Building high performance supply-chain relationships for dynamic environments

Abstract

Purpose The purpose of this paper is to explore how different forms of integration interact with environmental dynamism to influence the outcomes of a buyer–supplier relationship (BSR). Specifically, the authors assess the impact of communication, operational process integration (OPI) and joint knowledge exploration (JKE) on the economic value and competitive differentiation generated by the BSR. Furthermore, the authors assess the moderating role of environmental dynamism in changing the performance implications of these different forms of integration. Design/methodology/approach The authors empirically test the theoretical model using survey data collected from North America. The authors apply techniques such as confirmatory factor analysis, regression and a variety of robustness checks to ensure the validity of the findings. Findings The results indicate that OPI and JKE are useful in generating higher value from key supply chain relationships. However, communication does not directly influence performance outcomes, rather it assists in the implementation of other forms of integration. In stable environments, better returns can be obtained from focusing on OPI, while in dynamic environments JKE becomes far more important. Originality/value This study shows that different aspects of integration have very different performance implications and that selective integration can outperform broad-based integration in some conditions. More importantly, the performance implications depend on environmental dynamism in unique ways, where greater integration is not always the best response to dynamic business conditions. The results allow managers to make better decisions regarding what forms of integration to establish in key supply chain relationships.