Government Support and Market Proximity: Exploring Their Relationship with Supply Chain Agility and Financial performance

Abstract

The current paper presents a structural equation model with four variables (Government, Infrastructure, Proximity to market, and supply chain Agility) affecting the Financial performance of a company. Six hypotheses or relationships among variables are proposed, supposing that Government and market Proximity are key elements to achieve a greater Agility in supply chains, considering the regional Infrastructure to determine the impact on Financial performance in manufacturing companies. The model is validated with data from a survey applied to 225 persons in 65 manufacturing companies located in Ciudad Juárez, Chihuahua, Mexico. The model is evaluated using partial least squares, and the findings indicate that there is a direct and positive effect from the Government on regional Infrastructure with a rate of 0.436. When the Government supports the availability of land, energy resources, transportation, telecommunications, mobile telephones, and other services, a positive change is achieved in the Infrastructure and supply chain Agility. Furthermore, the Government also has a direct and positive effect on the market Proximity at a rate of 0.171; consequently, the regional Infrastructure also has an effect on it. Similarly, the market Proximity directly and positively influences the supply chain Agility, as well as a company’s Financial performance at a rate of 0.506.