Abstract
Purpose – This paper aims to explore the extent to which four elements of the value chain –
marketing, research and development, procurement, and operations – are associated with product
quality and product innovation.
Design/methodology/approach – A survey of 194 managers of Australian firms, and multivariate
analysis using structural equation modeling was used to test the hypotheses.
Findings – The elements of the value chain differ in their association with product outcomes.
Marketing and production are related to product quality, but surprisingly while research and
development is related to product innovation, marketing is not. Procurement is related to both product
quality and product innovation.
Research limitations/implications – The paper shows that individual elements of the value chain
are related to specific competitive strategies and how these elements are related to each other,
suggesting the need to direct effort within the firm for better, targeted performance. The results are
limited by the sample size and geography of the survey.
Practical implications – Specific value chain functions tend to be associated with specific
performance outcomes. This suggests that managers might gain by targeting specific elements of the
value chain as their organizations strive for specific competitive goals.
Originality/value – This paper seeks to help managers and decision makers to assess the
relationship between the different attributes of the value chain and product quality and innovation. It
is often not feasible for managers to emphasize all the elements of the value chain simultaneously, and
this paper provides an important step in looking at these individual linkages.
Keywords Value chain, Quality, Innovation, Australia