Purpose - In today’s constantly evolving global business environment, multidivisional firms (MDFs) require an organizational structure for supply chain management (SCM) that facilitates the development of supply chain agility. This research aims to investigate what structural elements of an MDF’s SCM team contribute to supply chain agility. Design/methodology/approach – A two-sample field study was conducted. Four MDFs with topperforming supply chains (Sample 1) were first studied to identify agility-supporting structural elements. Then, quantitative data from 35 MDFs with contrasting levels of supply chain agility (Sample 2) were collected to test the theoretical propositions advanced from Sample 1 findings.
Findings - The results reveal four structural elements that exert a positive impact on an MDF’s supply chain agility: hierarchical position of the divisional top supply chain executive, scope of divisional supply chain operations, hierarchical position of the top supply chain executive at the headquarters and scope of SCM coordination by the headquarters.
Originality/value - First, this study provides a comparatively comprehensive understanding of the SCM organization structure in MDFs. Second, this study is one of the first to provide empirically supported theoretical insights about the linkage between an MDF’s organizational structure for SCM and supply chain agility.
A multidivisional firm (MDF) is organized based on divisions, each being self-contained with its own functional hierarchy, responsible for day-to-day operating decisions, and guided as well as controlled by strategic and financial targets from the headquarters (Hoskisson et al., 1993). Because the multidivisional form is one of the most-used management models (Jones, 2005), and supply chain agility is emerging as a strategic means to create competitive advantages and superior performance (Christopher et al., 2004; Gligor et al., 2015; Li et al., 2017), how MDFs can develop supply chain agility deserves investigation. In seizing opportunities and responding to changes/disturbances, agility is a critical feature of best value supply chains, which are most likely to prosper in a dynamic landscape (Lee, 2004; Ketchen and Hult, 2007; Li et al., 2015; Whitten et al., 2012). As the benefits of agility have become generally acknowledged, there is increased investigation of how firms develop supply chain agility (Swafford et al., 2006; Braunscheidel and Suresh, 2009; Gligor and Holcomb, 2012; Gligor et al., 2013). Acknowledging that the capability of responding to changes can be either hindered or facilitated by the organizational structure, several researchers have investigated the impact of certain aspects of organizational structure on a firm’s supply chain agility (Nahm et al., 2003; Wieland and Wallenburg, 2013). However, how MDFs design their supply chain management (SCM) organization to foster and facilitate supply chain agility has not been addressed. The structural complexity of MDFs has not been considered in prior research. Previous studies have not examined how supply chain agility is impacted by a MDF’s structural choices for SCM organization at the headquarters, within and across business divisions. This paper contributes to an understanding of this structure–agility linkage.