Title: The effects of legal-political factors and market competition on supply chain performance: some findings from firms in a free trade zone

Authors: Yudi Fernando; Agustina Fitrianingrum; Christopher Richardson

Addresses: Graduate School of Business, Universiti Sains Malaysia, 11800 Penang, Malaysia ' Faculty of Economics and Management, Universitas Internasional Batam, 29442 Batam, Indonesia ' Graduate School of Business, Universiti Sains Malaysia, 11800 Penang, Malaysia

Abstract: This paper investigates the effects of legal-political factors and market competition on supply chain performance. The data were collected from firms in the electrical and electronics (E&E) sector in an Indonesian free trade zone (FTZ) on the island of Batam. The E&E firms were chosen because of their significant contribution to Indonesian exports. The sampling of this study was E&E firms involved in exporting activities. As part of survey research, hypothesis-testing was undertaken to explain the variance in the legal-political factors and market competition to predict the two measurements of supply chain performance of the E&E firms in Batam. Since structural equation modelling (SEM-PLS) path modelling 2.0 works efficiently with small sample sizes and complex models, this analytical tool was employed in the study. The findings reveal that legal-political factors and market competition were positively significant on supply chain performance-efficiency and supply chain performance-flexibility. This study suggests that firm success is not necessarily tied to the size of its investment. Rather, it is the interrelationship amongst the factors that influences the supply chain.

Keywords: supply chain flexibility; supply chain efficiency; exports; free trade zones; FTZ; Indonesia; legal factors; law; political factors; politics; market competition; supply chain performance; supply chain management; SCM; electrical and electronics industry; structural equation modelling; SEM; PLS; partial least squares.

DOI: 10.1504/IJLSM.2016.076484

International Journal of Logistics Systems and Management, 2016 Vol.24 No.2, pp.244 - 264

Received: 09 Apr 2015
Accepted: 06 May 2015
Published online: 10 May 2016 *

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