Supplier integration,operational capability and firm performance: an investigation in an emerging economy environment

Abstract

The literature on supplier integration’s (SI) impact on firm performance is intertwined with mixed findings in terms of definitional differences, study context, specific integration components, and the types of relationships examined. This study contributes to the supplier integration and firm performance (SI-FP) literature by investigating how and when supplier integration influences firm performance. Drawing on the relational view, the resource-based view, and the Dynamics Capability theories, we suggest that improvements in firm performance from the supplier integration perspective are dependent on gains in operational capabilities. We test this dependency with survey data from firms in Ghana, a developing economy. The results show positive significant relationships between supplier integration and competitive operational capabilities and between supplier integration and firm performance. Our results highlight the importance for managers in developing economies and elsewhere to improve their firms’ operational capabilities and competitiveness by investing in supplier integration. We also discuss implications of these findings for research.     

Manufacturing Practices and Strategy Integration: Effects on Cost Efficiency,Flexibility, and Market‐Based Performance

Manufacturing plant managers have sought performance improvements through implementing best practices discussed in World Class Manufacturing literature. However, our collective understanding of linkages between practices and performance remains incomplete. This study seeks a more complete theory, advancing the idea that strategy integration and enhanced manufacturing capabilities such as cost efficiency and flexibility serve as intermediaries by which practices affect performance. Hypotheses related to this thesis are tested using data from 57 North American manufacturing plants that are past winners and finalists in Industry Week's“America's Best” competition ( Drickhamer, 2001 ). The results suggest that strategy integration plays a strong, central role in the creation of manufacturing cost efficiency and new product flexibility capabilities. Furthermore, strategy integration moderates the influences of product‐process development, supplier relationship management, workforce development, just‐in‐time flow, and process quality management practices on certain manufacturing capabilities. In turn, manufacturing cost efficiency and new product flexibility capabilities mediate the influence of strategy integration on market‐based performance. These findings have implications for practice and for future research.     

Internal and External Integration for Product Development: The Contingency Effects of Uncertainty,Equivocality, and Platform Strategy

Effective product development requires firms to unify internal and external participants. As companies attempt to create this integrated environment, two important questions emerge. Does a high level of internal integration lead to a higher level of external integration? In the context of product development, this study considers whether internal integration in the form of concurrent engineering practices affects the level of external integration as manifested by customer integration, supplier product integration, and supplier process integration. External integration, in turn, may influence competitive capabilities, namely product innovation performance and quality performance. Second, using contingency theory, do certain contextual variables moderate the linkages between integration strategy (external and internal) and performance? Specifically, this study considers whether uncertainty, equivocality, and platform development strategy change the relationships among internal integration, external integration, and competitive capabilities. Data collected from 244 manufacturing firms across several industries were used to test these research questions. The results indicate that both internal and external integration positively influence product innovation and quality and ultimately, profitability. With respect to contingency effects, the results indicate that equivocality moderates the relationships between integration and performance.     

The impact of inter-organizational information systems-enabled external integration on capabilities of buyer–supplier dyads

Increasingly, firms are adopting two major supply chain management initiatives: to undertake external integration with supply chain partners and to implement inter-organizational information systems (IOSs). However, academic researchers have not adequately investigated effects of these types of initiatives. Using empirical data from 154 buyer–supplier dyads, we examined the direct and indirect effects (through external integration) of IOS usage on capabilities of buyer– supplier dyads. We found that external integration plays a mediating role in the relationship between IOS usage and capabilities of buyer– supplier dyad. This is the first study to investigate the effects of IOS usage and external integration on capabilities of buyer–supplier dyad.     

More (new) products,more problems? A systems perspective on increased capability deployment and organizational errors

The capabilities-based view postulates that organizational capabilities are a key driver of competitive advantage. However, while increasing the pace of deploying organizational capabilities, such as new product development (NPD), may enable alignment with changing environments, it may also have unintended consequences. In this study, we advance theory on these unintended consequences by investigating how the increased deployment of NPD capability leads to organizational errors. Borrowing from organizational research employing systems theory, we argue that an increase in NPD deployment may increase the likelihood of routine discoordination and, thus, the incidence of intra-firm and interfirm errors. However, we also proffer that firms can mitigate errors from increases in NPD capability deployment by engaging in distinct internal and external activities that enable the accumulation of knowledge on how to coordinate systemic change. We distinguish between internal and external errors, demonstrating that in the context of increased NPD deployments, internal voluntary investigations ameliorate internal manufacturing errors, while supplier alliances mitigate outsourced component errors. We find support for our predictions using data from new product introductions and recalls in the U.S. automotive industry. This study sheds light on the tension inherent to accelerating the deployment of patterned organizational activities and suggests that the outcomes of deploying an organizational capability are best viewed holistically within the milieu of organizational systems the capability spans.     

The Evolving Firm: How Dynamic and Operating Capabilities Interact to Enable Entrepreneurship

In this study, we expand our understanding of firm evolution by focusing on how operating and dynamic capabilities interact through endogenously led changes. The focus on endogenous change complements the current emphasis in the literature on how dynamic capabilities help firms cope with the risk of core rigidities following an exogenous shock. Our comparison of two collaborating firms shows that, at the operating capability level, firms build absorptive capacity in value networks during their product development experiences and this learning needs to be captured at the product portfolio planning level. When this learning is captured and transformed, product portfolio planning acts as a dynamic capability reconfiguring operating capabilities based on beliefs about follow-on entrepreneurial opportunities. Under conditions of endogenous change, dynamic capabilities are guided by a proactive entrepreneurial logic, complementing the need for reactive adaptive responses in circumstances of exogenous change. A key implication is that dynamic capabilities have a more expansive and critical role in the adaptation of firms than previously considered. Our theorizing shows how interactions between dynamic and operating capabilities build the adaptive capacity of the organization.     

Organizational dynamics and global integration: A perspective from subsidiary managers

This study establishes a relationship between organizational dynamics and overall integration within MNEs from the perspective of foreign subsidiaries in a dynamic environment. While previous empirical studies have emphasized that overall integration is determined by environmental and industrial pressures, we propose that integration is also affected by strategic capabilities, organizational infrastructures and strategic needs of foreign operations. Analysis of survey data including 168 foreign subsidiaries in a large emerging foreign market suggests that the resource distinctiveness committed to local operations is positively associated with overall integration, while the strength of networking with local businesses and governments is positively associated with overall responsiveness. The effectiveness of established information flow and coordination between a focal subsidiary and the rest of the network has a favorable effect on integration. Moreover, strategic needs in exploitation of factor endowment contribute to higher levels of integration. These needs also moderate the relationship between dynamic capability and overall integration.     

Critical success factors in managing modular production design: Six company case studies in Hong Kong, China, and Singapore

Many researchers have explored the advantages of modular product design, its design methods and its effects on product performance. Modular design is, for example, required for product platform, mass customization and postponement in order to achieve greater product variety and differentiation. However, a few empirical studies explicitly examine how to coordinate modular product design in a managerial way. This paper addresses it by conducting multiple case studies with six companies which have successfully adopted modular product design for five years. Seven critical factors are explored in the management of modular product design. These are pre-defined product advantage, selectively used design rules, module definition, system integration, technological newness, internal communication, and supplier and customer involvement. While most of the literature studies the technical dimension of modular design within a firm, this study focuses on the managerial side across the supply chain. It gives new insights on how to manage modular product design and proposes future research opportunities.     

The extended dynamic capabilities model: A meta-analysis

This paper investigates, from meta-analytic approach, some topics that were unexplored in others dynamic capabilities meta-analysis. Hence, our research advances to identify and test the main antecedents of dynamic capabilities, the possible moderation effects of economic and cultural contexts in the relationship between dynamic capabilities and firm performance and the mediation effects between the antecedents of dynamic capabilities and firm performance. (1) The elements that stimulate dynamic capabilities development are resources, knowledge and learning, alliances and environmental dynamism. However, entrepreneurial orientation has no direct relationship with dynamic capabilities. (2) Dynamic capabilities play a mediating role between resources, knowledge and learning, alliances and firm performance. Curiously, entrepreneurial orientation is not mediated by dynamic capabilities in relation to performance. (3) Economic and cultural moderation affect the relation between dynamic capabilities and performance. Surprisingly, we detected that an Eastern orientation, presenting a high level of power distance and a low level of individualism, promotes stronger effects in the relationship between dynamic capabilities and firm performance than a Western orientation. Thus, our main contribution is to broaden the previous research on dynamic capabilities and to propose a future research agenda. In addition, this study adds new empirical evidence to the study of dynamic capabilities, which reduces the heterogeneity of previous results.     

Examining the Impact of Interorganizational Systems on Process Efficiency and Sourcing Leverage in Buyer–Supplier Dyads

Manufacturing firms are increasingly seeking cost and other competitive advantages by tightly coupling and managing their relationship with suppliers. Among other mechanisms, interorganizational systems (IOS) that facilitate boundary‐spanning activities of a firm enable them to effectively manage different types of buyer–supplier relationships. This study integrates literature from the operations and information systems fields to create a joint perspective in understanding the linkages between the nature of the IOS, buyer–supplier relationships, and manufacturing performance at the dyadic level. External integration, breadth, and initiation are used to capture IOS functionality, and their effect on process efficiency and sourcing leverage is examined. The study also explores the differences in how manufacturing firms use IOS when operating under varying levels of competitive intensity and product standardization. In order to test the research models and related hypothesis, empirical data on buyer–supplier dyads is collected from manufacturing firms. The results show that only higher levels of external integration that go beyond simple procurement systems, as well as who initiates the IOS, allow manufacturing firms to enhance process efficiency. In contrast, IOS breadth and IOS initiation enable manufacturing firms to enhance sourcing leverage over their suppliers. In addition, firms making standardized products in highly competitive environments tend to achieve higher process efficiencies and have higher levels of external integration. The study shows how specific IOS decisions allow manufacturing firms to better manage their dependence on the supplier for resources and thereby select system functionalities that are consistent with their own operating environments and the desired supply chain design.     

政府支持、信任与供应链外部整合的关系研究

当前学术界对于影响供应链整合的因素、这些因素如何影响到供应链整合的研究相对匮乏。本研究则以广东省珠三角地区251家制造业为调查对象,构建了政府支持、信任与供应链外部整合之间关系的理论模型,以结构方程为工具,对政府支持、客户信任、供应商信任、客户整合、供应商整合之间的关系进行了实证研究。研究结果表明,政府支持对客户信任、供应商信任均有显著的正向影响;政府支持对客户整合、供应商整合也均有显著的影响;信任对供应链外部整合具有显著的正向影响;此外,政府支持会以信任为中介,间接地对供应链外部整合产生影响,本研究弥补了我国情境下制度与信任因素对供应链整合影响相关研究的空缺,研究结果对我国制造业进行高效供应链整合具有一定的启发意义。     

Reconsidering ordinary and dynamic capabilities in strategic change

Dynamic capabilities research explains the ability of firms to respond to dynamic environments by reconfiguring inert and insufficiently flexible ordinary capabilities. However, more recent research ascribes the routines that constitute ordinary capabilities the ability to evolve endogenously. This study aims to develop dynamic capability research by increasing our understanding of the relations between and the roles played by ordinary and dynamic capabilities in producing purposeful responses to environmental dynamism. Drawing on longitudinal, qualitative data, we show how ordinary capabilities make important contributions to organizational responses to dynamic environments. Our findings pose challenges to key assumptions of extant dynamic capabilities research and allow us to explicate new roles for ordinary and dynamic capabilities, thus advancing the understanding of the relation between dynamic and ordinary capabilities and advancing understanding of one of the central issues in dynamic capabilities research: firms’ capacity to respond to changing environments.     

Coopetitive Buyer–Supplier Relationship: An Investigation of Bargaining Power,Relational Context,and Investment Strategies

This study proposes an analytical approach combined with a behavioral experiment for a joint examination of the competitive and cooperative (i.e., coopetitive) relationship between a buyer and a supplier. Specifically, the article considers the scenario in which the buyer and the supplier invest in strategic capabilities to increase their relative bargaining power. The article examines how dynamic investments in strategic assets are influenced by the locus of bargaining power and by the underlying context (synergistic vs. adversarial) of the interfirm relationship. The dynamic evolution of bargaining power is also examined. A dynamic game model is considered to examine the evolution of investment strategies in critical resources and to investigate the issues of bargaining power in a buyer–supplier dyad. Equilibrium expressions for the investment strategies of the buyer and the supplier are presented and their implications for buyer–supplier relationships are examined. The behavioral experiment complements the analytical model and examines the correspondence between optimal behavior suggested by the analytical model and the boundedly rational behavior of decision makers in an experimental context. The results from the model and behavioral experiments suggest that the strategies are a function of the risk‐adjusted returns obtained from investments. The experiment shows that, in a synergistic relational context when the buyer maintains bargaining power, the investment shifts of the buyer and the supplier accord well with theoretical predictions. In an adversarial relational context, the results of the experimental study do not correspond well with that predicted by the theoretical model. The implications of the results are discussed and directions for future research are presented.     

Supplier integration and company performance: A configurational view

Supplier integration is considered a key managerial strategy for improving buyer performance. This study adopts a configurational approach to supplier integration, based on the interaction and complementarity between supply chain management practices. In this perspective, this study explores the impact of supplier integration and measures aimed at creating a fast supply network structure on buyer performance. This research also attempts to ascertain whether these practices can exert a synergic effect. After examining data from a sample of 186 manufacturing plants, we can conclude that while taken singly supplier integration and fast supply network structure practices have a markedly positive effect on the performance goals considered (i.e., efficiency, schedule attainment and flexibility); in addition, they interact to produce an additional synergic effect on efficiency and schedule attainment. The analyses also reveal that investing in FSNS or SI initiatives alone can be risky. On one hand, when companies fail to make any effort to structure their supply network in order to achieve fast lead times, the impact of supplier integration on efficiency and schedule attainment may be hindered and, in extreme cases, supplier integration might even have no impact at all. On the other hand, investing only in fast supply network structure initiatives, without striving to achieve an adequate level of supplier integration might well be useless: indeed, even detrimental to any improvement in performance. These findings provide useful guidelines for managers who must decide how to combine supplier integration and fast supply network structure initiatives in order to improve or maximize performance.     

Supplier integration and company performance: A configurational view

Supplier integration is considered a key managerial strategy for improving buyer performance. This study adopts a configurational approach to supplier integration, based on the interaction and complementarity between supply chain management practices. In this perspective, this study explores the impact of supplier integration and measures aimed at creating a fast supply network structure on buyer performance. This research also attempts to ascertain whether these practices can exert a synergic effect. After examining data from a sample of 186 manufacturing plants, we can conclude that while taken singly supplier integration and fast supply network structure practices have a markedly positive effect on the performance goals considered (i.e., efficiency, schedule attainment and flexibility); in addition, they interact to produce an additional synergic effect on efficiency and schedule attainment. The analyses also reveal that investing in FSNS or SI initiatives alone can be risky. On one hand, when companies fail to make any effort to structure their supply network in order to achieve fast lead times, the impact of supplier integration on efficiency and schedule attainment may be hindered and, in extreme cases, supplier integration might even have no impact at all. On the other hand, investing only in fast supply network structure initiatives, without striving to achieve an adequate level of supplier integration might well be useless: indeed, even detrimental to any improvement in performance. These findings provide useful guidelines for managers who must decide how to combine supplier integration and fast supply network structure initiatives in order to improve or maximize performance.     

An analysis of vendor innovation capability in the contract electronics manufacturing industry

Limited academic research has been given to analysing the innovation capabilities of vendors in outsourcing contracts. This paper seeks to address this gap in the literature by enhancing our understanding of how the innovation capability of vendors is deployed to win, run and renew outsourcing contracts with their customers. Employing the resource-based view as a theoretical basis and undertaking in-depth case study analysis of three vendors in the electronic manufacturing services industry, the research shows that to achieve the outsourcing objectives of winning, running and renewing the contract, vendors can use different configurations of the competitive priorities of cost, quality, delivery and flexibility. The research aggregates the capabilities that influence the innovative capability of a vendor into the innovation-related capabilities (IRCs) of design, new product introduction and manufacturing. Three strategies are identified for vendors on how to deploy these IRCs, and a number of propositions are developed to indicate the suitability of the three deployment strategies for different operational contexts.     

The Effect of Socialization Mechanisms and Performance Measurement on Supplier Integration in New Product Development

This article examines the effect of socialization mechanisms and supplier performance measurement on the level of supplier integration in new product development and subsequent firm performance outcomes. Prior research has found socialization mechanisms and performance measures to be effective in managing supplier relationships, though research examining their impact within a product development context has been limited. Socialization mechanisms, such as supplier conferences and on‐site visits, help establish communication and information‐sharing routines necessary to achieve supplier integration in the product development process. Using performance measures to evaluate a supplier helps focus managerial attention on areas such as innovation and communication that are important to integration success. A structural equation model, using a sample of 142 manufacturing firms based in the United Kingdom, indicates that the level of supplier integration in new product development is positively influenced by socialization mechanisms and innovation‐focused measures of supplier performance, but not significantly associated with the use of communication measures. In turn, increased levels of supplier integration led to improvements in both collaboration outcomes and business performance. Socialization mechanisms were also found to have a direct effect on collaboration outcomes achieved by the firm. Managerial implications and future research directions are discussed.     

Experiential learning,M&A performance,and post-acquisition integration strategy: A meta-analysis

While research on mergers and acquisitions (M&A) capabilities is accelerating, our understanding of their antecedents and performance implications still remains rather fragmented. Previous research has outlined the importance of learning for building M&A capabilities, but no work has attempted to summarize previous empirical findings regarding different learning mechanisms and their impacts on M&A performance. Mainly drawing upon organizational learning theory and the dynamic capabilities perspective, this study consolidates research on the relationship between different learning mechanisms, post-acquisition integration strategies, and M&A performance. Using meta-analytical techniques, our study shows that the capability-building mechanism relying on deliberate investments in learning tends to be more effective than the capability mechanism based on mere experience accumulation. In addition, our findings indicate that a higher degree of integration is associated with enhanced M&A performance among firms with more developed experiential learning, highlighting the need to explore mediating effects of integration strategy choices on the experiential learning-performance relationship.     

On Decisions for Integration Implementation: An Examination of Complementarities Between Product‐Process Technology Integration and Supply Chain Integration

Research has shown that both product‐process technology (PPT) integration and supply chain integration efforts produce operational benefits, yet synergies between these types of integration are not well understood. This article empirically examines strategic customer integration and supplier integration as complementary activities for PPT integration, with the aim of helping manufacturing plant managers to intelligently implement mutually supportive types of integration. We set two conditions for establishing complementarity: (i) one type of strategic integration must positively influence the adoption of another and (ii) the two types of strategic integration must exhibit a synergistic fit with respect to manufacturing plant capabilities. We test these conditions using survey results representing 224 manufacturing plants. The findings show positive complementarities between PPT integration and supplier integration with respect to quality, delivery, and process flexibility. Also, positive complementarities exist between PPT integration and customer integration with respect to quality and new product flexibility. The results extend the emerging theory of strategic value chain integration and provide guidance to manufacturing managers who wish to assemble strategic integration policies.