Exploring efficiency and effectiveness in the supply chain A conceptual analysis

Firms struggle for efficiency and effectiveness. Strategies involving collaboration between actors and integration of activity chains are reliant of factors that firms do not have direct ownership and control over. This has implications for strategizing, setting the goals and measuring performance. Efficiency and effectiveness are often used to describe performance. From a resource dependence perspective efficiency is defined as an internal standard of performance and effectiveness as an external standard of fit to various demands (Pfeffer and Salancik 1978). In supply chains efficiency improvements are e.g. Just-in Time production while effectiveness is achieved through customer orientation and innovation. The conceptualization of efficiency and effectiveness has its roots in system theory. Definition of the system is difficult for a quasi-organization as a supply chain that has blurred structural boundaries. Defining the system as processes of activities implies that the meaning of and the relation between efficiency and effectiveness might change as well. This is a conceptual paper with a purpose to describe and analyze efficiency and effectiveness as constructs based upon activity systems. The analysis of efficiency and effectiveness involves the meaning, the use and the relations between efficiency and effectiveness. We will use the resource dependence perspective’s definitions and recent development and usage of efficiency and effectiveness from IMP literature in the description. The analytical framework is in three steps: Dualism, duality and beyond (Ericson 2004). First, efficiency and effectiveness are described as two independent constructs, i.e. as a dualism. Thereafter efficiency and effectiveness will be described as two interrelated constructs, i.e. as a duality and finally we will analyze the constructs beyond the duality applied to a supply chain context. The framework illuminates that efficiency and effectiveness cannot be seen as independent in a supply chain context with focus on processes. This as the evaluation is neither of a relation nor of an organization but of an organization of relationships. In the analysis of efficiency and effectiveness the main difficulties are time, boundaries, and interdependencies.