A study of the dynamic capabilities along the fast fashion supply chain in China

Abstract

Purpose This research examines the significance of dynamic capability [DC] possession within the fast fashion [FF] industry in China, while supporting the notion that dynamic capabilities and an agile supply chain will improve a firm's competitiveness in a dynamically competitive environment. Fast fashion firms are a ubiquitous, relatively young genre of retailers dominating the market with rapid production of on-trend merchandise at bottom-dollar prices, thus able to move with agility and swiftness in the face of approaching market changes. The FF sector is increasingly important in modern competitive, globalised and deregulated environments characterized by shrinking product lifecycles, innovative developments, and dynamic markets. Capabilities are required to improve the speed, efficiency, and cost of the supply chain for modern apparel production activities with a responsive decision-making environment to maximize the production networks and systems across the matrix of supply chain members. To fulfill these requirements, an implementation of integration, reconfiguration, and learning capabilities among internal firm factors and external market factors is required: - External integration mechanisms which link information about the changing marketplace and future customers as well as market competition. - Internal integration mechanisms which facilitate extensive coordination between specialized organizational subunits for the purposes of implementing new concepts. Design/methodology/approach The aim of the research study is to measure the extent of DC adoption, by looking at the various activity levels and identifying possible correlations between external and internal factors in firms along the FF supply chain. Further, a correlation between DC and supply chain agility [SCA] is introduced. The measurement was carried out by investigating the self-reported perceptions respondents have about the DC being implemented and used within their current supply chain management practices. To provide a more in-depth level of understanding, this research consists of a two-phase study encompassing a qualitative multiple-case study and a quantitative questionnaire. The first research phase employs a qualitative methodology to interview and explore the elements of DC within the FF industry with industry experts. Combined with literature review, exploratory findings show the factors of DC to be functional, organizational, and technological. Phase 2 follows with a quantitative methodology to test related hypothesis drawn in Phase 1. Findings This research implements a DC perspective to investigate the path-dependent nature of procurement capabilities. Findings within this research on the FF supply chain in China support prior studies on DC which indicate positive model development correlating integration capabilities for DC possession in the FF supply chain. Further, FF firms show a strong correlation between DC and their internal and external information capabilities. This research yielded no correlation between learning capabilities, reconfiguration capabilities, and integration capabilities to managerial decision making, external information capabilities, and internal information capabilities. Finally, correlation was made between DC in FF firms and the possession of SCA. Practical implications Gaps exist in current research that would allow business organizations to effectively adopt and use DC to either 1) compete against FF firms or 2) improve business competences and capabilities, thus allowing them to move with increased SCA. Therefore, this research has three main practical outcomes: 1) development of a model representing the overall DC of firms working in the FF supply chain; 2) guidance on specific FF processes and methods; and 3) guidance on the types of information capabilities correlated to DC in the textile and clothing industry. Originality/value Academic insight into the FF industry remains relatively limited compared with the massive volume of revenue generated by this powerful business trend. In particular, research in this area remains limited with regard to the DC of firms along the FF supply chain. Efficient and effective textile and apparel production considers far more than the manufacturing-based element of the business. The communication among supply chain members, agility, capabilities and the ability to develop capabilities, internal firm factors, and external market factors all affect the supply chain performance of clothing retailers. Therefore this research includes the internal and external elements of a firm and is the first to explore the DC of FF, the correlation between SCA and DC in the apparel industry, and seemingly the first to quantify DC in the textile and apparel industry and the FF industry.