An Empirical Study On The Impact Of Supply Chain Integration On Firm Performance

In recent years, as a result of the globalization of market competition, the diversificationof consumer demand, and advances in information technology, the competitions betweenenterprise and enterprise have been gradually transformed into those between supply chainand supply chain. Therefore, enhancing supply chain management has become an importantstrategy to gain competitive advantage, and promoting the information and process integrationamong its members in a supply chain is the key to successful supply chain management.Through strategic cooperation with the members of the supply chain, supply chain integrationintegrates the relationships, activities, functions, processes, and locations of the members,aiming to meet customer needs and maximize customer value. Although supply chainintegration has received more and more attention from practitioners, empirical studies on therelationship between supply chain integration and performance are not too many. Using datafrom two questionnaire datasets and the Chinese industrial enterprise database, this paperexplored the impact of supply chain integration (internal integration, customer integration andsupplier integration) on performance (operational performance, financial performance, andsupply chain performance). Three studies are included in this paper.In Study1, the impact of supply chain integration on operational performance wasinvestigated by using structural equation modeling. The results (total sample) show that,internal integration has a significant positive effect on customer integration, supplierintegration and operational performance; customer integration has a significant positive effecton operational performance; supplier integration does not have a significant effect onoperational performance. The moderating effects of industry attribute, firm size and countrybetween internal integration and operational performance are also tested. Results show that,the relationship between internal integration and operational performance is moderated byfirm size and country; the relationship between internal integration and customer integrationis moderated by country; the relationship between internal integration and supplier integrationis moderated by country; the relationship between customer integration and operationalperformance is moderated by firm size and industry.In Study2, the effects of internal integration change, customer integration change, andsupplier integration change on operational performance change and supply chain performancechange were investigated by using hierarchical regression analysis. The results show thatinternal integration change, customer integration change, and supplier integration change havesignificant positive effects on operational performance change and supply chain performance change; the interaction of internal integration change and supplier integration change hassignificant negative effects on operational performance change and supply chain performancechange. Further study shows that the changing pattern of supply chain integration can bedivided into four types: all improving mode, all worsening mode, improving supplierintegration mode, and improving internal integration mode. The operational performancechange and supply chain performance change of all improving mode is significantly higherthan the other modes. The operational performance change and supply chain performancechange of all worsening mode is significantly lower than the other modes. There is nosignificant difference between improving supplier integration mode and improving internalintegration mode on operational performance change and supply chain performance change.In Study3, the impact of supply chain integration in2004on financial performancegrowth in2004-2009was explored by using hierarchical linear model. The results show that,internal integration has a significant positive impact on the growth of return on assets, returnon sales, return on investment and total asset turnover; customer integration has a significantpositive effect on the growth of return on sales, but not on the growth of return on assets,return on investment and total asset turnover; supplier integration dosen't have a significanteffect on the growth of return on assets, return on sales, return on investment and total assetturnover.When investigating the impact of supply chain integration on operational performance,this paper explored the moderating effects of industry attribute, firm size and country, byusing structural equation modeling analysis. It expands and enriches the empirical research inthis area. By two time points longitudinal study design, the impacts of supply chainintegration change on operational performance change and supply chain performance wereexplored by hierarchical regression analysis, and then supply chain integration patterns andtheir characteristics were investigated by cluster analysis; by several time points longitudinalstudy design, the effects of supply chain integration on the growth of financial performancewere explored by hierarchical linear model. These results also expand and enrich thelongitudinal empirical research in this area. In addition, the conclusions of this paper canprovide some implications on how to manage supply chain integration a for businessmanagers. Finally, the limitations and future directions of this paper are also pointed out inthis paper.