Resource Gaps and Resource Orchestration Shortfalls in Supply Chain Management: The Case of Product Recalls

By Ketchen, David J., Jr.; Wowak, Kaitlin D. et al. | Journal of Supply Chain Management, July 2014 | Go to article overview

Resource Gaps and Resource Orchestration Shortfalls in Supply Chain Management: The Case of Product Recalls


Ketchen, David J., Jr., Wowak, Kaitlin D., Craighead, Christopher W., Journal of Supply Chain Management


INTRODUCTION

Managers have increasingly turned to supply chains as a source of value creation and competitive advantage (Ketchen & Hult, 2007). Accordingly, many researchers have examined the performance implications of supply chain phenomena. Of particular interest is the role of strategic resources--resources that are valuable, rare, inimitable, and nonsubstitutable (Barney, 1991). Although the competitive value of strategic resources such as supply chain knowledge has been demonstrated (Wowak, Craighead, Ketchen & Hult, 2013), little is known about how managers position their firms for future success by closing resource gaps and resolving resource orchestration shortfalls within supply chains.

Unique opportunities for examining resources arise when bad, faulty, or tainted products enter a supply chain and must be recalled. In August 2013, for example, tainted salad mix was recalled by Darden Restaurants after stomach illnesses plagued more than 400 customers in 16 states. When failures like this are detected, managers usually seek to quickly recapture the bad products to minimize harm to consumers and to their firm's finances and reputation. Given that modern supply chains are complex, dynamic, and international in nature (Craighead, Blackhurst, Rungtusanatham & Handfield, 2007), recalls are becoming increasingly difficult for firms to manage.

Although recalls are painful to endure, Sitkin (1992) suggests that navigating failure is essential in order for firms to be able to adapt to changes in their environment and achieve superior long-term performance. If firms do not experience and learn from failures, they may enjoy short-term success, but are more likely to face long-term difficulties--this is known as the "paradox of success" (Audia, Locke & Smith, 2000). Accordingly, we argue that failures can be an effective mechanism to examine resources within supply chains.

More specifically, we suggest that supply chain failures will reveal learning opportunities about: (1) a firm's resource endowments and (2) how a firm orchestrates activities around their resources. Consumers and other stakeholders seldom can directly observe a firm's strategic resource portfolio (Connelly, Certo, Ireland & Reutzel, 2011), leading them to rely on realized outcomes of a process (Heil & Robertson, 1991) to garner an understating of the firm's underlying resource gaps and resource orchestration shortfalls. In the case of the salad mix recall, Darden's quick and thorough response to the discovery of tainted products suggested to consumers that Darden has both the resources and the resource orchestration skills needed to protect consumers.

Although past research tends to refer to product recalls in a monolithic fashion, our qualitative investigation of recalls, resource gaps, and resource orchestration unveiled four types of recalls. Below, we discuss how these recall manifestations led us to develop an emergent typology by juxtaposing firms' resource portfolios and their orchestration skills. We also discovered that the type of recall a firm conducts can send signals to various internal and external stakeholders and that the signals stemming from recalls are "double-edged swords" by posing both threats and opportunities.

THEORETICAL FOUNDATION

Because building grounded theory was our objective, we allowed our emergent qualitative data to determine which theories we consulted (Eisenhardt, 1989). As this study evolved, we were guided by two theoretical bases. Resource-based theory centers on strategic resources--assets and possessions that are valuable, rare, inimitable, and nonsubstitutable (Barney, 1991). Resource-based theory suggests that the endowments of these strategic resources vary across firms and that well-endowed firms can leverage their resources to create sustainable competitive advantages (Crook, Ketchen, Combs & Todd, 2008). Teece, Pisano, and Shuen (1997, p. …

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