for assistance in meeting customer expectations through supply chain collaboration. However, small and medium enterprises still face severe challenges in adopting supply chain collaboration resulting in poor business-to-business relationship. Despite numerous publications and techniques on how firms can coordinate supply chain collaboration, many small and medium enterprises are still lagging behind in tapping the benefits of supply chain collaboration and business-to-business relationship. This is likely to lead to death of small and medium enterprises, in turn lowering of the country’s gross domestic product. This decline in gross domestic product stirs worry of economic recession. This study tested the null hypotheses that innovation, planning, cost and risk management collaborations have no significant effect on strength of business-to-business relationship. Positivism paradigm approach and descriptive research survey design was adopted in this study. The target population for this study was 134 small and medium enterprise of information and communication technology firms in Kenya, and the respondents were drawn from owners, information technology and other managers of the small and medium enterprises. A sample of 100 small and medium enterprises was selected using Yamane (1967) formula. The study was guided by principal-agency theory. A self-administered structured questionnaire was used to collect primary data. Qualitative data was obtained from published sources such as library, internet and research done by other scholars. The questionnaire was tested for reliability and validity prior to being used. Quantitative technique was used to analyze the collected data with the aid of Statistical Package for Social Sciences software version 21.0 and Ms-Excel. Analyses were conducted using confirmatory measurement model. Also, multiple regression analysis was carried out by comparing ordinary least squares regression model. The study found that innovation, planning, cost and risk management collaborations were individually significant predictors of business-to-business relationship with risk management collaboration being the most significant predictor of the four. Generally, the study demonstrated positive relationship between supply chain collaboration and business-to-business relationship. This study recommends that management of small and medium enterprises as well as other organizations should consider developing risk management collaboration policy as it had the greatest impact. Finally, effective adoption of supply chain collaboration is capable of creating checks and balances to reduce opportunistic behavior between agent and principal as happens in the principal-agent theory. Future studies should be done using longitudinal study so as to provide a deeper perspective of the effect of supply chain collaboration on business-to-business relationship in Kenya.