The mediating effect of logistics integration on supply chain performance

Abstract

Purpose – The purpose of this paper is to analyze the impact of individual logistics-related factors, namely, supplier involvement (SI), length of supplier relationship (LSR), use of information technology (IT), and logistics integration (LI) on a firm's supply chain performance (SCP) and test for the mediating effect of LI in a multi-country survey conducted in Brazil, Korea and India. The paper also develops a composite variable, supply chain competency (SCC), as an overall measure of the quality of a firm's supply chain and demonstrate its effect on a firm's SCP. Design/methodology/approach – The research methodology was based on designing and administering a survey instrument. Data collected from 187 organizations in Brazil, Korea and India were analyzed using the partial least squares structural equation modeling methodology. Findings – Results show that for the combined data, the direct effects of SI, LSR and IT on SCP are insignificant while LI has a very significant direct effect on SCP. On the other hand, except for SI, LSR and IT have significant effects on SCP through LI establishing the mediating role of LI. The paper also finds that SCC has a significant effect on SCP. Further, when countries are considered individually the paper finds that IT has a significant indirect effect on SCP in the case of all the countries while LSR has a significant indirect effect on SCP, both in the case of Brazil and Korea. Additionally, in the case of Korea SI has a significant indirect effect on SCP. Research limitations/implications – Like other survey-based research, the findings of this paper are also limited by the sample size. Especially, the observations specific to individual countries are as good as the respective sample sizes. Also, since all the respondents belonged to manufacturing firms, the findings of this paper are relevant for the manufacturing sector. Practical implications – This paper establishes the mediating effect of LI in assessing the impact of logistics-related factors on a firm's SCP. It confirms that although logistics-related factors are necessary for a firm's superior SCP, they are not sufficient unless their interactions are taken into consideration, as evidenced by the significant positive relationship between SCC and SCP. Originality/value – To the best of the authors’ knowledge, this paper is the first paper to study the effect of logistics-related factors on a firm's SCP and establish the mediating role of LI in a multi-country setting. This paper also develops a composite variable SCC and examines its effect on SCP.