Global Supply Chains and Resource-Based Theory

Recently, Singapore’s Prime Minister Lee Hsien Loong cautioned the US decision to curb the supply of microchips to Chinese companies could have very wide ramifications. In systems thinking, ‘no man is an island’, and all products are assemblies of many components made by many manufacturers. In short, the US decision is disrupting the global supply chain - a multitude of suppliers and customers.

Many of them depend on the stable supplies as their strategic resource. For a supply capability to become a resource of a business, there must be cooperation, interdependency and trust of its partners to form a competitive network. Example, it is Apple network verses other networks.

This may be further explained by resource-based theory?(RBT) - that a firm finds its competitive advantage through the use of its resources to generate sales or margins and/or retain more customers than the competition. Wernerfelt (1984) wrote the seminal paper on resource-based view, and Barney and Ketchen (2011) argued for resource-based theory.

The US decision is to lure manufacturing activity back home or at least closer. But time will reveal the outcomes. One thing is sure - the global supply chains will continue to evolve. This is because competitive businesses tend to seek tangible and intangible resources and capabilities that are difficult to imitate, rare, and cannot be substituted.

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