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Effects of Supply Chain Management on Tomato Export in Iran: Application of Structural Equation Modeling

Although Iran is one of the top 10 countries in the world thatproduce tomatoes, the level that they are exported into theglobal market is low. This issue may have resulted from a majorproblem within tomatoes’ supply chain management. Thispaper aims to develop an empirical model of the supplychain management (SCM) of tomato companies. Throughoutthe reviewed literature, a SCM construct with different six indicators has been developed, including information sharing,long-term relationship, cooperation, quality, flexibility, anddelivery. In this study, the influence of the SCM componentson tomato export was identified through the use of empiricaldata that were collected from 20 different tomato companiesin Northeast Iran. Using structural equation modeling, themajor elements of SCM were found to have significant impactson the export of tomatoes. The results also showed that information sharing, cooperation, flexibility, quality, and deliveryhad significant positive effects on the export of tomatoes.
Export is considered to be an indispensable activity of business developmentin developing countries (Casillas, Acedo, &Barbero, 2010; Gassmann,Khodorkovsky, Friedler, Dubowski, & Olsson,2014; Sousa & Bradley,2008). There are different studies that focused on the effects of variousfactors in order to improve export activities, such as the studies conductedby Chi and Sun (2013) in China; Stoian, Rialp, and Rialp (2011) in Spain;Bloemer, Pluymaekers, and Odekerken (2013) in the Netherlands and Villar,Alegre, and Pla-Barber (2014) in Spanish and Italian manufacturing companies. In this regard, considering various components of supply chainmanagement (SCM) and understanding their role in the successful perfor-mance of different firms in different business activities, like export, havebecome a necessity in order to improve their competitive place in today’sworldwide environment and to increase profitably (Cachon& Fisher,2000;Karimi& Rafiee,2014).
The SCM, in its essence, considers that companies establish alliances withpartners in a common chain in order to enhance their competitive privilegesthat are exposed by leading the operational function of all partners involvedin the chain (Miguel & BritoLuizArtur,2011; Van Acker &Witlox, 2010; VanAcker, Witlox, & Van Wee,2007). There are many previous studies thataddress supply chain practice in different sectors Donlon (1996), Tan,Kannan, and Handfield (1998, 2002). Li (2002), Chen and Paulraj (2004),Min and Mentzer (2004), Hingley and Sodano (2009) and Oehmen,Ziegenbein, Alard, and Schönsleben (2009) all categorized various constructsof SCM practices and supported their associations with firm performance.
However, few studies have focused on the SCM practices in the agriculturesector. For several reasons, Iran is an interesting country in this case,especially with regard to the export of tomatoes. The country is one of themajor areas that produce tomatoes and its processed products (e.g., ketchup)due to its suitable climate for tomato growth.Figure 1shows the quantity ofexported tomatoes by producers in Iran. According toFigure 1, the exportmarket of tomato products in Iran fluctuated significantly, as the exportquantity slightly increased in 2001, then dramatically fell from 150,000 to5000 tons between 2007 and 2009, and then increased significantly to 250,000in 2010. The highest quantity observed (2010 is the latest data available)compared to the previous years. Already, around 90% of raw tomatoes aredelivered to tomato processing companies (Mazehary& Yazdany,1993) anda noticeable 60% of the total production and export in the country comesfrom the Khorasan province located in Northeast Iran (Figure 2).


There are many companies that actively buy and sell tomatoes products,causing a competitive environment both inside and outside of the country.
The purchasing departments within these companies ought to establishcommunication with farmers who are the suppliers of the raw tomato. Astoday, companies realize that their purchasing departments can work moreeffectively by increasing the efficiency and effectiveness of their performance.
Therefore, they have changed their purchasing strategy and try to find amore efficient approach when purchasing their goods. Given that, purchasingdepartments are seen as an important part of the company that complieswith itsstrategic objectives. For this purpose, a strategic purchase approach is neededto implement strategic planning when purchasing goods; meaning that establishing a strategic relationship with suppliers is necessary in order to accesscompetitive advantages. In this regard, SCM is considered as an essentialapproach for companies to achieve these objectives (Vajdyvahid,2004).
AsFigure 3shows, the SCM encompasses producers, wholesalers, processors, retailers, and final consumers. Of producers, there are three groups,including contract, non-contract, and farmers without a contract and a fewwholesalers who buy tomatoes directly from producers and sell them to theprocessors. Industrial Processors buy fresh tomatoes from wholesale or con-tract farmers and are able to increase the value of those tomatoes by turningit into ketchup, sauce, etc. A portion of the final products will be exportedand another will be sold to consumers in Iran. Retailers usually buy the freshtomatoes fruit squares and processed tomatoes from industrial processors.

Then, these products are presented to the final consumers who usually buyfresh or processed tomatoes from retailers.
During the past 10 years, tomato production in Iran has always been 20%higher than the demand.
The results from a survey on tomato trade showthat the policy reform process affected the tomato exports in Iran. Especiallyduring 2007–2009, tomato exports have surprisingly been reduced to aroundzero (seeFigure 1). The figures also demonstrate that although Iran has beenone of the top ten countries that produce tomatoes in the world, with 600,000tons in 2012 (FAOSTAT, 2012), it had a low share of export in the globalmarket and was not in the top ten list of the major exporters anymore. Thecountry ranked 13th in terms of the quantity of tomatoes exported in theglobal market (FAOSTAT,2011). This is an issue and can be considered as aserious problem in tomatoes’ supply chain management. This paper aims todevelop an empirical model of supply chain management for tomato companies. Accordingly, this study tries to shed light on the relationship betweenSCM and tomato’s export in order to investigate the impacts of SCM onexports. Understanding the relationship between SCM components andexport can provide useful information on how SCM is able to assist theperformance of industrial tomato producers as well as promoting the position of Iran as an exporter of this product.
The next section of this paper presents a brief discussion on factors thataffect SCM practices by reviewing literature that addresses supply chainconstructs in order to determine the components most associated withSCM. Next, the applied hypotheses and the methodology will be presentedto conduct the survey. Afterwards, an analysis of the results and discussionwill be presented, followed by the implications of the study.
SCM Constructs
In this paper, the key factors of SCM should be identified first. To do so, wereferto the studies that have been conducted so far with regard to the SCMand its components. There are many previous studies on supply chainpractice in different sectors. The study by Donlon (1996) identified supplierpartnership, continuous process flow, cycle time compression and information technology sharing as the main aspects of SCM. The study by Tan,Lyman, and Wisner (2002) recognizes just-in-time (JIT) capabilities, integration of supply chain activities, geographic location, customer needs, andinformation sharing as major components of SCM. More recently, supplychain practice was empirically tested by Li (2002). He identified sevenelements of supply chain practices, including customer relationships, strategic supplier partnerships, lean system, information quality, information sharing, trust, and commitment. The two following publications contributed tothe determination of the key elements of SCM: Chen and Paulraj (2004)represented a SCM framework that consisted of a supply network structurethat is identified by powerful interactions between involved partners, mini-mum vertical integration, a lack of power based connections; long-terminterplays, managed with efficacious relationship, cross-functional teams,planning procedures, and early engagement of supplier in major projects;and logistics integration. Min and Mentzer (2004) also considered SCM as asecond order construct that includes agreed upon visions and goals, information sharing, risk and reward sharing, cooperation, agreed supply chainleadership, long-term relationship, and process integration. Combiningboth studies, as well as taking into account other influential contributions,
Miguel and Brito (2011) recently suggested five constructs of present SCMs:information sharing, long-term relationship, risk and reward sharing, cooperation, and processes integration. A summary introduction of each of theSCM dimensions is provided next.
Information sharing is the ongoing flow of communication that arises,formally or informally, among partners in order to achieve enhanced planning and control within the chain (Chen & Paulraj,2004; Mentzer et al.,2001; Wilson & Carlson, 2004). Despite the importance of informationsharing, the significance of its effects on SCM depends on the type of sharedinformation, when, how, and with whom it is shared (Peng, Schroeder, &Shah, 2011). Companies should consider their information as a strategicproperty and make sure that it flows quickly, without delaying and distortion(Karimi& Rafiee,2014).
The long-term relationship prefers to the commitment of the supply chainmembers to the relationship by investing in resources and endeavors thatmaintain the strategy (Cooper & Ellram,1993). Good relations among themembers of the supply chain, including customers, are necessary for thesuccessful performance of SCM practices (Jie, Parton, & Cox, 2013).
Moreover, the analysis of the internal and external studies showed thatalthough the focus of the previous studies was on long-term relationships,the influence of long-term relationships on supply chain management hasbeen noticeably ignored (Fynes, Voss,& Búrca,2005). Companies implementing SCM need to continuously monitor the long-term relationshipcomponents of the supply chain. Some of the main benefits of holdinglong-term relationships are comprised of shared significant informationwith involved members, and sharing a specified amount of trust and promoting informed management (Griffith, Harvey, &Lusch, 2006).
Risk and reward sharingis based on a situation where companies shareinvestments on assets, project costs and revenues, and losses through a win-win relationship (no power), (Chen & Paulraj,2004; Cooper &Ellram, 1993;Mentzer et al.,2001).
Cooperationmeans that all structures devote supplementary resources todesign and conduct strategic processes or plans to cope with disagreements(Chen & Paulraj,2004; Fritz &Schiefer, 2008; Mentzer et al., 2001).
Process integrationconsiders that organizations will work together in orderto have a sequential and effective flow of substances and resources (Chen &Paulraj,2004; Mentzer et al., 2001).
Previous studies in different sectors over the years, as well as the studyconducted by Miguel and BritoLuizArtur (2011) that were discussed above,highlighted the significance of the following variables for evaluating theperformance of the supply chain management: Information sharing, long-term relationship, risk and reward sharing, and process integration.
However, these are not the only influential factors that may indicate therole of SCM in the performance of organizations. Flexibility, quality, anddelivery are also some other crucial aspects of SCM performance that need tobe taken into consideration when measuring SCM performance.
Flexibilitydefined as the capability of a system to accomplish perceptiveand responsive adaptations of its arrangement in order to deal with internaland external doubts. The outstanding significance of flexibility has beendemonstrated in different industries by Vickery, Clanatone, and Dro¨Ge(1999) and Martinez and Pérez (2005) who showed that flexibility itselfand supply chain flexibility in particular are substantial turnkeys to thefirms’ financial implementations.With regard to the quality, Levy (1998) considered the challenge of thetotal quality interaction in the supply chain as a large shift in paradigm. Inthe traditional paradigm, companies are interested in company-focusedissues, like the quality of the product, price, and delivery time. In the newsupply chain quality paradigm, supplier–customer links and co-created quality goods have gradually expanded as the main subject matters. Madu, Kuei,and Jacob (1996) and Lin, Chow, Madu, Kuei, and Yu (2005) found asignificant causal relationship between the quality dimensions, including theinvolved partners’ satisfaction, customer satisfaction and employee servicequality, and organizational efficiencies.
There are threedeliverydimensions, including delivery speed, productionlead-time, and delivery reliability (Coyle, Bardi, & Langley,2003). Miguel andBritoLuizArtur (2011) cited that delivery elements consist of about sixaspects, including delivery time, on-time delivery, production cycle time,new products time to market, time to solve customer complaints, andcustomer order processing time. Miguel and Brito (2011) compared thesesix constructs with 43 empirical papers published between 1996 and 2007 insignificant journals of operations management (POM, JOM, and IJOPM).
Based on the literature review, Miguel and Brito (2011) cited that information sharing and cooperation were the two dimensions most studied (33%each), followed by long-term relationship (23%) and process integration(19%). Risk and reward sharing were less studied (only 13%) and the scalesutilized to measure this construct had less things in common with each other.
In summary, the literature illustrates SCM implementations from a rangeof the various perspectives with one similar goal of eventually enhancing theperformance of organizations. However, so far a simultaneous considerationof all the mentioned factors has been neglected. This study seeks to addressthese issues. Consolidating and reviewing the literature and taking intoaccount other influential contributions, in this study, six distinctive dimensions of SCM, including information sharing, long-term relationships, cooperation, flexibility, quality, and delivery, were selected as influential factorswhen measuring the effects of SCM on tomato export. To the best of ourknowledge, no study has examined these critical factors of SCM and theircausal connections to the export of tomatoes in Iran. Such a connection isexamined in this study.
Study area
The Khorasan Razavi province, which is located in the middle of theKhorasan province, Northeast, Iran, was considered as the study area. Oneof the major agricultural products of this province is tomatoes. Mazhari,Naseri, and Mohammadzadeh (2013) reported that according to theInformation Center of Khorasan Razavi Agriculture Organization (2007),the total amount of tomatoes produced in this province was around617,129 tons, which accounts for about 10% of the entire province’s production. Major cities that cultivate this crop are Mashhad (the capital of theprovince), Chenaran, and Torbat Jam (Mazhari et al.,2013); among whichMashhad holds the largest area under cultivation (31%) and the production(33%) of this crop. In this study, with regard to the large number of tomatoprocessing plants in the Khorasan Razavi province, Mashhad city was chosenas the study population.
Survey design
Using census method, 25 tomato plants were chosen in the Khorasan Razaviprovince. A census study occurs if the entire population is very small or it isreasonable to include the entire population in the study. It is called a censussample because the data are gathered from every member of the population.
From the total 25 questionnaires, 20 questionnaires were sent back. A questionnaire that contained two main sections was developed: the objective ofthe first section was to gather information about SCM and identify the supplychain components. This part of the questionnaire consists of six mainindicators and 19 items, which were extracted from the pertinent literature(Table 1). The second section was designed to measure the performance oftomato processing plants in exporting (Table 2). All the questions werescored on a 7-point Likert scale (totally disagree = 1, disagree = 2, almostdisagree = 3, no opinion = 4, almost agree = 5, agree = 6 and totallyagree = 7).
After completing the questionnaire, the data were analyzed by SPSS(version 19) and AMOS (version 18)

Reliability of questionnaire
The reliability of the main indices of the study was confirmed usingCronbach’s alpha coefficients as shown in Table 3. The results of the tableconfirm the reliability of each indicator.
Research hypothesis and conceptual model
Six hypotheses were formulated and tested in this study:
H1:Information sharing has a positive effect on export.
H2:Long-term relationships have a positive effect on export.
H3:Cooperation has a positive effect on export.
H4:Flexibility has a positive effect on export.
H5:Quality has a positive effect on export.
H6:Delivery has a positive effect on export.
A conceptual framework has been developed in this study in order to postulatethe causal links between SCMand tomato export. This enables the use of statisticalmodels to evaluate and identify the SCM factors that may influence export.
Therefore, the structural equation modeling (SEM) technique was used to testthe proposed hypothesis. SEM has been substantially considered in social sciencesand is a professional multivariate statistical method through which a scholar canestablish theoretical concepts; analyze multivariate interactions between andwithin observed (that can be directly evaluated) and latent (that cannot be examined directly) indicators; and confirmproposed causal connections according to acouple ormore structural equations. Ingeneral, SEMis a combinationof measurement and structural models. Based on the measurement models, the researcherdefineswhichof the dimensions are the observedvariables or indicators andwhichis a latent variable. Based on these structural models, the correlation and variouseffects of different variables can be determined. In fact, structural models deal withthe direct and indirect connections between latent variables (Lin et al.,2005). Thus,these models can process several tasks at the same time, including assessmentindicators, direct and indirect impacts, measurement acceptability, and quality aswell as defined relationships between determinants (Daneshvar&Farahmand,2012). In this paper, the latent variables are SCMand export. A latent variable is avariable that cannot be observed directly and must be inferred from measuredvariables. Latent variables are implied by the covariance among two or moremeasuredvariables. They are alsoknownas factors (i.e., factor analysis), constructsor unobservedvariables. The export variable is calleda latent variablehere since theexport data of companies were not available separately.
Structural Equation Model (SEM)
Figure 4shows the summary results of the measurement and the results oftesting the hypothesis of the structural relationships among the latent variables. In this figure, information sharing, long-term relationship, cooperation, flexibility, quality, and delivery are considered as the latent variablesthat make up the SCM. In measurement models, error variables e1–e6 arerelated to a dependent latent variable and d1–d19 error variables deal withthe independent latent variables. In contrast, in structural models Z1 and Z7are error variables. There are seven measurement models in this figure;measurement models related to export, information sharing, long-term relationships, cooperation, flexibility, quality, and delivery.
In order to evaluate the structural model, several fit indices were utilized toensure that the results were acceptable and consistent with the underlyingtheory. There are over 30 model fit indicators that are usually identified inthe Amos software output, and the most important of which were utilized totest the goodness of fit for the measurement model. Table 4illustrates thedegree of fit indices for the structural model. As shown in the table, thestructural model analysis had a fair to good fit. The Root Mean Square Errorof Approximation (RMSEA) is a parsimonious index that corrects the model’scomplexity. A RMSEA less than 0.05 is evidence of a good model. The RMSEAestimates for the current study were 0.00, which shows a reasonable fit. Valuesclose to 0.90 or 0.95 for the Tucker-Lewis Index (TLI) reflect a good model fit,which is not the case in this study where it is estimated at 2.32. These indices,however, are more heavily impacted by a relatively small sample size, and, asByrne (1997) pointed out, the comparative fit index (CFI) is more appropriatewhen the sample size is small. The CFI was used tomake a comparison betweenthe proposed models and baseline models. The CFI values near or higher than0.9 provide a good index for the model fit. In this model, a value of 1 expresses agood model. According to these results, the data fit the model quite well.


Path analysis
There was a restriction in the structural equation modeling due to the smallsample size. Therefore, path analysis was used to determine the direct andindirect relationships between different variables. Figure 5shows the resultsof the path analysis.
Five of the study hypotheses are supported by the results of the pathanalysis. As shown inFigure 5, information sharing, cooperation, flexibility,quality, and delivery are significantly correlated with“export”, which con-firms H1, H3, H4, H5, and H6, among which, “flexibility”has the highestimpact (0.23) and the “quality” of SCM has the lowest impact (0.04) onexport. The relationship between cooperation and export (H3) as well assupply chain delivery and export (H6) are significant at a level of 0.05 with anestimate of 0.12 and 0.8, respectively. Furthermore, the results do not supportthe hypothesis that long-term relationships have any direct positive impactson export (H2), but rather that it has a negative effect. As a result, H2 isrejected. The figure also supports the existence of positive relationshipsbetween all SCM dimensions. Accordingly, various aspects of SCM developedstrong, sometimes extremely strong, relationships among each other, butnone of them can be considered identical. These results are further discussedin the next section.
Discussion and conclusion
This study analyzed the relationship between SCM and the performance oftomato companies in the export of tomato products by identifying the maincomponents of SCM; which is comprised of six main dimensions (information sharing, long-term relationship, cooperation, flexibility, quality, anddelivery). To do so, this paper presented a review of the existing literaturein order to define the main dimensions of the SCM. At the end, a conceptualframework was developed to show the connection between SCM variablesand the export of tomatoes. The suggested model articulates the significanteffects of different essential SCM variables on tomato export. Major findingsof this research and their implications are dealt with in the following discussion of this section.
The first finding concerns the positive impact of information sharing ontomato export, which is in line with the studies conducted by Walton (1996),Garvin (1987), Jie, Parton, and Cox (2007), Karimi and Rafiee (2014), whofound a significant relationship between the level and quality of informationsharing and the company’s performance. However, Krause, Handfield, and
Tyler (2007) found weak support for the impact of information sharing onthe overall operational performance.
While the second finding of this study, with regard to long-term relation-ships, showed a strong negative relationship with tomato exports and hasbeen identified as a key SCM driver that affects firm performance in the SCMliterature (Min &Mentzer, 2004). Our results show that there is a weakrelationship between producers of tomato in Iran’s tomatoes processingindustries, which negatively affect the export performance of tomatoes. Inthis regard, Ural (2009) found that information sharing has a positiveinfluence on export performance of small and medium-sized firms inTurkey. He concluded that exchanging information between exporters andimporters promote the exporting implementations of Turkish entities. Ifexporters clearly communicate with importers and exchange official andprivate information and strategic matters, it will enhance the successfulfunction of export activities. Long-term relationships are likely to comprisecollaboration, target, and risk sharing. Our findings also showed that long-term relationships had a positive connection with other SCM dimensions.
For instance, long-term relationships have a strong positive correlation withthe delivery and flexibility aspects of SCM, which consequently influencefirm performance as well. Similarly, Ural (2009) stressed that when exportersare informed about importer requirements according to the assessments ofthe perceptible related features of the product, such as delivery or service,their export performance will be more efficient. Ernst (1987) also found thatlong-term relationships assist the exchange of information and methods inan effective manner, which results in a simpler delivery flexibility. It has alsobeen mentioned that long-term relationships and efficient information-sharing between the various sectors of an exporting structure, like deliverysystems and distribution methods, have a positive effect on the flexibility ofdelivery functions (Vickery et al.,1999). Therefore, considering the negativerelationship between this dimension and tomato export in our study, it canbe noted that the goal of increasing the export of tomato products cannot beachieved without strengthening this kind of relationship. It is more effectiveif export managers cooperate with the related internal, as well as external,units and accept the priority of long-term relationships over the possibleshort-term approaches in order to achieve a successful export performance oftomato products.
The third outcome in connection with of the structural equation modelsupports the conclusion that the effect of cooperation on export is positive.
This finding is also consistent with the findings of Carr and Pearson (1999)and Chen, Paulraj, and Lado (2004). Although these studies showed apositive relationship others reported a weak connection between cooperationand firm performance. Turnbull, Oliver, and Wilkinson (1992) reported thedifficulties of the UK firms to reproduce Japanese cooperative implementations. Burnes and New (1997) notified their readers about the adverse effectsof overusing persuasive language when describing the advantages of cooperative connections. Combs and Ketchen (1999) determined that the effect ofcooperation on performance relies on the relationship context, whileVereecke and Muylle (2006) and Horta, Artur, and Brito (2009) found thatthere is only a poor relationship between performance and cooperation.
The fourth finding of this study confirms the existence of a significant andpositive relationship between the flexibility and export of tomatoes. Thisfinding is in line with many previous studies that found a positive relation-ship between supply chain flexibility and the performance of a firm (Agus,2011; Duclos, Vokura, &Lummus, 2003; Garavelli, 2003; McDowell, 2013;Vickery et al.,1999). Flexibility has been viewed as the ability of a supplychain to react to uncertainties (Das & Abdel-Malek,2003). Considering theincreasing competition in the export of processed tomato products amongexporting countries, as well as highly unpredictable consumer demand forsuch products, flexibility and the ability to change the type of productsproduced at various time intervals are very important. Flexibility helpsreduce the costs of switching from one product line to another. Therefore,Iran’s tomatoes processing firms should pay special attention to this variable,as it has a greater impact on export.
For the fifth finding, there is sufficient empirical evidence to support theexistence of a positive relationship between quality and delivery and tomatoindustries’ performance regarding export. Similarly, Miguel and Brito (2011)found a positive relationship between SCM implementation and operationalperformance in terms of flexibility, quality, and delivery. Nevertheless, ourfindings showed that the “quality” indicator has less influence on exportcompared to the other indicators. Therefore, Iranian tomato processingindustries need to increase their efforts to enhance the quality of tomatoprocessing if they want to be successful in the competitive global market.
Overall, the empirical results provided evidence of a positive impact ofSCM on the performance of tomato processing firms regarding export andconfirm previous empirical studies (Carr& Kaynak,2007; Karimi&Rafiee,2014; Lin et al., 2005; Miguel & Brito, 2011; Min &Mentzer, 2004) that founda positive relationship between the SCM and performance. The main con-tribution of the present study, however, resides in the relationship betweenthe SCM constructs and the export of tomatoes. By employing path analysisand structural equation modeling, this study illustrated the significant role ofSCM and the relationship between its components and the export of Iran’stomato processing industry.
These results help middle-line managers in the tomato processing industryto know which components and practices of supply chain management aremore important to focus on in order to improve the export of this product.
From the managerial point of view, the findings demonstrate the importanceof SCM in emerging economies and the fact that it can be a competitive assetthat the results in superior performance in all dimension simultaneously.
Future studies could focus on the role of each construct on supply chainmanagement performance. The studies could also try to further investigateon how Iranian tomato processing industries evaluate the performance oftheir supply chain and what significant constraints are emerge when implementing supply chain management and what kind of shifts should be madeto tomato supply chains in order to enhance their performance.
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