An empirical investigation of how information sharing affects cash flow performance through competitive capability

Abstract

Purpose This paper aims to examine how information sharing affects cash flow performance through the competitive capabilities of low cost or product quality.

Design/methodology/approach In total, 159 survey responses were collected from Norwegian manufacturing firms in 2018. Structural equation modelling (SEM) was used to analyse the data collected.

Findings The low-cost competitive capability was found to positively mediate the effect of information sharing on cash flow performance. However, product quality competitive capability did not have a significant mediating effect between information sharing and cash flow performance. Rather, customer satisfaction fully mediated the relationship between product quality, capability and cash flow performance. The empirical results not only support how the competitive capabilities can be developed through information sharing but also illustrate that the competitive capabilities affect cash flow performance through different mediating routes.

Originality/value While information sharing and competitive capabilities have been studied previously with regard to financial performance, less emphasis has been placed on how customer satisfaction might explain the mediated relationship between product quality, competitive capability and financial performance. In addition, financial performance is measured by the proxy of cash flow. The use of cash flow as a performance measure leads to a more forward-looking financial performance measure. This is especially appropriate for non-listed firms.