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Determinants of innovation management and supply chain management on Thai automotive enterprise effectiveness: A structural equation model

In 2015, Thailand was the 15th largest exporter of automotive products in the world, and in the first nine months of 2016 had USD 13.706 billion in sales. Achieving 80 percent localization, with over 2,000 parts suppliers, Thailand has also become the automotive industry leader in South-East Asia. To maintain this leadership status however, Thailand must examine how innovation management and supply chain management affect automotive enterprise effectiveness. As such, the researchers first performed a second-order confirmatory factor analysis to confirm the dimensions of the constructs which included supply chain management, innovation management, and effectiveness. A Structural Equation Model using analysis of moment structures was then applied to test the fit of the model and validate the research hypotheses. The sample consisted of 200 managers from automotive enterprises involved as manufacturers and distributors, both domestic and foreign, to determine whether the direction of the business was in line with market opportunities. The analysis determined that there was harmony between the models and the empirical data. The results also indicated that there were strong and positive relationships between supply chain management and innovation management and an automotive enterprise’s effectiveness with car companies now becoming data companies. Innovation, along with an increasing need for information technology skills, will play a crucial role. As the ASEAN Mutual Recognition Arrangement on Type Approval for Automotive Products and the ASEAN Trade in Goods Agreement come into effect, supply chain management combined with the essential skill of firm-to-firm communications, including English skills, will be paramount to an enterprise’s success and competitiveness.