This section analyses the relevant literature on the impact of supply chain management on small and medium enterprises’ financial performance. This includes a brief historical background and definition of supply chain management and financial performance. This chapter’s godevelopshe conceptual framework, theoretical framework, and empirical review are used in the study inregardingach variable in the study. This chapter also provides a critique of the existing literature relevant to the study and a highlight of the research gaps that the researchers identified. Lastly, a brief summary of all the chapters’ headings is given which concludes this chapter.
2.2. Theoretical Framework
A theoretical frame work comprises of several concepts as well as theories with a reinforcement of scholarly supporting reviews regarding the topic of study (Quinlan et al., 2019). The models in form of theories thrive towards explaining, predicting and even critiquing concepts explained and all these are done in line with the topic of study (Atanassova & Clark, 2015). Through a theoretical framework, there is bound to be a structure formed that proves relevant to the statement of the problem (Quinlan et al., 2019).
There are many reasons as to the need for a theoretical review in any study. The first importance lies with the fact that a theoretical framework consists of concepts, together with their definitions and reference to relevant scholarly literature that proves relevant the topic of study (Atanassova & Clark, 2015). Similarly, it allows the researcher to conceptualize the study in a broader context (Atanassova & Clark, 2015). It also connects the researcher to the existing knowledge through guidance by relevant theory by providing the basis of the research and choices of research methods (Quinlan et al., 2019).
It also specifies the key variables that influence a phenomenon of interest and highlights the necessity to examine them and evaluate what circumstances they might differ (Quinlan et al., 2019). Therefore, it limits the scope of the relevant data by focusing on a specific variable and defines the view the researcher should take in analyzing and interpreting the data to be collected (Quinlan et al., 2019) . It also facilitates understanding concepts and variables as per the given definitions and builds new knowledge (Quinlan et al., 2019).
2.2.1. Resource Based View Theory
This theory was developed by Prahad and Hamel in the period between 1980s and 1990s. The resource-based view is a model that sees resources as key to superior firm performance which enables the firm to gain and sustain competitive advantage (Hoskisson et al., 2018). This theory argues that organization should look inside the company to find the sources of competitive advantage instead of looking at competitive environment for it (Ruivo et al., 2015). According to RBV, it is much more feasible to exploit external opportunities using existing resources in a new way rather than trying to acquire new skills for each new opportunity (Hoskisson et al., 2018).
RBV holds that sustained competitive advantage can be achieved more easily by exploiting internal rather than external factors as compared to industrial organization view (Ruivo et al., 2015). The sustainability of any competitive advantage depends on the extent to which resource can be imitated and developed over time (Hoskisson et al., 2018). Strategies can be very difficult in practice thus there’s a need to enhance good managerial effort in identifying, understanding and classifying core competencies (Hoskisson et al., 2018).
A competitive supply chain in the market can be characterized by efficient use of resources which would lead to lower product cost, better quality of the product, faster response time and eventually higher market share (Storey et al., 2016). Core competencies creates strong competitive advantages that apply to business development in the long run (Hoskisson et al., 2018). Any enterprise or company possess resources and capabilities which is essential to allow it compete favorably in the market (Ruivo et al., 2015).