Managing resources for digital transformation in supply chain integration: The role of hybrid governance structures

Abstract

Digital transformation (DT) plays a crucial role in shaping operations and supply chain management. Through real-time data sharing and automated decision-making systems, DT fosters supply chain integration (SCI), facilitated by key digital technologies like Internet of Things (IoT), cloud computing, big data, and artificial intelligence. Effective DT necessitates managing organizational digital resources encompassing technical domains such as software, hardware, and data science, alongside financial resources and managerial capabilities. Navigating the complexities of DT requires strategic decisions in supply chain governance regarding the management of these digital resources. While in-house development offers control and differentiation, it entails organizational and financial risks. Conversely, outsourcing digital activities reduces risks but increases technological dependence. Hybrid governance (concurrently sourcing in-house and outsourcing activities) presents a reconciliatory approach that can be valuable for DT in SCI. This study investigates the contribution of hybrid governance for DT, focusing on its effects on SCI and delivery performance. Through quantitative analysis of 379 manufacturing companies, our findings reveal that hybrid governance positively influences the digitalization of SCI and contributes to delivery performance through a digitalized SCI. Our research contributes to the theoretical understanding of hybrid governance in DT, offering insights into strategic digital resource management for SCI. It underscores the importance of balancing internal and external resources to optimize supply chain performance in the digital era.