BUSINESS INTEGRATION

Business Integration

Abstract

Implementation of supply chain management techniques requires thorough integration of processes between supply chain partners in all functional areas, including sourcing, manufacturing, and distribution. Yet insufficient attention has been given to the means by which firms achieve high levels of integration. This study aims to examine moderators impacting supply chain integration barriers. Supply chain integration drivers and moderating barriers to supply chain integration were identified by extensive search of the literature, and in-depth interviews with supply chain managers. A survey was developed to measure levels of supply chain integration drivers, barriers to supply chain integration, and firm performance. The measures were validated using EFA, and the responses analyzed using multiple regression. The study finds that firms with a desire to improve, operating in a challenging competitive environment typically experience high levels of performance. Further, barriers to supply chain integration can actually increase the firm's ability to achieve firm performance as the firm is required to make greater efforts to overcome those barriers and develop effective supply chain linkages. This study answers a call for additional research into factors that enable and inhibit supply chain integration, and offers an empirical analysis of the moderating effect of supply chain integration barriers on the relationship between integration drivers and firm performance.

Introduction

Integration is now widely considered the core of successful supply chain management (SCM), both among academics and practitioners; because the implementation of SCM needs the integration of processes from sourcing, to manufacturing, and to distribution across the supply chain (Cooper et al., 1997; Ellram and Cooper, 1990; Mentzer et al., 2001). The increasing number of research studies on this topic has considerably furthered our understanding of integration. Most of the studies have focused on finding the positive outcomes of supply chain integration (e.g. Gimenez and Ventura, 2003; Stank et al., 1999). However, achieving a high level of supply chain integration has proven to be difficult (Fawcett and Bixby Cooper, 2001; Fawcett and Magnan, 2002). Fawcett and Magnan's (2002) study found that most companies are still engaged at the early stage of supply chain integration. After an extensive review of integration literature, Pagell (2004) called for more research on the factors that enable and inhibit supply chain integration. Thus, the current study is undertaken to further explore the drivers and barriers of supply chain integration, especially the role of the barriers.

The present research makes an important contribution by empirically examining the moderating effect of barriers of integration on the relationship between drivers of integration and firm performance. Because the positive relationship of supply chain integration and firm performance has been supported by numerous previous studies, we intentionally focus on the constructs of main interest in the current study. The paper is organized as follows. Relevant literature is reviewed and synthesized first to develop a conceptual model, followed by research methodology. The results are then presented along with discussion. Conclusion and implications are discussed finally.

Conceptual Theories

While researchers have conceptualized supply chain integration in various ways, in essence, “integration refers to the extent to which ...