Theoretical Contributions to Supply Chain Management: Transaction Cost Economics and Resource Based View

Supply Chain
Management draws
from a range of
theoretical
contributions

INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................4
Clearly outline the concepts and constituent elements of Transaction Cost Economics.................4
Definition of TCE...................................................................................................................4
Concept and constituent elements of TCE.............................................................................4
Demonstration of various contracting mechanisms supported by TCE theory......................5
The Resource Based View of the firm offers a contrasting perspective to TCE. Clearly explain
the main constituent elements of RBV and the key arguments.......................................................6
Explain the resource based view of firm offers a contrasting perspective to TCE................6
What is RBV?.........................................................................................................................6
The difference between RBV and TCE..................................................................................7
Define what is meant by outsourcing and clearly explain why it is different from
offshoring. What you consider are the benefits and disadvantages of outsourcing?......................8
The definition of outsourcing.................................................................................................8
The reason why it is different from offshoring......................................................................8
The merits and challenges of outsourcing and explain why based of the theories in the context
of supply chain management..................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES:.............................................................................................................................12
Books and Journals...............................................................................................................12

INTRODUCTION
Definition of supply chain management
Supply chain management (SCM) can be defined as the process of managing the flow of goods
and services (Del Giudice and et.al., 2020). According to Saunders (1995), the majority of
supply chain management definitions have at least one feature in common: “they focus on the
external environment of an organization, with the boundaries of the latter defined conventionally
in terms of an entity identified legally as a company or some other form of business unit”
(Croom, Romano and Giannakis, 2000, p. 68). SCM also includes the process of transforming
the raw materials into final products. The SCM helps the business organization to manage the
overall work in proper manner and provide the goods and services to the customers on right time
(Koberg and Longoni, 2019). This keeps the customers satisfied and helps them to carry on the
activities properly. Proper supply chain management is beneficial for the business organization
and assist them to gain advantage over the competitors in a sustainable way (Gölgeci and
Kuivalainen, 2020). Also, each and every business organization is suggested to hedge supply
chain disruption risk by adopting flexibility and diversification in order to manage the
unpredicted grand challenges such as global pandemic (McMaster and et.al., 2020).
Name a range of theoretical contributions to strategic supply chain management
An essential part for publishing in predominant SCM journals is theoretical contribution such as
resource-based view (RBV), transaction cost economics (TCE) theory, stakeholder theory and
institutional theory. Furthermore, the adoption of new approaches, research of underexplored
areas in SCM, and testing of recently produced structures could develop more theoretical
contributions (Touboulic and Walker, 2015). In this paper, we focus on the theoretical
contributions of RBV and TCE theories related to SCM process.
Transaction Cost Economics (TCE) is one of the important theories that are related to supply
chain management, however, TCE looks at individual transactions, whereas SCM takes a larger
systems approach, grouping and managing connected transactions as chains (Williamson, 2008).
TCE is a theory that works on effective governance of the transactions that are related to

exchange relations in general. It helps to check the theoretical foundations in order to manage the
supply chain in efficient manner (Huo and et.al., 2018).
Another theory that contributes to supply chain management is RBV of a firm shows the
performance of the firm that is determined by the resources at its disposal. The resources of the
firm such as human resources are important and help them to gain advantage over the
competitors, which also reveals a classic concept of business success and power (Collins, 2021;
Touboulic and Walker, 2015). There is important role of understanding the resource based view.
It assists the firm to know about all the requirements in managing their supply and completing
the work effectively (Chahal, Gupta, Bhan and Cheng 2020). In supply chain management there
is key role of resources that will help the firm to reach the customers timely and with quality
products. The use of proper resource manages the overall work of the firm and gain competitive
advantage (Ramon-Jeronimo, Florez-Lopez and Araujo-Pinzon, 2019).
There is a process of hiring another party to carry on the non-core operations of the company and
that is called outsourcing (Akbari, 2018). Also, outsourcing has been one of the essential global
supply chain in the past 25 years, therefore, research into supply chains and outsourcing has
surged exponentially (Akbari, 2018; Akbari and Hopkins, 2016). Therefore, as discussed above,
we may assume that all the decision that are taken by the firm must consider supply chain
management theory which could be beneficial for the sustainability and success of the firm.
Provide the roadmap
In the starting of this paper there is discussion related to understanding the meaning of
transaction cost analysis. Afterwards the main elements and concepts regarding TCE are also
mentioned. Various contracting mechanism that are supported by TCE theory are important part
of this paper. In the second part of this paper, the RBV of a firm is analyzed in contrast to TCE.
Afterwards the analysis of RBV with its proper definition is evaluated in this paper. The
difference among TCE and RBV in relationship to business organization is explained in this part.
The concept of outsourcing with its merits and challenges is evaluated in this paper and the same
is being differentiated with offshoring is discussed in the end.