2.1. Human capital

The academic interest in strategic human capital as a firm’s competitive advantage source has grown consistently over the last decade. However, few studies have taken place in SMEs and none in countries like Colombia and the studied region (Valle del Cauca). Most extant research on these issues has taken place in large, private, Europe/US-based, multinational enterprises [12]. As a result, many of the established concepts explaining human capital strategies, largely defined in the context of such companies, might be tested and adjusted in the contexts of other regions and other organizational structures. Therefore, studies conducted in other regions, particularly in emerging economies, and that also compare SMEs to large organizations are valuable, as they add to the increasing body of knowledge obtained through researching the strategic role of human capital in achieving performance excellence.

Based on human capital theories [13], the resource-based view, and capabilities [14], from an economic-productive perspective, human capital can be defined as the set of resources, capabilities, and competencies that enable individuals to assume responsibilities at the organizational level. Its contribution to innovation and business performance has raised controversy. On the one hand, researchers such as Jabbour and de Sousa Jabbour [15] and Gorman et al [16] argue a direct impact of human capital on organizational results. On the other hand, researchers such as Huo et al. [17] and Crandall and Crandall [18] argue the human capital incidence is indirect. They suggest that human capital directly affects operational efficiency, which in turn, affects supply chain effectiveness and firm performance as a result.

The positive effects of human capital on the supply chain, operational efficiency, and business innovation are mediated by different human resources management practices [19]. Companies allowing an effective combination of alignment and flexibility between their human resources management and SCM should raise their performance [20,21]. In this sense, human resources practices can make important contributions to the firm’s capability oriented towards the SCM from both an intra-organizational and inter-organizational approach gaining high performance. All this, by creating strategic partnerships, promoting intra-organizational and inter-organizational learning, building trust, and fostering synergy between different involved firms [20,21].

Specifically, training and teamwork [22,23], selective recruitment, variable payment, and, in particular, global thinking [24], improve the supply chain’s sustained performance. Regarding employee incentives, Huo et al. [25] relate them positively with the supply chain internal integration, negatively with customer integration, and with no effect on supplier integration. The direct participation of employees in integration management is related to the three dimensions. Besides this, Liu, Combs [26] state that highly committed and trained human capital allows employees to handle complex tasks in the supply chain, both within and between companies. For Smith-Doerflein, Tracey and Tan [27], supply chain managers must ensure that human capital management practices match the company’s needs. Likewise, they must ensure that employees have the skills and competencies for decision-making and effective solutions for diverse problems at a strategic, tactical and operational level [28].

To achieve operational effectiveness, organizations generally emphasize five dimensions: 1) cost, 2) quality, 3) reliability, 4) flexibility, and 5) speed [16,29]. In particular, for this research purpose, it is assumed that human capital is a critical driver of firm performance through the combined relationships of performance objectives such as cost, quality, and agility strategies. Likewise, based on Lepak and Shaw [30], Lepak, Takeuchi and Snell [31], and Lepak, Taylor, Tekleab, Marrone and Cohen [32], this study considers that human capital management effectiveness as a mediator of competitive performance is conditioned by the practices used in human capital management, the architecture and organizational infrastructure (related to the supply chain in this case), and clarity about the required human capital features according to the expected strategic goals.

2.2. Agility

As firms are increasingly challenged to respond to ever-increasing changes in demand, supply chain managers are pressed by customers whose decisions are based on the “cost of time” [33]. Consumers value time and have tools available to them, based on the internet, that enable them to source from those suppliers that meet their cost and quality specifications faster than their competitors. Thus, success—and quite possibly, survival—in the marketplace often relies on being able to respond more rapidly and effectively to changing demands in product volume and variety [34].

Agility, understood as a comprehensive approach to responsiveness [35], concerns the extent to which upstream and downstream supply chain members are capable of reacting promptly and creatively to challenging demand and unforeseen marketplace variation [36]. The ability of a firm’s supply chain to rapidly respond to market changes, creates customer value. Changes can affect fluctuation in the portfolio of products, the required volume, or delivery sequence or timing, therefore requiring, respectively, mix responsiveness, volume responsiveness, and delivery responsiveness. The meaning of short and medium-term are relative and context dependent. Changes in some industries—such as electronics, where product life cycles can be as short as just a couple months—are much shorter-termed than in other industries—such as automotive, where models remain in production for six years on average [37–39].

Past research has shown that firms that are more agile than their competitors in different, key aspects of their operations tend to outperform them consistently [40–42]. By developing an agile supply chain, firms can respond better to changing market situations and incur lower inventory holding costs, thus yielding higher returns on their capital.

As agility is constantly a pursued firm’s key performance objective, lead time reduction has arisen as a prominent practice in manufacturing and supply chain strategy [41,43,44]. Reducing lead time results in better profitability, lower costs, better inventory rotation, more efficient scheduling, and better service [45]. Firms that promise and provide faster delivery times can charge a premium price and enjoy higher customer demand [46]. The lead-time reduction can assist organizations in reducing inventory costs [47,48]. With longer lead times, schedules and assets must be frozen over a longer time. This, in turn, raises the likelihood of incorrect demand forecasts and calls for higher safety stocks to account for demand variability and prevent stock-out problems and their associated costs during replenishment.

Agility and the associated lead-time reduction greatly benefit from the information shared along the supply chain. Sharing information reduces uncertainty, time, and ordering process costs. Conversely, shorter lead-times allow firms to focus on and optimize demand information sharing. In contrast, longer lead-times force firms to spend efforts and resources to integrate their planning and forecasting information with supply chain associates [49].

Firms should realize that adversarial relationships prevent all players from exploiting opportunities for greater agility [36]. The high levels of information sharing and connectivity present in long-term and close relationships enable the notion of agility. Collaborative relationships or alliances are not always workable, so firms should carefully examine how to develop supply chain agility in less cooperative, not-so-close relationships [50].

As human capital receives wider attention with increasing globalization, most economies emphasize the improvement of human capital towards fast-tracking their growth. Hence, human capital development is one of the critical approaches to becoming more competitive in the international arena [51,52]. Therefore, the skills of both managers and workers make the organization effectively implement strategic initiatives that boost competitive advantages [53].

Based on a survey answered by 201 supply chain managers in the manufacturing sector, Jin, Hopkins [54] found direct links between human capital, the flexibility of the operations, and the production time to gain a competitive advantage. Consequently, based on Kraatz and Zajac [55] and Jin et al [54], this study contends that human capital strategies are essential to ensure agile, cost-effective, and high-quality operations. Thus, it is hypothesized that:

1. Hypothesis 1: Human capital is a positive predictor of a firm’s agility strategy.

2.3. Quality

The extant literature proposes a myriad of definitions for quality; different meanings might be appropriate under different contexts. From a manufacturing perspective, quality refers to fulfilling standards [56–58], a product-oriented approach that ensures that products are made well from the beginning. From a marketing perspective, quality relates to meeting or exceeding customer’s expectations [59,60], a challenging definition given that identifying such expectations is a complex task. From a more strategic view, quality has been well recognized by decision-makers and quality professionals as an initiative to total quality and change management approaches [61,62]. Quality is therefore a vital aspect in the development of management practices [63]. Total quality management (TQM) is a key practice for improving effectiveness, flexibility, and business competitiveness to meet customers’ requirements leading to a competitive edge [64]. Furthermore, TQM has been asserted as a source of excellence achievement, building a right-first-time attitude, attaining efficient tactical solutions, satisfying beyond expectations the clients and suppliers, etc., and above all, as a source of boosting organizational performance through sustained improvement in supply chain firms’ activities [65].

From the supply chain perspective, quality management can be recognized when the supply chain design across every organization provides quality products and services according to clients’ expectations [66]. The quality improvement of all supply chain processes results in reductions in cost, resource utilization improvement, and process efficiency improvement [67]. Research has been conducted on how quality practices can be used to improve the entire supply chain and address problems within the supply network [68].

It has been suggested that more work is needed for a better knowledge of continuous improvement practices in the supply chain context and the linkage between quality approaches and overall organizational performance. Consequently, standards for the implementation of quality practices in the supply chain are suggested for future research that can be of use for firms. For example, Dowlatshahi [68] and Lin and Gibson [69] performed exploratory studies on the role quality management plays in integrated supply chain performance. They propose that more work is needed on the reason why quality practices strongly impact an integrated supply chain. On the other hand, few studies have been conducted on the association between quality and firm performance mediated by strategic practices such as outsourcing.

Aryee, Walumbwa [70] reveal that high-performance work systems are related to human capital and the quality of the service at the individual level. Furthermore, Marimuthu, Arokiasamy [51] maintain that human capital has a direct impact on firm performance from various critical perspectives. Also, Snell and Dean [52] claimed that quality practices are positively related to human resource practices and to the comprehensiveness of training for operations employees to achieve higher levels of quality; therefore, it is hypothesized that:

1. Hypothesis 2: Human capital is a positive predictor of a firm’s quality strategy

2.4. Costs

Costs are the financial expenses incurred in engaging in business which is essential to evaluate the performance of a firm. Supply chain cost is defined as all relevant expenses of the operations of the supply chain of the company or organization in question. An effective SCM will reduce the operational costs of a firm [71,72]. Costs can be measured in terms of the supply chain as a whole [73], each supply chain process [74], or the logistical costs only [75]. Analysis of the supply chain costs can be performed in different ways. Different kinds of cost groupings can be found in the literature, including transportation, production, inventory, packaging, materials holding, and order processing [76].

The need to measure and control supply chain costs is increasingly relevant as firms grow in size and scope [77]. Supply chain partners should, therefore, actively seek cost-saving opportunities along the supply channels by gaining a better understanding of the linkages between different value-adding activities [78].

This research is particularly interested in two important, and often overlooked, cost elements: transaction costs and switching costs [79,80]. Information becomes available to supply chain participants at a cost. Firms incur costs when searching for information and safeguarding against opportunistic behavior from other participants. When information is shared more frequently, searching costs and information-sharing transaction costs tend to decrease [81], which in turn decreases the overall cost of products and services [82]. Furthermore, asset specificity tends to increase as information is shared more freely and more frequently. Interestingly, a reduction in transaction costs comes as a trade-off to an increase in switching costs, given that it becomes more costly for supply chain partners to seek new partners in the marketplace.

A study by Birdi, Clegg [83] found that empowerment of the human capital, extensive training, and teamwork have a predictive role in the success of total quality and just-in-time initiatives and, therefore, the achievement of better performance and reduction of the transaction costs. Additionally, the integration of human capital practices in a lean manufacturing system and the customer-supplier relationships are necessary for the delivery of desired standards at a minimum cost [84]. Thus, this study hypothesizes that:

1. Hypothesis 3: Human capital is a positive predictor of a firm’s cost strategy

2.5 Outsourcing

The outsourcing of elements of supply chain processes is now an important component of the operationalization of an organization’s competitive strategy [85,86]. Outsourcing is commonly defined as the transference of activities from an internal operation processing point of view to external professional third parties [87]. Outsourcing of activities has been historically linked to cost-saving, third-party logistics (3PL) procurement strategies in manufacturing firms [88]. With increasing frequency, though, outsourcing is becoming an important strategic option for all kinds of organizations, and its benefits transcend the usual cost reductions associated with economies of scope and productivity by specialization [89].

Logistics outsourcing is one of the different forms of outsourcing that has attracted the attention of organizations, academics, and researchers in recent years. Its relation to the organizational bottom line serves the following purposes: leadership, accessing high-quality processes, harmonizing with technology alterations, and downsizing, which contribute to providing a competitive edge Erturgut [90].

The increment of global service transactions that is reflected in the growth of outsourcing and offshoring provides an opportunity to understand the role of outsourcing and offshoring and the involvement of human capital in the quest to promote competitiveness [91,92]. Contractor and Mudambi [91] studied the effect of human capital on the exports of both goods and services. However, the results indicated that human capital was not significantly more important for services exports than for goods exports.

Outsourcing is, in some cases, an opportunity to increase the skill premium between foreign countries such as is the case of the US and Mexico that base their relationship on the North American Free Trade Agreement [93]. Interestingly, highly talented workers in Austria are losing benefits due to outsourcing, whereas in Poland, outsourcing is providing benefits [92]. Additionally, it is known that the impact of human capital investment has affected emerging economies like Asia significantly more than developed countries [91]. Thus, given the discrepancies in the impact of human capital on outsourcing initiatives, this study hypothesizes that:

1. Hypothesis 4: Human capital is a positive predictor of a firm’s outsourcing strategy

Hsu [94] found that different strategies related to logistics outsourcing can contribute to the reduction of fixed costs, thereby increasing flexibility. At the same time, it may be expected that logistics outsourcing will allow organizations to concentrate their activities on their business core, investment reduction, and the improvement of the quality of services.

Consequently, Deepen [95] acknowledges that logistics service providers (LSPs) are more efficient than logistics service users (LSUs). Deepen [95] also asserts that cost reduction can be seen as the greatest benefit derived from the help given by LSPs to LSUs. Consequently, the LSU cost position is affected by the reduction of capital investment requirements due to the LSP outsourcing processes. The connection between LSPs and LSUs is reinforced through valuable help from the former so the latter avoid any unnecessary investment in both the management of the workforce and their supply chain.

The win-win relationship between LSPs and LSUs promotes, through appropriate supply chain management, benefits such as cost reductions, better flexibility, and an increased level of responsiveness to the customers’ requirements. Several researchers have conducted studies to identify the main reasons for outsourcing. However, even though cost reduction is one of these, it is not always the main motivation [96]. Whether the organization engages in customer-related versus strategic activities will define the reasons for outsourcing [97].

Different criteria have been transcendental to outsourcing since its first implementation. Alkhatib et al. [98] conducted a comprehensive literature review and identified cost, quality, flexibility, services, financial measures, sustainability, and delivery as the most relevant and important criteria since the mid-1960s, and these account for 76.83% of the criteria used during 2008–2013 for outsourcing.

Table 1 shows the relative importance of the aforementioned criteria in different periods from the 1960s to the present.

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Table 1. Criteria relative importance (1966–present).

https://doi.org/10.1371/journal.pone.0274592.t001

The same study categorized the criteria into three main dimensions: Performance (financial, customer, and operational), Resources (tangible and intangible), and Services.

Most Fortune 500 firms base their operations on some form of outsourcing, a pattern that is growing throughout industries and regions around the world. Such popularity notwithstanding, there are still untapped areas where outsourcing has to prove its full potential, such as SMEs, outsourcing in emerging economies, and exploiting leveraging capability development in outsourcing strategies. In a globalized marketplace, SMEs are increasingly pressed to proactively seek and develop strategic partnerships in the supply chain [99]. Outsourcing can be a catalyst for innovation, quality, and supply chain flexibility, and thus contribute to the achievement of competitive advantage, provided that cross-functional in-house activities within the firm are effectively linked to externally executed processes [100]. Therefore, this study hypothesizes that:

1. Hypothesis 5: A firm’s outsourcing strategy is a positive predictor of its cost strategy
2. Hypothesis 6: A firm’s outsourcing strategy is a positive predictor of its quality strategy
3. Hypothesis 7: A firm’s outsourcing strategy is a positive predictor of its agility strategy

2.6. Business performance

Performance at the operational level relates to the degree to which organizations make progress towards key metrics such as cost-efficiency, quality, reliability, and flexibility [101,102]. Operational performance attainment encompasses building key capabilities with which organizations develop strengths that enable them to sustainably outperform challenges in their marketplace [103]. Furthermore, it is often asserted that frequent implementation of quality management and agility programs improve the achievement of operational objectives, including cost-effective performance, enhanced quality, shorter lead times, and flexible processes. Waste management, via process defects detection and fixing, also benefits from the implementation of quality programs [104].

Business performance relates to the outcomes of certain coordinated activities through the utilization of company resources to ensure the successful execution of business strategy for the fulfillment of organizational goals. Business strategy impacts the level of relationship strength between particular technology policies and firm performance [38].

At the business level, business performance relates to the utilization of firms’ resources to perform synchronized functions that ensure meeting shareholder’s expectations and achieving profit maximization [105]. Business performance is often conceptualized through the execution of two dimensions: market performance (e.g., market power, market efficiency, market volatility) and financial performance (e.g., profitability, liquidity, solvency, the margin on sales) [101].

As shareholder’s expectations are very dynamic, the measurement of business performance is expected to become more complex. The latter suggests several realistic scenarios that prove the complex performance-related dilemmas firms are confronted with: 1) Shareholder elevated returns vs. detrimental human resource management; 2) Organization as the "Best Employer" vs. weak financial performance; 3) Company recognized by self-imposed environmental standards vs. low efficiency of the manufacturing process, increased costs, low employee morale, and job cuts.

Agility, quality, and cost are key drivers of firm performance [106,107]. Being agile allows the organization to respond in a faster way to consumer requirements and to provide products or services of higher quality than the competitors. Pursuing agility within the organization means involving people in decision-making, adequate training facilities, and a motivating reward program [108]. Also, an organization with productive human capital can deliver products and services of higher quality than competitors, thus generating a positive impact on performance [109]. The cost has an impact on performance. A cost orientation strategy, based on human capital, can create a superior firm performance [110]. Consequently, an adequate human capital structure enhances the capacity of an organization to compete in agility, quality, and cost strategies and, therefore, impact positively on performance.

Based on the literature reviewed, this study contends that human capital strategies are essential to ensure cost-effective, high quality, and agile operations, that outsourcing is important to facilitate the effectiveness of such drivers, and that effective deployment of these key drivers positively impacts firm performance and competitiveness. Therefore, this study hypothesizes that:

1. Hypothesis 8: A firm’s human capital is a positive predictor of the firm’s performance
2. Hypothesis 9: A firm’s cost strategy is a positive predictor of the firm performance
3. H10: A firm’s quality strategy is a positive predictor of the firm’s performance
4. H11: A firm’s agility strategy is a predictor of firm performance
5. H12: A firm’s outsourcing strategy is a predictor of firm performance
6. Fig 1 illustrates the hypothesized relationships and the corresponding SEM model to be tested in this study.

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Fig 1. Research model with hypotheses.

https://doi.org/10.1371/journal.pone.0274592.g001

Quality

High conformance of final products to design specifications

Excellent product performance

Superior product reliability

Fast resolution of customer complaints / inquiries

Offer consistent quality High product durability

Cost

Maximize capacity utilizations

Increase labor productivity

Reduce production costs

Minimize inventory costs

Reduce distribution costs

Flexibility

Make fast capacity adjustments

Make deliveries adjustments to fulfil customer requirements

Offer large number of product features

Offer product customization

Offer a large extent of product assortment

Adjust production processes to allow new product manufacturing

Speed

Minimize set up times

Minimize delivery times

Minimize lead times

Fast introduction of new products

Minimize product development cycle time

Increase inventory rotation

Skilled workforce

Well trained logistics workers

Resourceful front-line logistics workers

Experienced supply chain managers

Customer oriented logistics workers

Readily available outsourced logistics workers

A good pool of expert logistics workers

In this section, please, state to what extent you agree or disagree with following reasons for not outsourcing logistics services

Control over the outsourced function (s) would diminish

Service level commitments would not be realized

Cost reductions would not be experienced

Local capabilities of 3PLs need improvement

Logistics too important to consider outsourcing

Corporate philosophy excludes the use of outsourced logistics providers

Issues relating to security of shipment

We have more logistics expertise than most 3PL local providers

Inability of 3PL providers to form meaningful and trusting relationships

Logistics is a core competency at our company

Our company previously outsourced logistics, and chose not to continue

Too difficult to integrate our IT systems with 3PL’s systems

Other (Provide details)

Business Performance

Our company has increased its profit margin

Our company has sustained competitive prices for its products

Our company has increased its sales volumes

Our company has increased its return on investment

Our company has increased its market share