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The impact of supply chain integration on firm performance: The moderating role of competitive strategy
Baofeng Huo, Yinan Qi, Zhiqiang Wang, Xiande Zhao,
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Baofeng Huo, Yinan Qi, Zhiqiang Wang, Xiande Zhao, (2014) "The impact of supply chain integration on firm performance: The
moderating role of competitive strategy", Supply Chain Management: An International Journal, Vol. 19 Issue: 4, pp.369-384,
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Abstract
Purpose – This paper aims to provide empirical evidence of the effectiveness of various supply chain integration (SCI) practices under different
competitive strategies in terms of cost leadership and differentiation.
Design/methodology/approach – Survey methodology was used to collect data from 604 Chinese manufacturers. Hierarchical linear regression
was used to analyze the moderating effects.
Findings – The results showed that competitive strategies significantly influenced the effectiveness of SCI practices, including internal, process and
product integration. More specifically, internal integration significantly affected the financial performance of cost leaders, while process integration
contributed more to the financial performance of differentiators. However, competitive strategies had no significant moderating effect on the
relationship between SCI and operational performance.
Research limitations/implications – This study contributes to the literature by exploring the effectiveness of various SCI practices in relation to
firm performance under different competitive strategies. The results should be treated with caution, as they may be more meaningful in China.
Practical implications – The findings clarify the alignment of SCI with competitive strategies for practitioners, so that they can allocate their limited
resources to build various SCI capabilities based on their strategic choices.
Originality/value – The results enhance the body of knowledge on SCI from the perspective of contextual factors to explore its effectiveness at
a more detailed level. This study extends the literature on the match between competitive strategies and SCI in improving financial performance.
Keywords China, Competitive strategy, Performance, Supply chain integration, Contingency theory
Paper type Research paper
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Supply chain integration on firm performance Supply Chain Management: An International Journal
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384
2012). For example, internal integration is more strongly 2. Theoretical background and hypotheses
related to performance than external integration (Flynn et al., development
2010). However, the contingent perspective suggests that the
In this section, we define the constructs and develop a set of
effectiveness of various types of SCI is determined by the level
hypotheses on the relationship between SCI and competitive
of contingent factors (Wong et al., 2011b). For example, Iyer
strategies and their effects on operational and financial
et al. (2009) showed that the effect of SCI on performance
performance. Figure 1 depicts the conceptual model.
decreased as product turbulence and demand unpredictability
jointly increased. Recently, the SCI literature has increasingly
2.1 SCI and competitive strategy
emphasized the external environment or product Different conceptualizations of SCI have emerged in previous
characteristics as contingent factors (Appendix 1). However, studies (Ho et al., 2002). Based on the literature, we define
findings on the integration – performance relationship have supply chain, external and internal integration according to
been inconsistent (Flynn et al., 2010; Huo, 2012; Zhao et al., Flynn et al. (2010, p. 59): SCI is “the degree to which a
2013). manufacturer strategically collaborates with its supply chain
Ketokivi and Schroeder (2004a, 2004b) argued that partners and collaboratively manages intra- and
conflicting findings about the effectiveness of operational inter-organization processes”; external integration is “the
practices may be due to the lack of consideration for degree to which a manufacturer partners with its external
contingency variables such as environmental uncertainty, partners to structure inter-organizational strategies, practices
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strategy and institutional pressure. They indicated that: and processes into collaborative, synchronized processes”; and
internal integration is “the degree to which a manufacturer
[. . .] seeking universal links between, say JIT implementation and structures its own organizational strategies, practices and
operational performance, should be avoided, because the failure to identify
a link may well be caused by the fact that in the sample there are plants that processes into collaborative, synchronized processes, in order
have adopted JIT by uncritical mimicry of others (Ketokivi and Schroeder, to fulfill its customers’ requirements”.
2004a, p. 77, 2004b). Furthermore, to respond to the need voiced by
Thus, it is critical to consider firm strategy in studying SCI Fabbe-Costes and Jahre (2008) and Huo et al., (2014b) for
effectiveness (Ketokivi and Schroeder, 2004a, 2004b; more focused empirical research on SCI, this study further
classifies external integration into product and process
Mckone-Sweet and Lee, 2009). Theorists argue that a
integration. Product integration refers to the involvement of
company’s practices should be aligned with its strategies to
suppliers and customers in the development of new products
obtain superior performance (Miller, 1992). In the supply
(Huo et al., 2014a; Khazanchi et al., 2007; Wagner, 2008) and
chain context, it is argued that supply chain management
aims to support such development through close interactions
practices should be aligned with firm strategy (Cigolini et al., with supply chain partners (Koufteros and Marcoulides,
2004). Furthermore, Stonebraker and Liao (2006) proposed 2006). Process integration is the establishment of
that there should be a strategic fit among environmental, collaborative and synchronized processes with suppliers and
strategic (e.g. competitive strategy) and operational (e.g. SCI) customers (Huo et al., 2014a; Kim et al., 2012; Wagner, 2008)
variables to achieve company success. Therefore, in this study, and aims to support product manufacture and delivery. In the
the contingent perspective is adopted to investigate the literature, these two external integration types are usually
relationship between SCI and performance by considering the investigated separately in different research streams. However,
moderating role of firms’ competitive strategies. both are imperative for manufacturers to compete in volatile
The majority of previous studies have focused on markets and may contribute to firm performance in different
investigating the effects of different types of SCI (e.g.
internal and external integration) on firm performance. Figure 1 The conceptual model
Such a classification of SCI is too abstract to reveal the
essence of the effectiveness of various SCI practices. This
classification may be one of the main reasons for
contradictory findings in previous SCI and firm
performance studies. For example, Iyer (2009) and Wong
et al. (2011b) found that environmental uncertainty had a
varying effect on the efficacy of internal and external
integration. Thus, it is necessary to explore the effect of SCI
on firm performance at a more detailed level. In this study,
we identify the content of SCI (i.e. internal, process and
product integration) and explore its effectiveness in
improving firm performance under different competitive
strategies.
The theoretical background and hypotheses are presented
in the next section, followed by a description of the research
methodology and analytical results. Finally, we conclude the
study with the major findings, contributions, limitations and
future research directions.
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Supply chain integration on firm performance Supply Chain Management: An International Journal
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384
ways. Therefore, it is necessary to investigate whether various former enhances the latter. For example, Frohlich and
external integration practices influence firm performance Westbrook (2001) concluded that manufacturers with the
differently, especially under different strategic contexts. widest degrees of supplier and customer integration achieve
Strategic management researchers have identified cost the best performance improvements in terms of market share
leadership and differentiation as two dimensions of and profitability. Droge et al. (2004) found that both internal
competitive strategies (Miller, 1988; Porter, 1991). Firms and external integration were related to financial performance
pursuing a cost leadership strategy compete mainly on lower through time-based performance. Zailani and Rajagopal
prices and must reduce costs through efficient (2005) noted that manufacturers with the greatest degrees of
sourcing/production/distribution and economy of scale. In external customer and supplier integration achieved the
contrast, firms with a differentiation strategy create unique highest overall performance improvement. The literature
products/services to command higher prices and typically suggests that internal and external process and product
need a high level of innovation capability and superior product integration can directly contribute to manufacturers’ financial
quality (Miller, 1988). Unique and multiple features often performance. Furthermore, it indicates that operational
differentiate their products/services from those of their performance plays an important role in the relationship
competitors. between SCI and financial performance. The literature also
provides evidence that operational performance positively
influences financial performance (Elgazzar et al., 2013; Inman
2.2 The effect of SCI on firm performance et al., 2011). Therefore, we propose our second set of
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Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384
process efficiency (Porter, 1991). Those firms face fierce price H4b. The positive relationship between process integration
competition from highly homogeneous products, which makes and financial performance is strengthened when firms
it difficult to provide personalized products, thus they are pursue a cost leadership strategy.
forced to serve customers with high bargaining power. This
dynamic emphasizes intensive supervision, high-level H4c. The positive relationship between product integration
engineering skills and process continuity (Kotha and Orne, and financial performance is weakened when firms
1989). Furthermore, organizations with a cost leadership pursue a cost leadership strategy.
strategy are inclined to build hierarchical cultures in which
H5a. The positive relationship between internal integration
formalized, structured workplaces are created, formal
and operational performance is strengthened when
procedures for governing people’s work are established,
firms pursue a cost leadership strategy.
smooth-running organizations are maintained, organizational
stability is pursued, the capacity of information flow is H5b. The positive relationship between process integration
increased and the efficient management and control of the and operational performance is strengthened when
whole system is emphasized (Cameron and Quinn, 2011). firms pursue a cost leadership strategy.
Thus, such a strategic orientation and organizational
atmosphere provide an appropriate context for seamlessly H5c. The positive relationship between product integration
linking the formalized process and information. and operational performance is weakened when firms
pursue a cost leadership strategy.
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Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384
H6a. The positive relationship between internal integration To ensure the questionnaire’s reliability, an English version
and financial performance is strengthened when firms was developed first, reviewed and then translated into Chinese
pursue a differentiation strategy. by knowledgeable operations management professors. Then,
the Chinese version was translated back into English by
H6b. The positive relationship between process integration another group of professors. The back-translated English
and financial performance is strengthened when firms version was then checked against the original English version.
pursue a differentiation strategy. Some questions in Chinese were reworded to better reflect the
original meaning of the questions in English. The Chinese
H6c. The positive relationship between product integration version of the questionnaire was pilot-tested in more than 40
and financial performance is strengthened when firms manufacturing companies from Tianjin, Guangzhou and
pursue a differentiation strategy. Hong Kong in China. The data collected from the pilot tests
H7a. The positive relationship between internal integration were also used to check the content validity of the measures.
and operational performance is strengthened when
firms pursue a differentiation strategy. 3.2 Data collection
A mail survey was used to collect the required data. The unit
H7b. The positive relationship between process integration of analysis was the manufacturing company. The supply chain
and operational performance is strengthened when managers, operations managers or general managers who were
firms pursue a differentiation strategy. knowledgeable in answering the questions on competitive
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Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384
Table I Industry distribution of respondents and population above 0.70 and thus acceptable in such a study (Flynn et al.,
Respondents Population 1990).
Industries (per cent) (per cent) Next, the construct validity was tested. Convergent and
discriminant validity were assessed using confirmatory factor
Food and beverage 10.10 8.66 analysis. To check the convergent validity, each item was
Electronic and communication linked to its corresponding construct, and the covariances
equipment 8.79 8.38
among the constructs were freely estimated. The model fit
Transportation equipment 8.63 8.79 indices were chi-square (881) ⫽ 2,926.58, root mean square
Textile and garment 33.22 33.37 error of approximation ⫽ 0.067, comparative fit index ⫽ 0.96
Electrical equipment 8.38 10.93 and non-normed fit index ⫽ 0.96, which were better than the
Machinery 16.12 17.74 threshold values recommended by Hu and Bentler (1999). In
Chemicals and petroleum 7.17 6.97 addition, all of the loadings were greater than 0.50 (except for
Plastic and latex 5.37 5.16 four items), and all of the t values were greater than 2.0. The
Total 100 100 results indicated that convergent validity was ensured.
Discriminant validity was assessed by building a constrained
confirmatory factor analysis model for every possible pair of
not biased toward any particular industry. The early and late latent constructs, in which the correlations between the paired
responses on physical assets, annual sales and number of constructs were fixed to 1.0. This was compared with the
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employees were also compared (Armstrong and Overton, original unconstrained model, in which the correlations
1977). The t-test showed no significant differences, indicating among constructs were freely estimated. A significant
that early and late response bias was not a major concern in difference in the chi-square statistics between the constrained
this study. Furthermore, Harman’s single-factor test was and unconstrained models indicated high discriminant validity
performed to examine the possibility of common-method bias (Fornell and Larcker, 1981). In this study, all of the
(Podsakoff et al., 2003). The results showed that there were differences were significant at the 0.001 level, indicating that
nine factors with eigenvalues above 1.0, and the largest discriminant validity was ensured.
variance explained was merely 30 per cent. We concluded that
no single factor emerged from the factor analysis, and no 4. Data analyses and results
general factor explained most of the variance. Accordingly, Table III shows the means, standard deviations and
there was no serious common-method bias in our study. inter-correlations of competitive strategies, SCI and
performance.
3.4 Psychometric testing The hypotheses were tested using a series of hierarchical
According to Flynn et al. (2010), the content validity of the linear regression analyses. The independent variables were
constructs used in this study was established through a search mean-centered before calculating the interaction terms to
of the literature, careful synthesis and the critical evaluation of minimize the effects of multicollinearity. In Model I, the
existing constructs and an iterative construct review by control variables including firm size and industry type were
experts. entered. In Model II, internal, process and product integration
An exploratory factor analysis of the constructs was were entered as independent variables. In Model III, cost
conducted to ensure the unidimensionality of the scales. A leadership and differentiation were entered as independent
principal component factor analysis with varimax rotation was variables. In Model IV, the interactions between three SCI
used to detect the underlying dimensions. The results showed practices and two competitive strategies (i.e. six interaction
that all of the items were loaded on the specific factor they items in total) were entered. The dependent variables were
were intended to measure. Furthermore, all of the factor operational and financial performance. When financial
loadings were greater than 0.40, which was proposed as the performance was selected as the dependent variable,
threshold value by Hair et al. (2006). The internal consistency operational performance was entered as an independent
or reliability of the scale was assessed by Cronbach’s alpha. variable. Tables IV and V summarize the regression results.
Table II indicates that all of the Cronbach’s alpha values were The results indicated that internal integration was positively
and significantly associated with operational and financial
performance, supporting H1a and H2a. Process integration
Table II Reliability
was positively related to operational performance and product
Number of Cronbach’s integration was positively related to financial performance,
Construct questions alpha supporting H1b and H2c. The relationship between
Cost leadership 5 0.817 operational and financial performance was positive and
Differentiation 5 0.675 significant, supporting H3. However, the coefficient of
Internal integration 6 0.797 product integration on operational performance was
Process integration 10 0.895 insignificant and the coefficient of process integration on
Product integration 2 0.545ⴱ financial performance was significantly negative, indicating
Operational performance 10 0.904 that H1c and H2b were not supported.
Financial performance 6 0.896 The interaction terms between SCI practices and
* competitive strategies had different effects on operational
Note: Pearson correlation
and financial performance. Cost leadership had a significant
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Supply chain integration on firm performance Supply Chain Management: An International Journal
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384
and positive moderating effect on the relationship between Therefore, H5a-H5c, H6a, H6b and H7a-H7c were not
internal integration and financial performance, supporting supported. The results are reported in Table VI.
H4a. Differentiation had a significant and positive moderating
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Supply chain integration on firm performance Supply Chain Management: An International Journal
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384
operational and financial performance, whereas process and transaction costs. This finding is supported by Qi et al. (2009),
product integration can only enhance operational and who noted that the public relationship department plays an
financial performance, respectively. However, product important role in the strategy formulation processes of
integration has no significant effect on operational Chinese manufacturers.
performance, perhaps because product integration requires Because operational performance is highly and positively
significant supplier and customer involvement, which can related to financial performance, internal and process
bring more changes and complexities to quality standards, integration can improve financial performance indirectly. This
delivery schedules and service routines – hindering the means that process integration can still contribute to financial
improvement of operational performance. This finding is performance through the improvement of operational
partially consistent with that of Koufteros et al. (2005), who performance. This finding is consistent with those of some
noted that supplier product integration is negatively related to previous studies (Huo, 2012; Swink et al., 2007).
product innovation and not significantly related to quality. Our findings that various SCI practices have different
More interestingly, process integration has a negative and effects on operational and financial performance contribute to
significant effect on financial performance and may need great the SCI literature. Overall, they confirm Frohlich and
investments such as physical assets, financial resources, Westbrook’s (2001) finding that a higher degree of SCI leads
human resources, guanxi (relationship) and manufacturers’ to better firm performance. Our study also provides evidence
time to produce benefits. Thus, the benefits tend to be that the findings on the effects of SCI on firm performance in
counteracted by the investments in external relationships, the literature are inconsistent (Flynn et al., 2010). More
leading to negative improvement in financial performance. importantly, our findings echo the call made by Fabbe-Costes
Such a phenomenon can also be explained by the particular and Jahre (2008) and Huo et al. (2014a) for SCI studies in
institutional environment of Chinese firms. Although the specific practices, such as process and product management.
reform and opening policy has been in effect for more than 30 The different roles of process and product integration extend
years, the Chinese economy is still not a “free market our understanding of SCI practices and their direct and
economy” and governmental intervention greatly influences indirect relationships with firm performance.
firms’ behavior. In terms of inter-organizational relationships,
Chinese manufacturers must invest in relationship building 5.2 The moderating effect of competitive strategy
with their supply chain partners directly and sometimes The influence of competitive strategies on the roles of
indirectly through the government, which implies significant practices has been identified in the literature (Prajogo and
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Supply chain integration on firm performance Supply Chain Management: An International Journal
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384
Table VI Results of hierarchical regression analyses resources and investments, thus cost leaders cannot leverage
Hypotheses Results their effectiveness in improving financial performance.
In contrast, firms pursuing a differentiation strategy achieve
H1a. Internal integration ¡ operational more financial benefits from process integration than firms
performance Supported pursuing a cost leadership strategy. These firms usually try to
H1b. Process integration ¡ operational
obtain the premium price, and cost is not their major concern.
performance Supported
As Olhager and Prajogo (2012) noted, the value of process
H1c. Product integration ¡ operational
integration can be more easily achieved by manufacturers
performance Not supported
engaged in creating differentiated products or services. A close
H2a. Internal integration ¡ financial
observation of Chinese manufacturers also shows that external
performance Supported
collaboration is more beneficial in providing differentiated
H2b. Process integration ¡ financial
products or services due to the lack of the core technology
performance Not supported
(Lockström et al., 2010). Furthermore, the differentiation
H2c. Product integration ¡ financial
strategy provides a flexible and collaborative firm culture that
performance Supported
helps process integration enhance financial benefits.
H3. Operational performance ¡ financial
Therefore, the interaction effect between process integration
performance Supported
and the differentiation strategy should be more significant in
H4a. Internal integration ⴛ cost leadership ¡
improving performance in the Chinese context. However,
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Supply chain integration on firm performance Supply Chain Management: An International Journal
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384
measures (Flynn et al., 2010; Huo, 2012). Since 2006, various Second, Chinese manufacturers need to change their
SCI streams have emerged, such as enablers of SCI (Zhao internal-oriented view to an external-oriented view, especially
et al., 2008, 2013), relationships between different SCI for the supplier side.
dimensions (Zhao et al., 2011), contextual SCI studies (Huo Finally, our findings are also valuable to overseas buyers
et al., 2014b) and contingency SCI studies (Boon-Itt and who are customers of Chinese manufacturers. Those buyers
Wong, 2011). This study classifies SCI using a new method should pay attention to the fact that Chinese manufacturers’
(combined internal vs. external integration and capabilities are in internal streamlining and process
content-oriented external integration), extending SCI integration. If the overseas buyers’ objective is to minimize
concepts and dimensions. The effects of new SCI dimensions their cost, the current collaboration with Chinese
on both operational and financial performance are analyzed, manufacturers is valuable. However, if the overseas buyers’
providing more evidence of SCI – performance relationships.
aim is to increase their innovative capability, they need to help
This study examines the moderating effects of competitive
Chinese manufacturers to build capabilities in coordinating
strategies on the relationship between SCI and performance,
with external supply chain partners.
enriching contingency SCI studies.
practices under different competitive strategies. First, internal claim that fit between SCI practices and competitive strategies
and process integration can directly improve firms’ will determine performance. In general, the correlations
operational performance. Both internal and product between SCI practices and financial performance are stronger
integration are helpful for financial performance. Although the when firms emphasize competitive strategies. However, the
beneficial effects of process integration on financial pattern of interactions between SCI practices and competitive
performance are insignificant, it does not mean that the former
strategies shows some differences, at least in the Chinese
should be abandoned. Process integration can significantly
context. Our study can provide a possible explanation for the
boost operational performance, suggesting that when
inconsistent findings about the effects of SCI on financial
designing and implementing SCI practices, manufacturers
performance. One of the practical implications is that Chinese
should have a long-term and strategic plan rather than
pursuing the short-term or monetary objective. manufacturers may develop their SCI capabilities based on
Second, the implementation of SCI practices may not their competitive strategies.
bring universal benefits for manufacturers. Our findings Although this study makes significant contributions to
suggest a contingent view of the SCI practice – performance academic research and practices, it has several limitations that
relationship. Manufacturers with a cost leadership strategy open up avenues for future studies. First, we conducted this
should implement internal integration and those with a study using Chinese samples and thus the findings are more
differentiation strategy should implement process meaningful in the Chinese context. Hofstede (1980) argued
integration extensively to achieve better financial that the leveraging of organizational practices for competitive
performance. The adoption of product integration should strategies may differ across countries. Hence, it is not clear
be cautious. On the one hand, product integration can be how SCI practices are used with competitive strategies to
implemented only when manufacturers achieve better improve performance in different contexts, such as in different
financial performance no matter which types of competitive countries. Future studies can investigate this issue in other
strategies are selected. On the other hand, product contexts or conduct cross-cultural studies. Second, this study
integration cannot help manufacturers that are providing used a cross-sectional design and cannot reflect the lag time or
outsourcing services (most Chinese manufacturers) to long-term effects of SCI practices on performance. Therefore,
improve their operational performance, which is one of the future studies could conduct longitudinal studies to examine
most important evaluation criteria used by foreign buyers to the relationship between SCI practices and performance.
make the supplier selection decision. Third, this study only examined the moderating effect of
Third, our findings highlight the characteristics of Chinese
competitive strategies on the relationship between SCI
manufacturers in terms of implementing various SCI practices
practices and performance. Future studies could investigate
under different competitive strategies. Chinese manufacturers
the causal effects of competitive strategies on the qualitative
are incapable of managing different types of SCI practices. For
facets of SCI. For example, they could explore what kinds of
example, our findings show that process integration is working
well for operational performance, but not for financial SCI practices, such as types of information sharing, should be
performance, and product integration is only beneficial for emphasized under various strategies. Finally, by focusing on
financial performance. In contrast, internal integration is various industries, company sizes and regions, we developed a
valuable for both operational and financial performance. broad picture of the relationship among competitive strategies,
These findings imply that Chinese manufacturers’ operational SCI practices and company performance. However, these
routines are still internal-oriented. It may be that there are relationships may not be the same for all company sizes,
high external transaction- or relationship-management costs industries or regions. Future research should investigate the
in the Chinese context. Therefore, to increase the supply chain effects of these contextual factors on competitive strategies,
efficiency of Chinese manufacturers, two things are important. SCI practices and company performance, along with the
First, China’s institutional environment must be straight-out. relationships among them.
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Supply chain integration on firm performance Supply Chain Management: An International Journal
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384
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Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384
Appendix 1
Representative contingency studies on SCI are shown in Table AI.
382
Supply chain integration on firm performance Supply Chain Management: An International Journal
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384
Appendix 2
Measurement items (with factor loadings) are shown in Table AII.
Cost leadership. Please indicate the importance of the following competitive methods to your firm’s overall strategy (1 ⴝ most
unimportant; 7 ⴝ most important)
Operating efficiency 0.74
Pursuing cost advantage of raw material procurement 0.76
Pricing below competitors 0.81
Pursuing economy of scale 0.72
Finding ways to reduce cost of production 0.74
Differentiation. Please indicate the importance of the following competitive methods to your firm’s overall strategy (1 ⴝ most
unimportant; 7 ⴝ most important)
Providing product with unique features 0.76
Providing product with many features 0.81
Targeting high-priced product segments 0.58
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Advertising 0.64
Control of distribution channels 0.45
Internal integration. To what extent does your company use the following practices (1 ⴝ not at all; 7 ⴝ extensively used)?
Data integration among internal functions 0.75
Enterprise application integration among internal functions 0.75
Integrative inventory management 0.70
Real-time integration and connection among all internal functions from raw material management through production, shipping,
and sales 0.69
The use of periodic interdepartmental meetings among internal functions 0.55
The use of cross-functional teams for product design 0.43
Process integration. To what extent does your company use the following practices (1 ⴝ not at all; 7 ⴝ extensively used)?
Establishing strategic partnership with suppliers 0.73
Working with suppliers to improve inter-organizational processes with suppliers 0.72
Creating a greater level of trust with suppliers 0.72
Creating linkage with suppliers through information technology 0.65
Sharing information with suppliers 0.71
Establishing strategic partnership with customers 0.67
Working with customers to improve inter-organizational processes with customers 0.64
Creating a greater level of trust with customers 0.70
Creating linkage with customers through information technology 0.57
Sharing information with customers 0.53
Product integration. To what extent does your company use the following practices (1 ⴝ not at all; 7 ⴝ extensively used)?
Involving suppliers in product development stage 0.69
Involving customers in product development stage 0.73
Operational performance. How does your company perform compared with your major competitors (1 ⴝ much worse; 7 ⴝ much
better)?
Overall product quality 0.72
Customer service level 0.77
Pre-sale customer service 0.70
Product supports 0.72
Responsiveness to customers 0.67
Delivery speed 0.70
Delivery dependability 0.72
Volume flexibility 0.70
Product mix flexibility 0.63
New product flexibility 0.64
Financial performance. How does your company perform compared with your major competitors (1 ⴝ much worse; 7 ⴝ much
better)?
Return on Investment 0.82
Return on Sale 0.76
Market share 0.67
Growth in ROI 0.82
Growth in ROS 0.81
Growth in market share 0.73
383
Supply chain integration on firm performance Supply Chain Management: An International Journal
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384
in 2006. He has taught courses on operations management, Management, Journal of Consumer Research, Decision Sciences
supply chain management and business strategy game. His Journal, European Journal of Operations Research, International
work has been published in publications including Journal of Journal of Production Research and other journals.
384
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