CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This chapter analyses the theoretical and empirical literature from other researchers on supply chain management practices, organizational culture and performance of Kenyan fast moving manufacturing firms. Also, it covers the conceptual framework assessing the relationships of the independent and dependent variables. Finally, this chapter carries out a critical review of the pieces of literature and establishes the research gaps.

2.2 Theoretical Review

A theory is defined as ideologies or declarations that explain a given occurrence or event, particularly, one that has been examined before or is extensively accepted and can be used to provide predictions for natural predictions. Theories provide analytical tools that can be used on making, explaining and understanding prediction concerning a particular phenomenon (Lozano & Valles, 2013). A formal theory is meaningless but only makes sense after being accorded a semantic component after being applied to some context. This study will rely on the following theories; resource-based theory, system theory, lean production theories, and the theory of constraints.

2.2.1 Resource Dependency Theory

Resource Dependence Theory, promoted by Nienhüser (2015), is the study of how external resources affect the performance of an organization. The productivity of the tactical and strategic management of a firm relies on the acquisition of external resources. The publication of the External Control of Organizations: A Resource Dependence Perspective in the 1970s marked the formalization of this theory this is despite having vital importance (Nienhüser, 2015). This theory bears implications in the procurement effectiveness of the buying firms especially in the tapping into the purchasing relationship. Casciaro and Piskorski (2014) assert that this theory highlights purchasing as an essential element in the practices of supply chain management. Further, the theory argues that actors lacking in vital resources will work toward establishing beneficial relationships that will aid in the acquisition of new resources.

To remain in business buyers rely on suppliers to acquire external resources as well as sellers who increase access to precious markets. Besides, through reducing the dependence levels organizations try to take control of their operations or try to be competitive by increasing the dependence of other organizations on them. Within this viewpoint, organizations are believed to be coalitions that alert their structure and patterns of behavior to aid in the acquisition and maintenance of the required external resources. By reducing an organizations dependence on other or by increasing the reliance of others on it, organizations successfully acquire external resources needed. Casciaro and Piskorski (2014) assert that this type of modification help organizations to consolidate power. The Resource Dependency Theory has two basic assumptions; competencies and resources are distributed heterogeneously among organizations; and competencies and resources are imperfectly mobile, which differentiates firms and maintains stability (Casciaro, & Piskorski, 2014).

2.2.2 System Theory

Systems theory involves the interdisciplinary study of systems with the aim of expounding on the ideologies that can be functional to different types of systems at different levels of research (Haddad et al., 2012). This theory is not assumed to be a specialized system thinking; otherwise as an objective outcome of systems science. This theory emphasizes the generalization value across a broad range of systems thus it is applicable in this study to indicate the management of operational supplies and system management in distribution. Various fundamental ideas formed the basis of the systems view, and for example, all events can be explained by a web of relationships among a system, or elements. Secondly, all systems are defined by a universal property, behavior, and pattern that can be analyzed by an observer. According to Shaw (2011), this situation can be used in the development of insights into the behavior of complex events and move towards the unification of science.

Haddad et al. (2012) assert that a referential system comprises of activist groups that interact or interrelate during the distribution practices within and outside of an organization. Concerning the supply chain management field, the fundamentals of the System Theory combine the different elements of the complex supply chain. These elements include financial, material, knowledge, capital and human resources that create a subsystem which acts as part of a more significant system of the supply chain. According to Shaw (2011), the System Theory asserts that for an all-inclusive outlook it must be applied to provide insight on the external and internal factors that can be determined by the supply chain performance of an organization concerning its distribution levels.

Heinze (2013) affirms that the System Theory explains how different parts of an organization are interrelated and how the change in a particular area possesses rippling effects. According to Haddad et al. (2012), an organization can be defined as systems that interact with their environment. To adapt to the changes in an environmental organization continuously affect the balance of equilibrium. This theory is built on the premise that all elements of an organization are...