The impact of supply chain risk and supply chain integration on organizational performance

Abstract

Goal: The purpose of this study is to investigate the mediating role of supply chain integration for Supply chain risks heading toward organizational performance. This study is mainly focused on the dairy sector of emerging economies. Design / Methodology / Approach: This is quantitative research, in which a multi-item scale web-based survey was conducted to collect primary data. 407 stakeholders of the dairy industry, specifically the customers and the ones dealing with supply chain operations and the planning and integration department were investigated. Confirmatory factor analysis and internal consistency were applied to test the reliability and fitness of the measurement model and structural equation modeling-SEM is used to test the proposed hypotheses. Results: The results suggest that in the dairy sector, both customer and supplier risks, act as barriers to implementing (SCI) supply chain integration and also negatively influence (OP) organizational performance. However, supplier risks, belonging to the dairy industry of an agricultural-based country like Pakistan, have a comparatively less negative impact on organizational performance as compared to customer risk, conversely, supply chain integration helps the organization to achieve better performance. The integration indeed acts as a strong mediator in reducing the negative impact of supply chain risk. Limitations of the investigation: This study utilizes cross-sectional data, which restricts the researchers to depict the entire manifestation of (SCR) supply chain risk, supply chain integration, and organization performance, for businesses operating in the dairy sector of a developing economy, like Pakistan. Practical implications: This study helps managers to use  SCI as a tool to reduce the impact of supply chain risk i.e. supplier risk and customer risk on organizational performance. Also, this study explains the importance of customer risk as compared to supplier risk associated with perishable products. Originality / Value: This paper enriches the literature in an evolving area of SCI and SCR, by investigating the mediating role of SCI. Two key risks i.e. supplier risk and customer risk associated with the supply chain network of dairy sector organizations are addressed, along with the mediating ability of supply chain integration to improve firm performance is investigated.