Supply chain transformation and technology management challenges in developing regions: Inductive theory building from rural Chinese nanostores

Rural nanostores are the dominant source of packaged products for consumers in rural China, thus the more these stores order from reliable suppliers, the better the product quality available to rural areas. To improve merchandise circulation in rural areas, the Chinese government embarked on the large-scale “Thousands of Villages” (ToV) program in 2005. One of its key components was the implementation of an information technology (IT) procurement system to facilitate transactions between rural nanostores and the ToV program's certified consumer packaged goods (CPG) suppliers. The nanostores' adoption of the ToV procurement system was encouraged yet voluntary. We study how this system was used initially and how it evolved over time. If effective, this program has the potential to address the growing social disparity between rural and developed areas in China. We first embarked on an exploratory analysis (March 2012) to understand the ToV program from the perspectives of nanostore owners, the ToV's CPG suppliers, and the government. We then collected interview data. In Period 1 (2013–2014), when the technology was still nascent, we found that nanostore owner's trust in the ToV's CPG suppliers, and system value, played key roles for nanostore owners to use the ToV procurement system. In Period 2 (2018–2019), three contextual factors emerged—population demographic shift, improved technology infrastructure, and trust in new [non-ToV] purchasing platforms—each hindering the ToV procurement system's use. We observed strong government support during the early phases of ToV, but that support evolved from subsidizing the ToV platform and offering associated training (Period 1), to also providing credibility to competing non-ToV procurement platforms (Period 2). Collectively, the findings identify idiosyncratic challenges that arise when public policies attempt to address developing region problems by reengineering supply chains via IT. We provide implications for IT research about technology management in rural developing areas and for managers to recognize potential pitfalls of managing IT projects in supply bases unfamiliar with advanced IT.