168 IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT, VOL. 65, NO. 1, FEBRUARY2018 The Fit Between Supply Chain Strategies and Practices: A Contingency Approach and Comparative Analysis Daniel Prajogo , Carlos Mena , and Anand Nair Abstract—This paper presents a contingency model that exam- ines the external links between the business environment and sup- ply chain strategies, and the internal links between supply chain strategies and supplier management practices. The research model theorizes that flexibility and low-cost oriented supply chain strate- gies should fit with the underlying business environments, and, in turn, supplier management practices (i.e., long-term relationships, supplier assessment, and integration) should fit with the chosen supply chain strategies. The dataset to test the research model was drawn from a survey of managers from 232 Australian manu- facturing firms, and comparative path analyses were employed to assess the fit among different business environments, supply chain strategies, and supply chain practices. The findings show that dy- namic environment has a better fit with flexibility strategy than low-cost strategy, while competitive environment surprisingly does not show a stronger fit to low-cost strategy than flexibility strat- egy. Additionally, the results show that while supplier assessment is important for both flexibility and low-cost oriented strategies, long- term relationship and logistics integration are more important for flexibility strategy than for low-cost strategy. The implications for theory and practice are discussed in the paper. Index Terms—Business environments, contingency theory, supply chain strategies, supplier management practices. I. INTRODUCTION M ANY STUDIES have examined the relationship be- tween supplier management practices and firm (buyer) performance. These studies consider long-term relationships [1]–[3], supplier assessment [5], [6], and logistics integration [7]–[10] as important elements of supplier management. While these streams of research have provided important theoretical and practical insights, they often adopt a deterministic approach which assumes a “one best way” perspective, overlooking the complexities of supply chains. An alternative perspective, which has received less attention in the literature, involves evaluating Manuscript received July 11, 2016; revised March 5, 2017 and July 12, 2017; accepted September 2, 2017. Date of publication October 17, 2017; date of current version January 18, 2018. Review of this manuscript was arranged by Department Editor J. Sarkis. (Corresponding author: Daniel Prajogo.) D. Prajogo is with the Department of Management, Monash University, Caulfield East, VIC 3145, Australia (e-mai: daniel.prajogo@monash.edu). C. Mena and A. Nair are with the Department of Supply Chain Management, Eli Broad College of Business, Michigan State University, East Lansing, MI 48824 USA (e-mail: cmena@broad.msu.edu; nair@broad.msu.edu). Color versions of one or more of the figures in this paper are available online at http://ieeexplore.ieee.org. Digital Object Identifier 10.1109/TEM.2017.2756982 how the relationships among supplier management strategies, practices, and performance are influenced by contextual vari- ables. This perspective implies that organizations need to adapt their strategies and practices to maintain their fit with changing contextual variables so as to attain higher performance [11]. This contingency perspective allows the investigation of the complex set of relationships among a firm’s strategy, its environment, and its supply base, which is the main focus of this study. Burns and Stalker [12] theorized that the fit between an or- ganization and its environment depends on the nature of the environment. The paper proposed that structures that maximize efficiency fit a stable and predictable environment while or- ganic structures that sacrifice efficiency for flexibility fit better in an environment characterized by rapid change. Fisher [13] extended this thinking to the supply chain area and proposed that functional products, characterized by predictable demand, fit with an efficient supply chain while innovative products, characterized by unpredictable demand, fit with a responsive and flexible supply chain. Lee [14] further developed this con- tingency view of supply chain strategies by adding supply un- certainty to Fisher’s [13] demand uncertainty model. The conceptual pieces by Fisher [13] and Lee [14] have in- spired a stream of contingency research in the supply chain. Some researchers have focused on the external fit between envi- ronmental contingencies and supply chain strategies (e.g., [15], [16]), others have centered their efforts on the internal fit be- tween supply chain strategies and practices (e.g., [9], [17], [18]) while a third group has concentrated on the fit between external contingencies and internal practices [19]. However, a question that remains unaddressed is: What drives firms to engage in cer- tain supply chain strategies and supplier management practices? This paper examines a contingency model of supply chain strategies and supplier management practices. In this model, we theorize that the business environment (in terms of dynamism and competitiveness) affects the choice of supply chain strate- gies (in terms of flexibility and low-cost) and these strategies, in turn, influence the choice of supplier management practices. Understanding the contingency aspects of supply chain strate- gies and practices is important given the various kinds that have been introduced in the past two decades. The accumulation of supply chain management (SCM) concepts might lead firms to think that they have to adopt all of these strategies and practices without recognizing the unique fit between the two elements 0018-9391 © 2017 IEEE. Personal use is permitted, but republication/redistribution requires IEEE permission. See http://www.ieee.org/publications standards/publications/rights/index.html for more information.