Decision Sciences Research in China: Current Status, Opportunities, and Propositions for Research in Supply Chain Management, Logistics, and Quality Management*

Authors


  • *

    This research is partially supported by the Li & Fung Institute of Supply Chain Management and Logistics, Chinese University of Hong Kong. We also would like to express our gratitude to Mr. Huo Bao Feng, PhD student at Chinese University of Hong Kong, for his support in the literature review for the article. Finally, we would like to thank Editor Vicki Smith-Daniels for inviting us to write this article and for her encouragement and guidance throughout the process of preparing this manuscript.

Corresponding author.

ABSTRACT

As China becomes increasingly important to the global economy, it is critical to conduct high-quality research on important decision sciences issues there. This article provides an extensive review and critique of the extant China-based literature on supply chain management, logistics, and quality management, based on the foundation established by Zhao, Flynn, and Roth (2006). In general, decision sciences research in China is in its infancy. Although there have been some very interesting and well-executed articles, the majority are descriptive and focus on status updates. We provide a set of propositions to guide future research in logistics, supply chain management, and quality management in China, as well as guidelines for dealing with some of the unique challenges of conducting empirical research in China.

INTRODUCTION

Research on business issues in China is becoming increasingly important to the global economy. Offshoring and outsourcing to China is fast transforming supply chain (SC) and logistics practices globally, and China is influencing global consumer expectations regarding value. Yet, despite the abundance of anecdotal evidence about the importance of effective supply chain management (SCM), logistics, and quality management (QM), we know relatively little about these practices in China and much less about relevant theory. For example, China's cost advantage can be reduced by SC and logistics inefficiencies, as well as through poor product quality. There can be little doubt that the pace of change in China and its business environment have opened the door to new opportunities for significant vast research in the decision sciences. In this article, we conduct an extensive literature review of published empirical articles that focus on SCM, logistics, and QM in China. The aim is to help scholars to close the gap between theory and practice in China-based research in these areas.

We build upon our prior research (Zhao, Flynn, & Roth, 2006), which provided an overview of trends in the Chinese economy and broad areas for future research. We highlighted issues that companies face when doing business in China, such as regional protectionism, accompanied by tensions between local autonomy and central control; inadequate infrastructure, including roads and energy to accommodate a massive geographic region; national culture; and China's journey toward a market economy. Taken together, China's SC and logistics management are less than optimal, yet Chinese businesses are under pressure to produce world-class-quality products and services. Huffman (2003) reports a number of factors in China that are at odds with SC and logistics efficiency. The Chinese infrastructure is designed for local protectionism, characterized by transportation difficulties, customs clearance for imports, regulations for interprovincial purchasing, and control of consumer and agricultural product flows. There is misalignment between central and local governments regarding adherence to rules and regulations. Businesses in China are more likely to rely on hard-copy SC paperwork flows. Huffman also points out that most western SC and logistics managers take for granted the availability of less-than-truckload and express-package-delivery service providers, but that the choices for third-party logistics providers are very limited in China.

Western companies, such as Wal-Mart, are attempting to change the rules of play in China regarding SCM and logistics practices, as well as regarding setting standards for quality. Wal-Mart has a long history of sourcing from China to supply its U.S. stores. As China's sixth largest export partner, Wal-Mart was just behind Germany (Elliott & Powell, 2005). In 1996, Wal-Mart opened its first Supercenter in Shenzhen and now has 68 retail outlets in China. Over the years, Wal-Mart has aggressively attacked traditional Chinese business models, pushing ruthlessly to regionalize and nationalize distribution, educating suppliers on best practices, and becoming heavily involved in government and community relations. The China Retail Summit named Wal-Mart “2006 China Retail Industry's Best Employer,” and the China Chain Store and Franchise Association has ranked it #1 for the past three years. But Wal-Mart's journey was riddled with problems, from Chinese labor union threats and public relations issues in the United States. about the loss of jobs to offshoring to the emerging new Chinese conglomerate suppliers which may wield power over Wal-Mart and want a role in new product development, as well as manufacturing. Wal-Mart provides an interesting, contemporary SCM/logistics case about the challenges facing a foreign retailer's SC and logistics, serving to illustrate why more rigorous China-based decision sciences research is needed.

Just as China's market economy is emerging, academic China-based decision sciences research is also developing. Many of the existing studies are descriptive in nature, often reporting the experiences, issues, and challenges facing companies, based on observation. Because of their lack of methodological rigor, very few of these articles have been published in top academic journals. In recent years, there have been more studies based on data collected through surveys; however, most have used only descriptive statistics and relatively small samples.

In the following sections, we begin by describing our research approach. Next, we review the content of existing literature on selected SCM, logistics, and QM topics in China and briefly critique selected articles. We also address some of the major methodological issues that were discovered through our literature review. We then move to developing propositions for future research in each of the areas. This is followed by a general discussion of methodological issues in China-based decision sciences research, using Farh, Cannella, and Lee's (2006) framework as a guide. We conclude with some general insights.

RESEARCH APPROACH

To critically examine the research on SCM, logistics, and QM in China, we conducted an extensive literature search of leading journals in the decision sciences and electronic databases over the 1995–2006 time frame. We included articles covering mainland China, as well as Hong Kong and Taiwan, which are interesting from a research perspective. Although their inhabitants are ethnic Chinese with traditional cultural values, their business and economic environments are very different. We limited our SCM and QM search to articles that used empirical research methodologies, including surveys, case studies, structured interviews, experiments, and secondary data sources. Because empirical research on logistics in China is relatively less mature, we included conceptual research dealing with the unique characteristics of logistics in China.

Conducting empirical research in China is uniquely challenging, due to its size, culture, and recent economic and social history (Zhao et al., 2006). In critically assessing the measures used, we drew extensively on the foundation provided by Farh et al. (2006). Farh et al. (2006) describe four approaches to the development of measures for empirical research in China, based on the source of the scale and its cultural specificity: translation, adaptation, decontextualization, and contextualization. The translation approach uses direct translation of an existing Western scale to create a Chinese language version. The researcher assumes that the meaning of the underlying construct is exactly equivalent across cultures and that an unbiased source language scale with proven construct validity is available. Translation allows for direct comparability of findings to those from Western settings. It can save time and costs, if the scale has already undergone construct validation. Limitations include difficulties in achieving semantic equivalence and hidden cultural biases that might carry through to the Chinese language scale through translation.

The adaptation approach involves modifying a source language scale to make it suitable for a Chinese context, through altering item wording, dropping inappropriate items, or adding new items (Farh et al., 2006). It is based on the assumption that empirical representations of content are not equivalent across cultures, that Western-centric measurement scales contain cultural bias, and that firms in emerging markets have different levels of management maturity. The goal is to enrich an existing scale for use in China, without altering the fundamental definition of the construct. The benefits of the adaptation approach are similar to those of translation, but to a lesser degree. Field work is necessary in order to pinpoint the exact modifications to be made. In addition, it is difficult to compare the findings from an adapted scale with those from the source scale. Thus, adaptation is best for developing valid measures for local research, when there is no interest in cross-cultural comparison.

In the decontextualization approach, a new measurement scale is developed because an existing scale is not available (Farh et al., 2006). It is used when the target construct is believed to be universal and insensitive to cultural context. Items are phrased at a more abstract level, and context-specific factors are avoided, in order to avoid local cultural bias. This is the dominant approach used in Western research, although not necessarily because scales were designed with decontextualization in mind.

The contextualization approach assumes that a construct is embedded in the local context, with facets that are culturally specific (Farh et al., 2006). Because the measurement scale is explicitly designed to be appropriate to the local culture, it may be necessary to develop different instruments for use with different cultural groups. The contextualization approach is costly, in terms of time, effort, and resources, and is not conducive to comparative research. In addition, indigenous constructs or measures may be perceived as too novel for mainstream research, which could create artificial barriers to dissemination of research findings.

REVIEW OF EXISTING LITERATURE

We now summarize 41 published articles on SCM, 13 on logistics, and 48 on QM, in the context of China. Although we do not claim that this set of articles is exhaustive, it contains a good cross-section of the important literature on these topics. This is generally true for SCM, logistics, and QM. In reviewing the literature, two tables were developed for each topic. The first lists the primary methodological approaches employed in the research, by topic. The second shows how the methodological approaches have evolved over the years covered in this article. We also classified these studies according to the scale development approaches employed in Table 7.

Table 7.  Scale development approaches employed.
TopicOtherApproach to Scale Development*
TranslationAdaptationDecontextualizationContextualization
  1. *This approach to scale development is based on Farh et al. (2006).

Supply Chain Management
 Supplier selection, evaluation, and management 4  2 
 Supply chain collaboration and relationship management 2  4 
 Supply chain design and coordination 1 
 Impact of culture 1 4 3 1 3
 Supply chain quality management 1  2 2
 Supply chain practices  2 
 Green supply chain management  2 
 Other issues 5  2
Logistics
 Evaluation of logistics infrastructure and systems 4 
 Logistics barriers and challenges  2 1
 Logistics strategy  1 
 Third-party logistics providers 1  4 
Quality Management
 Status of quality management initiatives in China  7 1 6 
 Quality management implementation issues and factors 10 4 6 2
 Customer perceptions of quality  2 2 
 Relationship between quality management and performance  2 2 2 
 Relationship between national culture and quality  1  3
 Measurement of quality management constructs  1 2 
Total1929251913

Research on SCM in China

China plays an increasingly important role in the global SC. In the following subsections, we briefly review SCM articles and categorize them according to the topical issues addressed and data collection methodology (Table 1). Many of the articles that we evaluated pertained to impact of culture on SCM. Supplier selection, evaluation and management, and SC collaboration and relationship management were also dominant topics. Surveys, followed by case studies, were the most prevalent methods.

Table 1.  Supply chain management (SCM) topics and research methodology.
TopicData-Collection Methodology
Case StudySurveyOthersTotal
Supplier selection, evaluation, and management 3 12 6
Supply chain (SC) collaboration and relationship management 2 4  6
Impact of culture on SCM 111 12
SC quality management 1 4  5
SC practices  2  2
Green SC  2  2
SC design and coordination 1  1
Other issues 2 23 7
Total1026541

Supplier selection, evaluation, and management

The SCM literature suggests that supplier selection, evaluation, and management play vital roles in building a competitive SC. Proper selection, evaluation, and management of supplier relationships can help to reduce conflict, opportunistic behavior, and transaction and inventory costs, while enhancing quality, delivery, flexibility, customer service, and innovative capabilities. These, in turn, help Chinese firms gain competitive advantage in the marketplace and improve financial performance.

Humphreys, Shiu, and Chan (2001) used an adapted scale to report the percent usage of supplier selection criteria among 72 large Hong Kong companies. They found that problem solving capability, capacity, and logistics were the three most important criteria. They found no significant differences in the use of the criteria between Hong Kong and UK firms.

Several studies used case study methodology to study supplier selection, evaluation, and management. Zhang and Goffin (2001) investigated supplier management in Chinese international joint venture manufacturing. They confirmed that the primary challenge is simultaneously reducing costs by purchasing materials and components locally, while maintaining high quality levels. Choy and Lee (2003) presented a generic supplier management tool to use in outsourcing. In a later article, Choy, Lee, and Lo (2004) discussed application of an intelligent supplier relationship management system for new product development, including customer relationship management, supplier rating systems, and product coding systems. They found that outsourcing cycle time and delivery delays were greatly reduced when this system was used by Honeywell Consumer Products.

Handfield and McCormack (2005) described challenges of sourcing from China, based on their discussions with Chinese executives and a translated survey of SC maturity levels using the Supply Chain Council's SC operations reference model. They pointed out that Chinese companies are stronger in the elements that are within their control, such as in-house make-and-delivery processes, but weaker in processes that require external collaboration, such as planning, sourcing, and designing. Although the article is highly descriptive and subjective, it provides many practical insights for sourcing in China and raises interesting new researchable issues.

In a study of the ownership of potential suppliers, Millington, Eberhardt, and Wilkinson (2006) investigated the performance of suppliers with different ownership types, based on interviews with senior managers of 75 UK and U.S. manufacturing firms. They used decontextualization for the ownership construct and adaptation for the other constructs. They found that, while state-owned enterprises (SOEs) had significantly worse performance than international joint ventures (IJVs) or wholly owned foreign enterprises (WOFEs), Chinese private enterprises performed comparably to the IJVs and WOFEs, especially in terms of relationships. Although this study only examined differences between mean scores by ownership and the overall mean, the results indicate that ownership significantly influences performance. Further investigation of how ownership influences the role of the firm within the SC is warranted.

SC collaboration and relationship management

SC collaboration and relationship management is another important theme in SCM. Humphreys, Li, and Chan (2004) examined the role of supplier development in buyer–supplier performance, using an adapted survey and data collected from 142 electronics manufacturers in Hong Kong. Important to supplier development infrastructure were strategic goals, effective communications, long-term commitment, top management support, supplier evaluation, supplier strategic objectives, and buyer trust. Transaction-specific supplier development, trust, supplier strategic objectives, and effective communication were also shown to improve buyer–supplier performance. In a related article, Li, Humphreys, Yeung, and Cheng (2007) studied the relationship between supplier development and buyers' competitive advantage. They found that joint actions and trust were the two most critical elements for enhancing operational efficiency, while asset specificity improved market responsiveness. As one of the most methodologically sophisticated China-based articles, the researchers applied confirmatory factor analysis to assess the exogenous and endogenous measurement models and the convergent and discriminant validity of the constructs. Hypotheses were tested using structural equations modeling (SEM).

Wong, Tjosvold, and Zhang (2005) performed a survey of 96 supplier relationships and 71 marketing partnerships in SOEs in Xian, using the adaptation approach. They proposed and tested a model of the relationship among interdependence, goal interdependence, trust, continuous improvement, and customer satisfaction. The results showed that interdependence between firms and their partners fosters cooperative goals. Cooperative goals help to improve trust, which leads to continuous improvement, and continuous improvement positively influences customer satisfaction. Therefore, cooperative goals form the basis for developing effective SC partnerships in China. This study was strong in terms of research methodology. The research models and hypotheses were theoretically justified, and SEM was used to test the relationships. However, a small convenience sample of participants in an executive training class was used; thus, the findings have limited generalizability. Furthermore, the validity of the measurement scales was not well assessed. In an earlier article, Wong, Tjosvold, Wong, and Liu (1999) investigated how relationships with suppliers contribute to improving the quality of products in Hong Kong–China SCs, using the theory of cooperation and competition through an adapted survey of Hong Kong managers. They also found that manufacturers and suppliers that shared cooperative goals and discussed quality issues open-mindedly and constructively had developed trusting, long-term relationships.

Sheu, Yen, and Chae (2006) performed in-depth case analysis of five pairs of suppliers and retailers in Taiwan. They found that (i) interdependence, intensity, and trust influenced long-term orientation; (ii) supplier–retailer relationship and long-term orientation affected SC architecture, which affected the level of supplier–retailer collaboration; and (iii) supplier–retailer collaboration enhanced supplier–retailer performance. Using data collected through interviews, direct observation, and archival data, the authors proposed a model and research propositions. This study was well designed and executed; however, all supplier–retailer pairs were from a single supplier. Future studies with more diversified samples are needed to replicate their work. In a case study of four companies, Wang and Kess (2006) investigated the motives for partnership. They found that partner selection included both task- and partner-related dimensions.

Impact of national culture on SCM

Twelve studies were found that explicitly examined the role of China's unique national culture in managing the relationship between suppliers and buyers (Table 1). China's national culture is characterized as collective, high in power distance, and long-term focused (Hofstede, 1980). Several interesting and well-executed studies examined how these cultural characteristics affect management of buyer–supplier relationships. They employ a variety of methodologies, including surveys, experiments, interviews, and cases studies.

In an example of a well-executed case study, Batonda and Perry (2003) examined the impact of national culture on interfirm network development in China and Australia. Their in-depth interviews were guided by detailed case study protocols, and interview data were analyzed using matrix displays and tables. They concluded that each group should be better prepared to adjust to its partner's business culture. Chow, Deng, and Ho (2000) used an experiment to assess the interaction between national culture and contextual factors and the openness of knowledge sharing. Participants from China and the United States. were presented with two scenarios, and their responses were analyzed using content analysis. Openness of knowledge sharing was related to collectivism, with in-group membership moderating this relationship; Chinese respondents shared significantly less with potential respondents who were not members of their in-group. Kim, Pan, and Park (1998) examined the role of cultural context in decisions about marketing relationships, surveying respondents in China, Korea, and the United States. While the Chinese and Korean respondents exhibited tendencies that were consistent with a high-context culture, U.S. respondents' tendencies were consistent with a low-context national culture.

Lin and Miller (2003) studied the effect of national culture on negotiation behaviors of managers in 74 American–Chinese joint ventures. Negotiation approaches were conditioned by relational contextual variables. National culture had an indirect effect on choice of negotiating approaches, while interacting with relational context. Mavondo and Rodrigo (2001) examined the interaction between relationship dimensions and their impact on interpersonal and interorganizational commitment among Chinese and Australian business partners. Using a path modeling approach, they developed a hierarchy of importance among relationship dimensions. Wong, Tjosvold, and Yu (2005) studied the roles of self interest, goal interdependence, and opportunism in 103 customer–supplier pairs in Shanghai, using SEM. Shared vision helped partners develop cooperative goals, which reduced opportunistic behavior.

Some of the research on SC relationship management deals with guanxi, which is the obligation for reciprocal exchange that is unique to China (Zhao et al., 2006). These studies all use a contextualization approach in developing scales to measure the guanxi construct. Lee and Dawes (2005) examined the determinants of trust in a salesperson, specifically examining the guanxi construct. Using unstructured interviews, pilot testing, and factor analysis, they found three factors that constitute guanxi: reciprocal favor, face preservation, and emotion. Leung, Lai, Chan, and Wong (2005) studied the relationship among guanxi, personal trust (xinyong), and other relational variables, including supplier competence, commitment, conflict handling, and satisfaction among senior purchasing managers in clothing manufacturing firms in Guangzhou. Their SEM results revealed that guanxi had a stronger influence on xinyong than on satisfaction, and xinyong was extremely important in establishing a partnership relationship with a Chinese buyer. Wu, Hom, Tetrick, Shore, Jia, Li, and Song (2006) developed and validated a measure of three types of reciprocity: generalized, balanced, and negative. After generating a pool of items, they conducted three studies to assess the measurement properties of the scales, using over 1,600 respondents. Their analysis upheld the reciprocity types that had been predicted by the literature. Rao, Pearce, and Xin (2005) explored the role of government support and structure in the development of trust, using archival data and structured interviews of 399 managers in China, the United States, Hong Kong, and Thailand. There was greater trust among business associates with facilitative versus nonfacilitative governments, whereas nonfacilitative governments had greater reciprocal exchange relationships. However, the reciprocal exchange relationships were insufficient to overcome the strong effect of facilitative governments on managers' trust. Zhuang and Zhou (2004) studied the relationship between dependence and power in SC relationships, focusing on department stores in Xian and their suppliers. Power was not derived from the dependence of the other member of the SC dyad, counter to the expectations of the Western literature on SC behavior. Using SEM, the results indicated that it was more desirable to associate with a powerful partner, rather than a dependent partner, because association with a powerful partner provided the ability to transfer the partner's guanxi network. Rameseshan, Yip, and Pae (2006) studied power and channel exchange relationships in 302 Shanghai and Guangzhou tenants in department stores. The use of coercive power had no effect on the tenant's economic or social satisfaction. Interestingly, coercive power was perceived as legitimate by the tenants, which was described as typical of members of a collectivist national culture.

SC design and coordination

Design and coordination of the SC have a great deal of impact on SC efficiency and responsiveness. Lau and Yam (2005) investigated the relationship between product modularization and SC design and coordination, based on a case study of an audio consumer electronics manufacturer in Hong Kong and China. They found that product modularization affected SC design and that product innovation impacted SC coordination. While they developed some interesting propositions, their research was based on a single company. Because generalizability is a major concern, future studies are needed in this area.

SC practices

Several studies examined SC practices in a Chinese context. Pyke, Robb, and Farley (2000) investigated SCM among 100 companies in Shanghai, comparing their findings with those obtained in Beijing by Robb and Xie (1998). Differences among ownership types were generally insignificant, and the firms all used advanced manufacturing strategies. However, the Chinese companies were not as advanced in SCM as many Western firms. Chinese manufacturers communicated more with customers than suppliers, indicating that their downstream relationships are closer than their upstream relationships. Chin, Tummala, Leung, and Tang (2004) investigated SCM practices in a survey of 184 manufacturers in Hong Kong. They examined the importance of strategic success factors, such as building customer–supplier relationships, employing information and communication technologies, reengineering material flows, changing corporate culture, and identifying performance measures. They concluded that Hong Kong companies were making little progress toward SCM implementation. These studies only report descriptive statistics, such as means and percentages. There is little conceptualization and no testing of research hypotheses. Furthermore, the scales are direct translations of Western scales, without much effort to test and validate them in a Chinese context.

Green SCM (GrSCM)

There has been an increasing emphasis on GrSCM research in China, because many multinationals require certification of sustainability and disposal practices (Zhu, Sarkis, & Geng, 2005), and the Chinese government encourages enterprises to develop in a sustainable way (ke chi xu fa zhan strategy). Two influential articles in this area are Zhu et al. (2005) and Zhu and Sarkis (2004). Zhu et al. (2005) investigated GrSCM drivers, practices, and performance, using data collected from 314 Chinese manufacturing firms. Sources of pressure included SC partners, costs, marketing, and government regulations. Practices included internal environmental management, external GrSCM, eco-design, and investment recovery. They evaluated the measurement instruments and reported descriptive statistics on these constructs, but did not statistically test any relationships. Zhu and Sarkis (2004) examined the relationship between GrSCM practices and performance, based on survey data from 186 firms. GrSCM practices had a positive impact on environmental and economic performance. QM and just-in-time (JIT) had a moderating effect; while QM can help GrSCM, JIT may hurt the environmental performance associated with internal environmental management. These two articles represent the best efforts to date for developing and testing measurement instruments for GrSCM. Measurement items were either adapted from previous instruments or contextualized for GrSCM practices in China. The second article also did a very good job with developing and testing the research hypotheses, and the quality of this article is the best among all published articles on SCM in China. However, the data were gathered from a convenience sample of participants in executive development and MBA programs, and participants were from only three cities; thus, the results may not be generalizable to other cities or provinces in China.

SCM and QM

With the increasing importance of QM and SCM, researchers have investigated their interaction. Kanji and Wong (1999) examined the relationship between total quality management (TQM) and SCM, enriching an existing SCM model using TQM concepts. The model was verified using data from 139 companies in Hong Kong. Wong (2003) found further evidence to support the model by his content analysis of the comments made by SC managers of 59 companies concerning their relationship with their major supplier and its contributions and problems. Lin, Chao, Madu, Kuei, and Yu (2005) identified factors that influence SCM, based on data collected from 109 firms in Hong Kong and 103 firms in Taiwan. QM practices were correlated with supplier participation and selection strategies. These studies used the literature and interviews with executives to develop instruments, which were not designed specifically for the Chinese context. Thus, they illustrate Farh et al.'s (2006) decontextualization approach.

Lo and Yeung (2004) examined how total quality philosophies (TQP) influence strategic alliance practices (SAP) in the Pearl River Delta (PRD). They identified three phases of strategic alliance and proposed a practical framework for PRD manufacturers to use in developing partnerships with their critical suppliers. In an effort to develop good contextualized measures for supplier quality management (SQM) in the PRD, they conducted an extensive literature review and interviewed practitioners. They proposed a framework that portrays the relationship between TQP and SAP and developed an instrument for measuring the key constructs. The measurement instrument was reviewed by ten practitioners, and it was pilot-tested in 30 leading PRD manufacturers. Lo and Yeung offered qualitative managerial insights, rather than statistically testing relationships. In another article, Lo and Yeung (2006) used in-depth interviews and an extensive literature review to identify critical items for evaluating SQM practices, employing a contextualization approach. They developed and validated the instrument with 90 manufacturers in Hong Kong, extracting ten critical factors for describing a SQM system. These factors were clustered into three groups: supplier selection, supplier development, and supplier integration. These two articles represent the best efforts for developing instruments to measure specific constructs in the context of the PRD, providing a good example of contextualization. Among the studies in this area, only Kanji and Wong (1999) and Lin et al. (2005) proposed and empirically validated relationships between key constructs, while the other studies were limited to descriptive statistics only.

Other issues in SCM

Other issues that have been investigated include SC efficiency (Jiang & Hansen, 2003), SC cost advantage (Wu, Yue, & Sim, 2006), manufacturing support infrastructure (Lee, Tummala, & Yam, 2000), SC subcontracting (Liu & Brookfield, 2006), SC operation difficulties (Jiang, 2002), SC talent gap (MacEachern, Melius, Roberts, & Tan, 2005), and integration of SCM and management information systems (Koh, Saad, & Arunachalam, 2006).

Summary

Overall, our review of the literature indicates that there has been increasing research interest in SCM in China in recent years, and many of the studies have raised interesting research questions. Table 2 shows the evolution of the research methodology over time, revealing that, while many of the studies have been descriptive, the maturity of the research has been increasing over the past 5 years. About 70% of the studies tested relationships among constructs. However, less than half of the studies explicitly tested the validity and reliability of the survey instruments, and only nine applied SEM/path analysis. Most of the articles did not do a good job designing and implementing the research, and only a few studies were methodologically sound (Batonda & Perry, 2003; Zhu & Sarkis, 2004; Lin et al., 2005; Wong, Tjosvold, & Yu, 2005; Wong, Tjosvold, & Zhang, 2005; Sheu et al., 2006; Li et al., 2007).

Table 2.  Evolution of supply chain management research methodology.
YearDescriptive and ConceptualTest and Validation of MeasurementTest of RelationshipsSEM, Path AnalysisTotal
  1. Note: Numbers do not sum to total because any single study may employ more than one method. SEM = structural equation modeling.

2007  1 1 1 1
2006 3 3 5 1 9
2005 2 7 8 310
2004 2 3 3 1 6
2003 2 1 3  5
2002 1  1
2001  1 3 1 3
2000 1 1 2  3
1999  2 2 2 2
1998  1  1
Total131928941

Research on Logistics in China

The logistics infrastructure and how companies manage logistics activities greatly influences operational efficiency and competitiveness. As a result, there has been a great deal of attention paid to China's logistics infrastructure and systems, how they influence operations in China, and how companies deal with logistics barriers and challenges. Yet, relative to SCM, there is much less empirical research. In the following paragraphs, we review and summarize the major studies by topic area (Table 3).

Table 3.  Logistics topics and research methodology.
TopicData-Collection Methodology
Case StudySurveyOthersTotal
  1. Note: Numbers do not sum to total because any single study may employ more than one method. 3PLs = third-party logistics service providers.

Evolution of logistics infrastructure and systems 4 4
Logistics barriers and challenges 3  3
Logistics strategy 1  1
3PLs14  5
Total18413

Evolution of logistics infrastructure and systems

Logistics infrastructure and systems have been evolving rapidly since 1978, as China undertakes major economic reform. Luk (1998) described distribution reform programs and emerging trends. He also discussed unresolved marketing and administrative issues, providing guidelines for effective channel management in China. Jiang and Prater (2002) described China's traditional distribution system, recent developments, and reform efforts. They indicated that the main problems with China's distribution system include underdeveloped infrastructure, government regulation, and regional protectionism. However, China's booming economy, its accession to the World Trade Organization (WTO), and e-commerce are major driving forces for improving China's logistics systems and infrastructure. Goh and Ling (2003) analyzed transportation networks, telecommunications systems, warehousing facilities, customs procedures, and laws and regulations, using secondary data. They found that the logistics infrastructure curtails the ability of multinational companies to leverage China's full potential. Bookbinder and Tan (2003) compared logistics systems in Asian and European countries and clustered them into three groups, using secondary data from Garelli (1999). Clustering criteria included infrastructure, performance, information systems, human resources, business environment, and political environment. Denmark and Singapore had the top-ranked logistics systems, with China classified in the second tier. This study represents the best example of the use of secondary data to evaluate the logistics performance of different countries.

Logistics barriers and challenges

The underdeveloped logistics infrastructure has created barriers and challenges for companies in developing their businesses in China. Several studies investigated logistics barriers and actions for overcoming them. Carter, Pearson, and Peng (1997) evaluated the severity of barriers to managing operations in China in a survey of 204 U.S. companies operating in China. In a related article, Pearson, Carter, and Peng (1998) reported on strategic alliances between U.S. and Chinese companies, using survey data from 282 U.S. firms. Each of these articles assessed strategic actions to overcome barriers used in multiple regression analyses. Because the data was derived from only U.S. firms, however, it is difficult to generalize the findings to Chinese firms. Ta, Choo, and Sum (2000) investigated 63 Singapore-based manufacturing companies with plants in China. Satisfaction with transportation in China was influenced by both the type of transport mode and ownership. They identified transportation problems faced by foreign companies operating in China and proposed actions for overcoming them.

Logistics strategy

Compared with the numerous studies about business strategy and operations strategy in China, logistics strategy research has been virtually ignored by scholars. Chan's (2005) study provides an exception. Chan examined the relationship between positioning strategy, competitive strategy, manufacturing planning and control, and manufacturing logistics systems performance, based on a survey of 125 senior managers in light manufacturing industries in Hong Kong. Manufacturing logistics performance was dependent on the fit of logistics systems with competitive strategy.

Third-party logistics service providers (3PLs)

Several studies have examined 3PLs in China.Gunasekaran and Ngai (2003) explored how a small 3PL company in Hong Kong achieved high performance. The company's strategic alliances with customers, operations strategy, and technology were critical success factors. Lai, Zhao, and Wang (2006, forthcoming) studied the impact of information technology (IT) on competitive advantage and financial performance among 3PLs. Using data collected from 105 3PLs in China, they found that IT strategy significantly influenced financial performance in a nonlinear fashion. Yeung, Selen, Sum, and Huo (2006) investigated strategies adopted by 159 3PLs in Hong Kong. The cost and differentiation strategy outperformed a pure low-cost or differentiation strategy. Using a similar method, Wang, Zantow, Lai, and Wang (2006) investigated the strategic posture of 3PLs in China. They found that a differentiation strategy outperformed a cost leadership strategy and that companies pursuing cost leadership were shifting toward differentiation, to cope with intense competition. These articles had explicit research hypotheses, which were tested using sophisticated statistical techniques. They represent a major improvement in research methodology over earlier descriptive studies.

Summary

As stated by Zhao et al. (2006), most logistics research in China focuses on describing the status and evolution of China's logistics infrastructure and reporting challenges faced by companies operating in China. Interestingly, Table 4 does not show a clear trend of increasing empirical work in China-based logistics research, which is much less mature than the SCM research. Some articles used brief surveys, while others used case studies, direct observation, or secondary data. Out of the 13 important articles reviewed, only two explicitly proposed and tested research hypotheses using statistical analysis and data. Five reported descriptive results only, and eight articles tested relationships between constructs. None tested relationships among variables using path analysis or SEM. Furthermore, most studies were based on relatively small samples and did not properly assess the validity and reliability of the instruments.

Table 4.  Evolution of logistics research methodology.
YearDescriptive and ConceptualTest and Validation of MeasurementTest of RelationshipsSEM, Path AnalysisTotal
  1. Note: Numbers do not sum to total because any single study may employ more than one method. SEM = structural equation modeling.

2006 14  4
2005 1  1
2004 
20033  3
20021  1
2001 
2000 1  1
1999 
19981 1  2
1997 1  1
Total518 13

Research on QM in China

There has been a substantial amount of empirical research on QM in China. Typical of an emerging area of study, many of the articles have dealt with the status of QM in China and development of frameworks that articulate its antecedents and consequents. The topics and research methods used for China-based QM research are summarized in Table 5.

Table 5.  Quality management (QM) topics and research methods.
TopicData-Collection Methodology
Case StudySurveyOthersTotal
  1. Note: Numbers do not sum to total because any single study may employ more than one method.

Status of QM 14 14
QM implementation 12 12
Customer perceptions of quality3 6  9
Relationship between QM and performance  5  5
Relationship between national culture and quality 10212
Measurement of QM constructs  3  3
Total350255

Status of QM in China

Because QM in China has lagged its implementation in Western countries, research on its status helps establish and document various aspects. Lee and Leung (1999) sampled engineering management students and respondents from ISO 9000 registered companies. Although respondents were aware of customer satisfaction and quality concerns, they were not ready for a comprehensive TQM approach. Lee and Zhou (2000) classified 243 manufacturers in China as TQM or traditional. The TQM firms had more foreign sales and tended to focus on high-precision products. They ranked product quality as their highest priority, compared with traditional firms, which focused on cost priorities. Lau, Zhao, and Xiao (2004) classified 452 organizations in China according to their stage of QM system development. Using factor analysis, they found that firms at the TQM stage had superior performance, but that most Chinese firms lacked a complete understanding of strategic QM. This study was very strong methodologically and sampled firms across China in 29 provinces and autonomous regions. Li, Anderson, and Harrison (2003) collected data from 428 firms in northern China. They found that joint ventures scored the highest in quality practices, while SOEs scored the lowest. Privately owned companies scored well in some aspects of QM implementation, especially quality leadership. Zeng, Tian, and Tam (2005) found that the major motivation for implementing ISO 9001 in China was to improve organizational culture.

Several studies compared the status of QM in China to other countries. In an early study, Zhao, Maheshwari, and Zhang (1995) compared QM efforts in India, China, and Mexico. The majority of manufacturers in all three countries were aware of modern QM concepts and philosophies, believing they were doing a good job providing high-quality products. While this study used a random sample in India and Mexico, it used a convenience sample of executives in a management development class in China. Raghunathan, Rao, and Solis (1997) compared QM practices in India, the United States, and China. There were no differences in human resources (HR) practices among the United States, India, and China, and India and China were similar in their perceptions of QM practices. Sun (2000) compared QM in China and Norway. Although Chinese companies had been using QM longer than Norwegian companies, they focused more on quality control and statistical methods, neglecting customer satisfaction and quality assurance. However, the Chinese respondents were members of the Shanghai Association for Quality Control, which may have accounted for the bias toward quality control in their responses.

Ahmed, Aoieong, Tang, and Zheng (2005) compared the status of QM systems in the construction industry in the United States and Hong Kong. Quality tools were mainly used for monitoring and recording purposes in both countries. This study had a very low response rate, with only 8% of the U.S. sample responding. Chin, Sun, Xu, and Hua (2002) compared QM practices in Hong Kong and Shanghai. Although the use of QM practices led to improvement in business results in both locations, Shanghai companies paid greater attention to environmental impact, while Hong Kong companies focused more on market and customer feedback. Hopkins, Nie, and Hopkins (2004) compared perceptions of QM among managers of electronics firms in Taiwan and China. There were differences in beliefs about the definition of quality, the relationship between QM and organizational performance, the extent to which QM is practiced and how the quality of their firms' products compares with the global competition. Taiwan managers held stronger beliefs about QM and used QM practices to a greater extent. In his survey of 500 small Chinese manufacturers and visits to ten small manufacturers, Lee (2004a,b) found that TQM was new to most small manufacturers in China. He reported that TQM is commonly viewed as a tool for saving money through inventory reduction.

QM implementation issues and factors

Although most research on QM has been conducted in a Western setting, QM in China may have different key drivers and implementation issues. Pun and Ho (2001) identified critical factors and recommended improvement strategies for a Hong Kong restaurant; however, the study had limited generalizability beyond the immediate case. Likewise, Guarnani (1999) looked at TQM implementation problems in a case study of a single Hong Kong division of a multinational company. He found that there were implementation difficulties when time and labor were limited. Lo and Cheng (1997), in their survey of top managers in engineering-related industries, found that Hong Kong employees were motivated by QM's technical aspects, compared with its systematic and philosophical aspects. Chin, Tummala, and Chan (2003) sampled 400 companies in the electronics and toy industries in Hong Kong. Customer focus was perceived to be the most important core element, followed by leadership and employee participation. Rao, Raghunathan, and Solis (1999) assessed QM practices in the HR division of companies in India, China, and Mexico. The best practices in all three countries were related to training in specific skills and building quality awareness, while the weakest included training in statistical tools, employee involvement, and participation. This study could have been improved by analyzing actual scores, rather than artificially dichotomizing them into high and low, and reporting the results across the entire sample, rather than simply reporting high and low within countries. Chow and Lui (2001) evaluated adoption of TQM in the information systems (IS) function of Hong Kong firms. They found that the key factors were user focus, top IS management support, and IS product and service design.

In a well-executed study, Zhao, Yeung, and Lee (2004) developed an empirical taxonomy of QM systems in service industries in China. Nonhierarchical cluster analysis revealed four patterns of service QM: undeveloped, accommodating, strategic, and soft. The type of QM system adopted was associated with organizational contextual factors. Although the perceived importance of quality induced further development of the QM system to a strategic quality system, they found that small service firms that competed locally could achieve very good performance using a soft quality system.

Customer perceptions of quality

As China has become a major player in the global economy, particularly since its accession to the WTO, customer focus has become more of an issue. Particularly because manufacturing has historically been controlled centrally, customer focus remains a challenge. Ellis, Williams, and Zuo (2003) studied the extent to which cross-cultural expectations and perceptions influence perceived service quality. Their sample included managers of European and Chinese supermarkets in Nanjing, Suzhou, and Shanghai, as well as their Chinese customers. While there was no difference in perceived service quality between local and international service providers, there were significant differences in perceptions of personal interaction, reliability, and policy. Heung, Wong, and Qu (2000) studied Chinese casual, full-service, and quick-service restaurants, finding that customer expectations varied by type of restaurant. Bennett and Zhu (2004) used a combination of semistructured interviews and questionnaires to study the relationship between brand and country of origin to customer impressions about product quality in China and the United Kingdom. Their sample included Chinese machine tool manufacturers that were the partners of UK machine tool manufacturers, as well as Chinese companies in various industries. All three groups believed that foreign technology-based machines that were made in China were superior to machines based on local technology. Cui, Lewis, and Dong (2004) used rigorous, structured content analysis of interview data from retail bank customers and employees in five banks in Guangzhou to examine factors influencing bank service quality, as well as a questionnaire in China and the United Kingdom. They found 16 factors that were perceived as determinants of service quality. While some service quality determinants functioned as satisfiers, some were dissatisfiers and others were dual determinants of service quality. Schniederjans, Cao, and Olson (2004) studied the perception of Chinese goods in the eyes of randomly selected respondents in all 50 U.S. states. The average rating of Chinese products was “poor,” and non-Chinese products were viewed as having greater net product value. However, because this study relied on U.S. consumers' memory of having purchased Chinese-made products, there are issues with its validity.

Relationship between QM and performance

Several studies have sought to articulate key practices that contribute to improvements in performance. Lam (1995) studied 220 frontline supervisors in Hong Kong organizations, finding that they felt that QM did not make their jobs more interesting or more important, only more demanding. Lee, Adam, and Tuan (1999) found that quality performance was strongly related to the improvement approach employed. Operating and financial performance were weakly related to the type of improvement approach. Li, Zhao, and Lee (2001) compared the performance of Hong Kong and UK banks. Hong Kong banks focused more on meeting service standards and providing prompt service, while UK banks focused more on customer needs and wants. Wang, Lo, and Hui (2003) studied bank branches in northern China, using SEM. Both service and product quality influenced bank reputation, but there was no evidence that reliability or empathy had an impact on service quality. Ng's (2005) study of the satisfaction of government and quasi-government organizations with the quality performance of engineering consultants found that actual benefits tended to be lower than clients' expectations. Wang, Lo, and Yang (2004) studied customers of two competing cell phone service providers in China. Customer value mediated the relationship between service quality and customer satisfaction. Xu, Jayaram, and Xu (2006) used hierarchical regression to study the effect of service enablers on conformance quality and productivity. They isolated resource management and human resource management (HRM) practices that affected both conformance quality and productivity, finding that the level of customer contact had a contingency effect. Although they found no significant differences between them, the same data was gathered in two different ways—through mail surveys and through face-to-face interactions in field visits.

Yeung, Cheng, and Lai (2005) studied key constructs in achieving business results in 225 firms in the electronics industry in Hong Kong and the PRD. In a study that was very strong methodologically, they found that process control and improvement were the key drivers of operational performance and customer satisfaction. There was a chain of effects that impacted operational performance: top management leadership, cultural elements, operational support systems, process control, and improvement.

Relationship between national culture and QM

Noronha (2002, 2003) studied the influence of Chinese cultural values on QM in 385 companies in China, Hong Kong, and Taiwan. Using SEM, he found that the underlying Chinese values of abasement, adaptiveness, harmony with people, harmony with the universe, interdependence, and respect for authority influenced the dimensions of quality. He concluded that quality climate is an important intermediary for bridging cultural values into quality practice and results. In contrast, Pun (2001) found no evidence that Chinese cultural values influenced employee involvement or QM adoption. Management in both Hong Kong and China was in harmony with Confucian ethics and the traditional Chinese values of paternalism, hierarchy, and personal obligation. In their study of middle managers in the United States, Japan, Taiwan, and Hong Kong, Yavas and Rezayat (2003) found that individualism/collectivism, uncertainty avoidance, and power distance were all important in differentiating the way that managers perceive quality processes. Walumba, Lawler, Avolio, Wang, and Shi (2005) studied the moderating effect of collective- and self-efficacy on the influence of transformational leadership on followers' work-related attitudes. Surveying 644 respondents in 37 branch banks in China, India, and the United States, they found that transformational leadership and efficacy beliefs were positively related to followers' work-related attitudes in all three countries. Aggregated collective- and self-efficacy moderated the relationship between transformational leadership and followers' work-related attitudes.

Chow, Lindquist, and Wu (2001) used an experiment to study the relationship of national culture to the implementation of high-stretch performance goals. Chinese nationals more readily accepted imposed high-stretch performance standards than the U.S. respondents. Hui, Au, and Fock (2004) examined cross-cultural effects on empowerment, focusing on the moderating role of power distance in the relationship between job autonomy and job satisfaction. The authors combined analysis of secondary data, a survey, and an experiment to reveal that power distance consistently moderates the effect of empowerment on job satisfaction. Essential conditions for implementing empowerment included willingness to exercise discretionary power and the desire to satisfy customer needs. Lindholm (2000) examined the extent to which HRM practices could be transferred between countries. Surveying 1,849 host-country employees from European multinational corporations (MNCs) in China, Thailand, India, the United Kingdom, and the United States, he found that evaluation and feedback practices were likely to be adapted to the host culture. Wang and Clegg (2002) studied the relationship between trust and participation in 328 managers in Australia and China. While trust in employee psychological maturity had a positive impact on willingness to encourage employee participation, Chinese managers had a lower level of trust in the psychological maturity of their employees. This led them to invite less employee participation. Lau, Tse, and Zhou (2002) examined readiness for change in Chinese firms with different types of ownership. A major research company conducted interviews with 3,960 managers and workers in 20 firms. Employees in IJVs and reformed enterprises were more open to change than employees in SOEs. In addition, employees in more developed regions of China were more open to change. There were sharp contrasts in openness to change between top managers, middle managers, and workers.

Measurement of QM constructs in China

Several articles dealt exclusively with the development or adaptation of measurement instruments. Zhang, Waszink, and Wijngaard (2000) contextually developed and validated an instrument for measuring QM in China. Although the instrument was developed specifically for use in China, it was initially developed in English, then translated into Chinese. Zhou (2004) found that his adaptation of SERVPERF was an appropriate predictor of customer satisfaction in China. The primary driver of customer satisfaction was reliability/assurance, and there was a lack of trust in local banking services. Lam (1997) adapted SERVQUAL (Parasuraman, Zeithaml, & Berry, 1988) for studying health care quality in Hong Kong. He found that it was consistent and reliable for measuring health care service quality; however, the dimensions that he found did not confirm SERVQUAL's five dimensions.

Summary

These studies reflect that, although progress is being made, China is still early in its QM journey. The studies on national culture and QM tend to be methodologically stronger than those in other areas, which are anecdotal or descriptive. Table 6 indicates that some more recent studies have used SEM/path analysis, but that there continues to be numerous descriptive studies. In terms of content, although there are numerous studies on the status of QM, there are relatively fewer that deal with relationships between theoretical constructs. In addition, virtually all of these studies used respondents from regions of China that were relatively advanced in their economic development, suggesting that QM in most parts of China is likely to lag the rest of the world even more.

Table 6.  Evolution of quality management research methodology.
YearDescriptiveHypothesis TestingAnalysis of RelationshipsSEM, Path AnalysisTOTAL
  1. Note: Numbers do not sum to total because any single study may employ more than one method. SEM = structural equation modeling.

2006  1  1
2005 21 11 5
2004 4  4210
2003 3  12 6
2002 1 1 2
2001 12 1  4
2000 12  3
1999 2  1  3
1998 2  2
1997 2  3  5
1996 
1995 2  2
Total20512643

RESEARCH OPPORTUNITIES AND PROPOSITIONS

In this section, we identify research opportunities and present research propositions in each of the topic areas, based on our review of the literature and observations from visiting Chinese plants and interacting with executives and scholars in China.

Logistics and SCM

Although China has become the global factory and is playing a crucial role in the global SC for many different types of products, empirical research on logistics/SCM is still in its infancy. Most of the studies we reviewed are based on anecdotal evidence, case studies, or surveys with very small sample sizes. Furthermore, many studies reported only descriptive statistics and did not adequately validate their multi-item measurement scales. There is a great deal of opportunity for developing and testing new theories and validating existing theory in China. Some high-potential areas for future research are presented below.

Supplier selection, evaluation, and management

An increasing number of foreign companies are sourcing from China. How they select, evaluate, and manage their suppliers will significantly influence their competitiveness in the global marketplace. Although many companies sourcing from China have cost reduction as their primary motivation, quality, speed and reliability of delivery, and flexibility can also have major impact on total SC cost and competitive advantage. As Chinese manufacturers become more mature, many are building capabilities in quality, speed and reliability of delivery, flexibility, innovation, and service. Suppliers' capabilities in these areas can enhance the competitive capability of their partner firms and, thus, become an important criterion for supplier selection. However, the importance of these criteria depends on the competitive strategy of the sourcing firm. Therefore, we propose the following research propositions:

  • RP1: The competitive strategy of the sourcing firm will significantly influence the importance of supplier selection and evaluation criteria, such as cost, quality, flexibility, delivery, service, and innovation.

  • RP2: As Chinese suppliers develop their capabilities, they are more likely to use cost as an order qualifier and other criteria, such as quality, flexibility, delivery, innovation, or service, as order winners. Chinese suppliers in the more developed areas, such as the PRD, Yangtze River Delta (YRD), and Bohai Sea Economic Area (BSE) are more likely to use noncost criteria as the order winners than the suppliers in the less developed areas.

As more and more companies focus on developing long-term, collaborative relationships, rather than arm's-length transactional relationships (Humphreys et al. 2001), they are changing their criteria to incorporate relationship-oriented selection criteria. Furthermore, foreign partners who invest in China bring their cultures, values, and management methods to China and thus have a major impact on the way companies select, evaluate, and manage suppliers. The following are some interesting propositions to be tested:

  • RP3: Ownership and organization culture will be key factors for companies to consider in selecting suppliers. Companies with foreign ownership and culture will be more likely to select suppliers with similar ownership and culture. Companies with foreign ownership (IJVs and WOFEs) will be less likely to select SOEs as suppliers.

  • RP4: Companies with investments from Japanese companies, such as Toyota and Honda, will have much greater emphasis on cultural similarity, supplier involvement, and continuous improvement capabilities in selecting and managing their suppliers than companies with investments from the United States, Hong Kong, and Taiwan.

SC collaboration and relationship management

Information sharing and coordination between trading partners are crucial for SC integration. Due to China's unique culture, dynamically changing environment, and underdeveloped legal systems, collaborating with partners is very challenging. This creates exciting opportunities for research. Some interesting research issues are: (i) How do China's cultural characteristics (long-term orientation, high-power distance, high collectivism, high uncertainty avoidance) influence the role of power, trust, and relationship commitment in SC integration? (ii) Given the fact that Chinese place greater emphasis on trust and guanxi and the difficulty of using the legal system to make sure partners fulfill contractual requirements, what is the best control mechanism, in terms of contracts versus relational norms? and (iii) How does culture influence the importance of trust versus contracts in governing SC relationships? More specifically we put forth the following research propositions:

  • RP5: Companies with Chinese culture as the dominating management culture (such as SOEs) will rely more on trust, relational norms, and personal relationships in managing SC relationships than companies with a Western culture (such as IJVs and WOFEs). Companies with a Western culture will rely more on contracts in managing SC relationships than companies with a Chinese culture.

  • RP6: In SC relationships with companies of Chinese culture, the use of nonmediated power (such as expert power and referent power) will be more effective relative to use of mediated power (such as reward and punishment power). In SC relationships with companies of Western culture, the reverse will be true.

SC strategies, design, and management practices

As pointed out by Zhao et al. (2006), developing strategies for SCM and global integration strategies are top of mind for operations executives. Culture plays a key role in SCM, as does the geopolitical climate. Oftentimes different rules between local and central governments affect SCs in China. As companies adopt competitive strategies, they select different SC strategies, modifying their SC structure and practices to fit the changing strategies and environment. It will be interesting to investigate how companies select and implement SC strategies, develop practices, and change their SC structures to support their competitive strategies in the rapidly changing environment. Some interesting research questions are: (i) How do product characteristics and competitive environment influence the choice of SC strategy? Do Chinese companies choose SC strategies differently than Western companies, due to China's unique culture and history? (ii) How does the fit among environment, competitive strategy, and SC strategy influence SC and firm performance? and (iii) How do companies build SC capabilities through the implementation of different types of management practices? Do Chinese companies follow a pattern of tradeoffs or cumulative capabilities (Noble, 1995; Flynn & Flynn, 2004; Rosenzweig & Roth, 2004)? Specifically, the following research propositions can be tested:

  • RP7: Chinese companies are more likely to adopt overall cost leadership as a competitive strategy than Western companies. When a company uses overall cost leadership as its competitive strategy, it will emphasize lean SC strategy in a stable environment, but it will use both lean and agile SC strategies in a volatile environment.

  • RP8: Companies with foreign investment from more developed countries, such as the United States and Europe, tend to focus more on an agile SC strategy or a leagile (a combination of lean and agile) SC strategy than SOEs.

  • RP9: SC strategy will significantly influence SCM practices. The development of lean and agile capabilities will follow a cumulative pattern, rather than a trade-off pattern. Companies with investments from well-established foreign companies will follow different patterns of development than SOEs. Joint venture companies will adopt systems and practices from their well-established parent companies quickly and thus be able to build capabilities in multiple dimensions quickly.

  • RP10: The fit among environment, competitive strategy, SC strategy, and practices will have a major impact on SC and firm performance. Firms that can customize SC strategy and SC design to fit the competitive strategy, market environment, and product characteristics will have a major competitive advantage in the marketplace. While IJVs, WOFEs, and PCEs will have a much better fit, due to their willingness to change, SOEs will have much lower flexibility to make the required changes, and thus will have a much lower fit and substantially worse performance.

Research on Japanese SC integration shows a dominant path to globalization (Roth, Cattani, & Froehle, forthcoming). Given that Western companies have entered China and Chinese companies are now globalizing, it will be interesting to see if this theoretical path holds. More specifically:

  • RP 11: Successful Chinese companies that intend to globalize need a threshold level of SC integration expertise. Information-based technology will mediate this relationship.

To attract foreign investment and promote economic development, the Chinese government has been very active in formulating policies and regulations to stimulate development within certain regions and target industries. For example, the government provides preferred tax treatment, such as tax holidays and reduced tax rates, to companies that mainly export their outputs or produce high-technology products. They also allow companies to import raw materials, component parts, and production equipment without paying import duties. The government provides free land or free factory space to targeted companies in order to attract them to locate in certain industrial parks or technological development areas. These efforts will have a major impact on the design of SC networks. Furthermore, the government's restrictions on share ownership and the complex ownership structure of SOEs and collectively owned enterprises will also influence the choice of suppliers. All of these have major implications for SCM and create interesting research propositions.

  • RP12: Government policies and regulations concerning taxes, duties, and subsidies will significantly influence SC network design. Companies will optimize their SC networks and select partners based on these factors.

  • RP13: The government's efforts to establish and promote industrial parks and supply clusters (Wu et al., 2006) will influence SC network design. Industry clusters will help companies create cost advantages.

  • RP14: Supplier and customer involvement will significantly influence SC learning and capabilities in product and process innovation. Ownership will influence the extent of involvement and learning.

GrSCM

With China's rapid economic development, there is increasing concern for the environment. While some companies moved their production facilities to China because of its low environmental restrictions, recent changes in environmental regulations have made companies much more cautious. At the same time, companies are finding new business opportunities in reverse logistics and practicing GrSCM. Although two studies (Zhu & Sarkis, 2004; Zhu et al., 2005) examined GrSCM pressures, practices, and their impact on company performance, a great deal more research can be performed to examine GrSCM issues in China. For example, how do companies with less restrictive environmental regulations as their major motivation for moving to China perform over time? How does their performance differ from companies with other motivations? How do companies with different competitive strategies adopt and implement GrSCM practices? How do companies incorporate environmental decisions in key SC decisions, such as the choice of location, s election of suppliers, design of the product, and adoption of production technology? How do GrSCM practices interact with other practices in influencing the performance of the company? Interesting research propositions include:

  • RP15: Companies having China's lower environmental restrictions as their major motivation for moving to China will have declining performance over time.

  • RP16: Companies with explicit environmental strategies that consider the environment in key SC decisions will outperform those companies that do not. GrSCM practices will interact with other management practices to influence company performance.

QM

The extant research on QM in China consists mostly of surveys. Many of them are characterized by descriptive statistics, small samples, and convenience samples. In addition, many of the studies suffer from lack of attention to reliability and validity issues. While there is some excellent case study research, such as Cui et al. (2004), other articles primarily narrate stories of QM implementation or read like consulting reports. However, the experimental studies related to QM and national culture tend to be very well done. Research in the QM area could benefit from more controlled experiments for appropriate topics and more rigorous survey research.

Status of QM in China

Because of the vast differences between China and Western countries, it has been important to carry out studies on the status of QM in China, in order to lay the foundation for future research. However, there have been numerous studies in this vein, and it is time to move on to more sophisticated research that focuses on testing theoretical relationships between constructs. In particular, there is a need for more contextualized research that focuses on the unique characteristics of QM in China, such as its relationship to ownership, economic, social, and cultural issues. Research that documents stages of QM implementation and their relationship to performance is also of interest, perhaps by industry, region, or ownership.

Studies that compare the status of QM efforts in China to other countries are very interesting. However, such studies could make a better contribution to the knowledge by being theoretically grounded. For example, do companies at the same stage of QM implementation in different countries apply similar practices? Several types of cross-country comparisons are valuable: China versus Western countries, China versus other Asian countries, and China versus other developing countries. Each type of comparison, if well executed, would make a valuable contribution to the knowledge about QM in China.

QM implementation issues and factors

As research on QM implementation issues and factors moves forward, it should focus on issues that are unique to China, such as the prevalence of small manufacturers, ownership issues, small service providers, and implementation issues in China's less-developed regions. The development of empirical taxonomies related to these topics will continue to be a valuable research direction. Well-executed case studies, culminating in propositions for future research, will be important for exploring new directions. Research propositions of interest include:

  • RP17: SOEs will be at a lower stage of QM implementation than firms with other types of ownership. IJVs will be at the highest stage, because of the influence of their foreign partners. In the SOEs, there will be a greater focus on statistical process control, and there will be more issues with implementation of QM principles.

  • RP18: Service organizations will be at a lower stage of QM implementation than manufacturing organizations in China, due to their lower exposure to foreign organizations.

  • RP19: Service organizations will have less focus on customer needs than service organizations in Western countries, because of China's history of central control. This will be true, even compared with other developing economies.

Customer perceptions of quality

Although there have been some interesting studies on perceptions of the quality of Chinese-made products, they have suffered from methodological problems. Controlled experimentation would be very beneficial. Scenarios could be developed to allow assessment of differences in perceived quality of comparable products made in China versus Western countries, other Asian countries, and other developing countries.

  • RP20: The quality of Chinese-made products will be perceived as lower than that of comparable products made in Western countries. It will be perceived as higher than comparable products made in some developing countries, but lower than products made in Japan.

Chinese consumers may have different expectations about the quality of service, based on China's history of central control of products and services. In addition, their expectations may vary greatly by region. For example, customers in the PRD, YRD, and BSE, who have been exposed to Western service quality at Starbucks and McDonald's, may have very different expectations than customers in China's interior regions.

  • RP21: There will be less focus on customer needs in SOEs and in regions of China that are distant from the Southeast.

Relationship between QM and performance

There are many opportunities for interesting research dealing with the relationship between QM and performance, building on existing theory and conditions in China. Examples of research propositions include:

  • RP22: Employees in more remote regions and SOEs will have less concern about the job enrichment and job enlargement associated with QM. They will perceive it as adding responsibilities to their jobs, rather than as beneficial to them.

  • RP23: QM will occupy a different position in the sandcone model (Ferdows & DeMeyer, 1990) than in Western countries. Cost will be at the base of the sandcone, rather than quality, which will build upon the cost advantage, since cost is what initially attracts foreign businesses to Chinese suppliers.

  • RP24: Quality will function as an order winner in the remote regions of China, while it functions as an order qualifier in the better developed coastal regions, such as the PRD, YRD, and BSE areas.

Relationship between national culture and QM

Unlike most other China-based QM research areas, there have been some exceptionally well-executed studies on the relationship between China's national culture and QM. In some cases, they have had conflicting results, leaving a number of interesting research issues to be resolved. For example, will empowerment be effective in China's high-power distance national culture? Will the effects of collectivism be stronger than power distance in implementing empowerment initiatives?

  • RP25: The dimensions of national culture that contribute most to QM will be different in China than in other parts of the world.

  • RP26: QM initiatives that are tailored to China's national culture will be more successful than those that are imported intact from Western countries.

  • RP27: Western QM initiatives will be better accepted in regions of China that have more IJVs and MNCs than in the more remote regions of China, where the influence of Chinese national culture will be stronger. Thus, there will be greater cultural convergence in China's better-developed regions.

In addition to Hofstede's (1980) seminal work on national culture, there are a number of other sound perspectives on national culture that can be applied to the implementation of QM in China, including the GLOBE study (House, Hanger, Javidan, Dorfman, & Gupta, 2004) and Hampden-Turner and Trompenaars (1997).

Measurement of QM constructs in China

While some of the studies have done an adequate job in developing QM measures and instruments, there is opportunity for a great deal more. In particular, researchers need to focus on more contextualized measurement instruments for constructs, such as guanxi, trust, customer perceptions of quality, and customer satisfaction in the Chinese context. In addition, there should be more work to adapt well-established QM instruments for local use in China and careful translation of instruments to allow cross-country comparisons.

METHODOLOGICAL ISSUES

As indicated by Zhao et al. (2006), conducting decision sciences research in China can be challenging. Overall, the quality of China-based empirical research is hit-and-miss. While there is some rigorous, well-executed research, much of it continues to be descriptive. For studies with data collected through surveys, the reliability and validity of the items tapping into the constructs is of major concern. Furthermore, generalization of study conclusions is questionable, due to insufficient attention paid to sampling, statistical techniques, and theoretical justification of the hypotheses. In the case study research, more attention must be paid to structured analysis of the findings and generalizability of results, such as the approach used by Batonda and Perry (2003). In the following sections, we build on Zhao et al. (2006) and address some of the major methodological issues that must be overcome to improve China-based research.

Conceptualization and Theoretical Foundations

Good research starts with good conceptualization and theory. With its unique culture and rapid transformation, China is a fascinating research laboratory in which to assess the explanatory and predictive power of theories (Meyer & Peng, 2005). It also provides opportunities for researchers to develop and test new theories. For example, Meyer and Peng (2005) reviewed research articles related to Central and Eastern Europe and how they have influenced the overall trajectory of theory development. They focused on organizational economic theories (Transaction Cost Theory and Agency Theory), resource-based theories, and institutional theories. They summarized the challenges to theory and the implications and methodological challenges of these theories in addressing key issues confronting foreign entrants, local incumbents, and newly established firms. Based on their review of the literature, they proposed a future research agenda for each of the three theories with regard to each of these types of firms.

While Meyer and Peng had many interesting ideas, it is not possible to deploy a similar approach for the literature we reviewed in logistics/SCM and QM. The major reason is that most of the China-based articles did not make clear theoretical contributions. One exception is Zhao et al.'s (2004) contributions to contingency theory. Many articles fell short in both theory development and validation, reporting practices, challenges, and problems faced by organizations in China without much emphasis on theory. This indicates the underdeveloped nature of research in these areas and calls for more theory-driven research that focuses on development of new theory or testing existing theories. It is time for researchers to move beyond descriptive reporting to studying relationships based on theories. In addition to the theories summarized by Meyer and Peng (2005), contingency theory and trust-commitment theory are also very relevant and useful in logistics/SCM and QM research.

The choice of research methodology should depend on the research purpose. While quantitative survey research is more suitable for validating theories (Roth, Schroeder, Huang, & Kristal, forthcoming), qualitative methodology, such as case studies, is more suitable for grounded theory building (Miles & Huberman, 1994). The maturation of China-based research would benefit enormously from rigorous case studies that build theory in the Chinese context. Yet, case research presents several challenges. “It is time consuming, it needs skilled interviewers, and care is needed in drawing generalized conclusions from a limited set of cases and in ensuring rigorous research” (Voss, Tsikriktsis, & Frohlich, 2002, p. 195). Voss et al. (2002) provide a step-by-step procedure for conducting case research in operations management and demonstrate how to apply this procedure, using published articles in the operations management (OM) area. This article provides a nice guide for conducting case research in China.

Measurement Issues

Measurement is another very crucial issue. As Farh et al. (2006) stated, “When it comes to conducting high-quality empirical research, it is imperative that we have valid measurement instruments.” Our review shows that all four approaches for scale development described by Farh et al. (2006) have been used (see Table 7). The majority of the articles used measurement instruments that were translated or adapted from Western instruments. Only a small number of studies developed new instruments, and a smaller number developed their instruments for the specific context of China. This indicates that the majority of studies transfer Western scales and theory into China. There is an increasing need to develop new measurement instruments that are more appropriate for the Chinese context. Roth, Schroeder, Huang, and Kristal (forthcoming) present a useful approach for developing reliable and valid, new, multi-item measurement scales. It also reports on 1,803 published operations management scales that might be adapted to the Chinese context.

Several approaches to scale translation were used. Noronha (2002, 2003) developed separate versions of his questionnaire for use in China (simplified characters), Hong Kong, and Taiwan (complex characters). The studies by Chin et al. (2002), Cui et al. (2004), Ellis et al. (2003), and others translated scales that were previously used in Western settings, with known reliability and validity. The best approach to translation is to translate from the source language into Chinese, then to have a different translator back-translate from Chinese into English, so that the scale can be checked for accuracy. This approach was used by a number of authors, including Lee (2004), Raghunathan et al. (1997), and Xu et al. (2006). Researchers using this approach must be cognizant that much variation exists in the psychometric properties of published scales; thus, care must be taken when building upon prior work.

A number of studies used the adaptation approach. Hopkins et al. (2004) selected the items from Benson, Saraph, and Schroeder (1991) that best tapped into the beliefs and practices they were measuring. Zhao et al. (2002) changed the wording of some SERVQUAL items after the pretest revealed confusion among the Chinese respondents. Similarly, Lam (1997) changed all negatively-worded SERVQUAL items to positively-worded items, to avoid confusion. While these changes helped to eliminate confusion, their findings cannot be compared with other studies that used SERVQUAL or the Benson et al. (1991) questionnaire.

De-contextualization was used in a few studies to measure general relationships, independent of their context. For example, Ngai and Cheng (1998) measured the extent to which computer-based technology supports quality management. Lee et al. (2000) studied the relationship between quality and productivity approaches and various types of firm performance, and Zhao et al. (2004) developed an empirical taxonomy of QM systems in service organizations. Examples of contextualization include the studies of guanxi by Lee and Dawes (2005), Leung et al. (2005), and Wu et al. (2006)'s studies of reciprocity. Regardless of the approach used in developing scales, it is incumbent on researchers to test the reliability and validity of their measurement instruments.

Another important issue in using instruments cross-culturally is testing measurement equivalence. According to Horn and McArdle (1992, p. 117), measurement equivalence refers to “whether or not, under different conditions of observing and studying phenomena, measurement operations yield measures of the same attribute.” People from different cultures or in different environments often use different conceptual frameworks to assess the same construct or assign different weights to items. There can be psychometric differences that imply different groups of raters have consensus on the conceptual framework, with equivalent factor forms and the same pattern of factor loadings, but respond to the measurement scale differently (Edwards, 1993; Cheung, 1999, 2002). If researchers are using a translation or adaptation approach in scale development and want to make comparisons between different groups or to pool data from different cultural groups, they should test and demonstrate measurement equivalence first, otherwise the comparison will not be meaningful. For example, Roth, Gray, Singhal, & Singhal (1997) and Roth (1996) used a translation approach to survey executives in 35 countries; however, great care was taken to ensure measurement equivalence of key constructs across countries in the pilot studies. A useful approach was taken by Voss, Roth, Rosenzweig, Blackmon, and Chase (2004), who used teams of cross-trained interviewers from different countries to interview executives.

Thus, because of the substantial differences between Chinese and Western cultures, there is a great need to test measurement equivalence before pooling data or comparing country data, such as between China and the U.S. or Japan. There are many opportunities for discovering conceptual differences among important constructs that have been developed and tested in the Western settings. This will lead to more scale development using the contextualization approach, reducing the tendency to simply translate or adapt Western scales for China-based research.

Sampling and Data Collection

Sampling and data collection represent another major challenge in conducting survey research in China (Zhao et al., 2006). China is a huge country with different regions in different stages of economic development. Furthermore, different regions have different cultures and traditions. In addition, companies with different ownership and in different industries often employ different policies and face different competitive and legal environments. These differences make it extremely difficult to draw generalized conclusions.

Our review of the literature shows that most existing studies used small samples or convenience samples. Furthermore, the majority of the studies used samples from the more developed areas such as the PRD (including Hong Kong and Guang Dong province), the YRD (including Shanghai and nearby cities), and the BSE (including Beijing and Tianjin). While it is important and proper to study these areas, researchers must be cautious in making general conclusions about China overall based on results from these disparate samples. There have been only a few efforts to study companies in the less-developed areas in China. For example, Wong et al. (2005) and Zhuang and Zhou (2004) used samples from the Northwest, and Wang et al. (2003) used samples from the Northeast. The only studies that used samples with national coverage were Lau et al. (2004) and Zhao et al. (2004). While it is difficult and costly to have national coverage in sampling, the diversity of the different regions, industries, and ownership offer very interesting opportunities for within-China comparisons. More research is needed to understand the less developed areas of China, as they evolve and grow in importance.

Analysis and Interpretation

In addition to good conceptualization and theory, good measurements, and quality data, researchers must also perform rigorous data analysis and interpret the results with the guidance of theory and first-hand knowledge of Chinese business and its environment. Researchers must move beyond description and begin to develop theory-based hypotheses and test them with the appropriate tools.

CONCLUSIONS

The time is ripe for rigorous, well-executed research in SCM, logistics, and QM in the context of China. There is a general paucity of good empirical science regarding China in these areas. With some exceptions, much of the China-based decision sciences research continues to be descriptive. This is not surprising, since description is the first step in the theory-building process. In general, the state of empirical research in China seems to lag that of the West by about two decades. It was only in the mid-1980s that empirical research on operations management topics had become acceptable in the U.S. (Roth, Schroeder, et al., forthcoming). Consequently, this article aims to stimulate the process of conducting empirical research in China, drawing upon Zhao et al. (2006) and Farh et al. (2006).

This research makes a contribution to the existing literature by developing a conceptual typology of important SCM, logistics, and QM issues as they relate to China. It organizes selected studies by issue, as well as by research methodology. Selected articles were critiqued regarding the quality of their research, in terms of measures and analysis. We presented tables that show the evolution of SCM, logistics, and QM research, respectively. Next we critiqued the methods used in many of the China-based publications on SCM, logistics, and QM and made suggestions for overcoming flaws. Finally, we developed 27 propositions that reflect important areas for future China-based research in SCM, logistics, and QM.

Our research brought out the role of national culture in conducting cross-country research. Given the importance of guanxi and other cultural attributes, the high importance placed on assessing cultural attributes in the SCM and QM research that we covered seems logical. Interestingly, a key research question is whether Chinese culture will dominate Western practices, or vice versa. For example, Wal-Mart adapted its philosophy to the Chinese market, and is becoming a major force for change (Elliott & Powell, 2005, p. 38), who reported:

“The core message to Wal-Mart's associates…is simple: respect for the individual - customers in particular - is what we're all about.” Unlike in most Chinese companies, the system is transparent –guanxi, or personal connections, don't matter in the firm's Chinese stores. The culture of Wal-Mart is stronger in China than anywhere else in the world.”

The importance of culture is one of the key themes in the extant cross-country literature, and the dimensions put forth by Hofstede and others have been very influential in many of the articles that we reviewed. While these dimensions may be an excellent starting point for gaining an understanding and perspective of China versus other groups, they are not necessarily good predictors of individual behaviors. SCM and QM, in particular, have their own culture-creating mechanisms. Interestingly, our literature review shows that most of the scholarly research that has been subjected to empirical scrutiny falls in the areas of SCM and QM. Logistics is the weakest research link, with the fewest articles. Thus, we developed propositions around culture for future research that should be very influential if conducted well.

Finally, we find that there is significant variation in the overall quality of the selected published articles, in terms of measures and methods. This variation is to be expected, due to the lack of precise construct definitions, theory development and formal hypothesis statements, and statistical testing. For many of the studies, the sample sizes were too small for the use of sophisticated statistical procedures. As issues in SCM, logistics, and QM mature, variation will be reduced and the scope of inquiry will mature, as well, as constructs and items tapping into them are refined. Much methodological work must be done to improve sample selection (Zhao et al., 2006). Only then will theory development and rigorous statistical testing lead to generalizable research findings. As empirical research matures globally in operations and SCM, the prospects for conducting high-quality research in China also increases. [Invited.]

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