Supply chain integration, competitive strategies and firm performance

Abstract

Purpose This study aims to examine the interaction between different types of supply chain integration (SCI) and competitive strategies on firm performance. Design/methodology/approach The research method is quantitative. The study develops a structured model and a set of hypotheses based on the related theories. Empirical data is collected in a cross-sectional manner using an online survey to test the model and its hypotheses. The survey comprised standard scales to measure study variables. The scales had high reliability and validity and were commonly used in the literature. The study was conducted on Iranian firms working in steel and auto parts industries. Based on official reports, a total of 305 active companies were found in these two industries. Due to the small population size, all companies in the two industries were contacted for participation. Overall, 84 firms completed the survey. To test the research hypotheses, the authors used hierarchical regression analyses using SPSS 27 software. Findings Results showed that internal integration improves financial performance when firms follow a cost leadership strategy. Differentiation strategy and process integration interact positively and improve operational performance. Type of industry had no significant effect. The results add to the SCI literature by showing that a match between competitive strategy and integration type can influence both operational and financial performance. In total, firms should focus on the appropriate dimension of SCI based on their competitive strategy to improve the performance of the firm. Originality/value The impact of competitive strategy as a moderator on the SCI-performance relationship has not been widely addressed in the literature. In one study, Huo et al. (2014) investigated this relationship using data from 604 manufacturing companies in China. The results provided support for financial performance but not for operational performance. However, the influence of competitive strategies on the SCI performance may vary in different countries and contexts with dissimilar environmental, social and cultural characteristics. As several supply chain scholars have argued, understanding contextual conditions that influence the effect of best practices such as SCI on performance are critical