The mediating role of customer related performance outcomes on the relationship between customer integration and firm performance

Abstract

Purpose Even though supply chain integration (SCI) has been considered as a vital contributor to business performance, the research shows inconsistency in its finding. Accounting for these inconsistencies, researchers (Fabbe-Costes and Jahre, 2007; Van der Vaart and van Donk, 2008) have highlighted the need to relate the level of integration in a single relationship to the performance outcomes of that relationship. The purpose of this paper is to make an effort in this direction and investigate the impact of customer integration (an important dimension of SCI) on customer-related performance outcome (CRPO) and financial performance of the firm. Design/methodology/approach Based on an extensive literature review, a research model has been developed hypothesizing the relationships between customer integration, CRPO and financial performance. The research model is then tested using data collected from 214 Indian manufacturing companies. Structural equation modeling was used to test the hypothesized relationship between constructs of interest. Findings The result showed that there is no direct effect of customer integration on financial performance instead the relationship is fully mediated through CRPO. Originality/value This study conceptualizes and develops scale for the specific performance outcome resulting from a high level of integration between manufacturer and key customers and labels it as CRPOs. It further investigates the mediating role of this immediate performance outcome on the relationship between customer integration and firm performance.