Supply Chain Management: An International Journal

The impact of supply chain integration on firm performance: The moderating role of competitive strategy
Baofeng Huo, Yinan Qi, Zhiqiang Wang, Xiande Zhao,
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 The impact of supply chain integration on firm
performance
The moderating role of competitive strategy
Baofeng Huo
School of Management, Zhejiang University, Hangzhou, China
Yinan Qi
School of Business, University of International Business and Economics, Beijing, China
Zhiqiang Wang
School of Business Administration, South China University of Technology, Guangzhou, China, and
Xiande Zhao
China Europe International Business School, Shanghai, China and School of Business Administration, South China University
of Technology, Guangzhou, China
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Abstract
Purpose – This paper aims to provide empirical evidence of the effectiveness of various supply chain integration (SCI) practices under different
competitive strategies in terms of cost leadership and differentiation.
Design/methodology/approach – Survey methodology was used to collect data from 604 Chinese manufacturers. Hierarchical linear regression
was used to analyze the moderating effects.
Findings – The results showed that competitive strategies significantly influenced the effectiveness of SCI practices, including internal, process and
product integration. More specifically, internal integration significantly affected the financial performance of cost leaders, while process integration
contributed more to the financial performance of differentiators. However, competitive strategies had no significant moderating effect on the
relationship between SCI and operational performance.
Research limitations/implications – This study contributes to the literature by exploring the effectiveness of various SCI practices in relation to
firm performance under different competitive strategies. The results should be treated with caution, as they may be more meaningful in China.
Practical implications – The findings clarify the alignment of SCI with competitive strategies for practitioners, so that they can allocate their limited
resources to build various SCI capabilities based on their strategic choices.
Originality/value – The results enhance the body of knowledge on SCI from the perspective of contextual factors to explore its effectiveness at
a more detailed level. This study extends the literature on the match between competitive strategies and SCI in improving financial performance.
Keywords China, Competitive strategy, Performance, Supply chain integration, Contingency theory
Paper type Research paper

1. Introduction achieving performance and competitive advantages (Flynn

et al., 2010; Frohlich and Westbrook, 2001; Vickery et al.,
The trend of focusing on core capabilities and outsourcing the
2003; Zailani and Rajagopal, 2005; Zhao et al., 2013).
rest has prompted an increasing number of firms to look
One of the fundamental issues in the SCI literature is
beyond their own boundaries for supplier and customer
whether the relationship between SCI and performance is
resources that might be leveraged to create additional value
universal or contingent on environments or strategies. The
(Flynn et al., 2010; Swink et al., 2007; Zhao et al., 2008,
universal perspective suggests that certain types of SCI are
2011). Supply chain integration (SCI) helps firms to
more effective than others in improving performance
reconfigure their resources and capabilities internally and
(Frohlich and Westbrook, 2001; Flynn et al., 2010; Huo,
externally to consolidate their supply chain as a whole in an
effort to improve long-term performance (Horvath, 2001;
Huo, 2012). It is generally acknowledged that SCI is critical in
This research was supported by National Natural Science Foundation of
China (#71090403/71090400, #71233003, #71002005 and #71372058),
The current issue and full text archive of this journal is available at Key Project of Philosophy and Social Sciences Research of Ministry of
Education (#12JZD042), a fund from program for innovative research
www.emeraldinsight.com/1359-8546.htm
team at UIBE and the Institute of Supply Chain Integration and Service
Innovation.

Received 17 March 2013

Supply Chain Management: An International Journal Revised 18 August 2013
19/4 (2014) 369 –384 25 November 2013
© Emerald Group Publishing Limited [ISSN 1359-8546] 16 January 2014
[DOI 10.1108/SCM-03-2013-0096] Accepted 19 January 2014

369
 Supply chain integration on firm performance Supply Chain Management: An International Journal
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384

2012). For example, internal integration is more strongly
related to performance than external integration (Flynn et al.,
2010). However, the contingent perspective suggests that the
effectiveness of various types of SCI is determined by the level
of contingent factors (Wong et al., 2011b). For example, Iyer
et al. (2009) showed that the effect of SCI on performance
decreased as product turbulence and demand unpredictability
jointly increased. Recently, the SCI literature has increasingly
emphasized the external environment or product
characteristics as contingent factors (Appendix 1). However,
findings on the integration – performance relationship have
been inconsistent (Flynn et al., 2010; Huo, 2012; Zhao et al.,
2013).
Ketokivi and Schroeder (2004a, 2004b) argued that
conflicting findings about the effectiveness of operational
practices may be due to the lack of consideration for
contingency variables such as environmental uncertainty,
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2. Theoretical background and hypotheses
development
In this section, we define the constructs and develop a set of
hypotheses on the relationship between SCI and competitive
strategies and their effects on operational and financial
performance. Figure 1 depicts the conceptual model.
2.1 SCI and competitive strategy
Different conceptualizations of SCI have emerged in previous
studies (Ho et al., 2002). Based on the literature, we define
supply chain, external and internal integration according to
Flynn et al. (2010, p. 59): SCI is “the degree to which a
manufacturer strategically collaborates with its supply chain
partners and collaboratively manages intra- and
inter-organization processes”; external integration is “the
degree to which a manufacturer partners with its external
partners to structure inter-organizational strategies, practices

strategy and institutional pressure. They indicated that: and processes into collaborative, synchronized processes”; and
internal integration is “the degree to which a manufacturer
[. . .] seeking universal links between, say JIT implementation and structures its own organizational strategies, practices and
operational performance, should be avoided, because the failure to identify
a link may well be caused by the fact that in the sample there are plants that processes into collaborative, synchronized processes, in order
have adopted JIT by uncritical mimicry of others (Ketokivi and Schroeder, to fulfill its customers’ requirements”.
2004a, p. 77, 2004b). Furthermore, to respond to the need voiced by
Thus, it is critical to consider firm strategy in studying SCI Fabbe-Costes and Jahre (2008) and Huo et al., (2014b) for
effectiveness (Ketokivi and Schroeder, 2004a, 2004b; more focused empirical research on SCI, this study further
classifies external integration into product and process
Mckone-Sweet and Lee, 2009). Theorists argue that a
integration. Product integration refers to the involvement of
company’s practices should be aligned with its strategies to
suppliers and customers in the development of new products
obtain superior performance (Miller, 1992). In the supply
(Huo et al., 2014a; Khazanchi et al., 2007; Wagner, 2008) and
chain context, it is argued that supply chain management
aims to support such development through close interactions
practices should be aligned with firm strategy (Cigolini et al., with supply chain partners (Koufteros and Marcoulides,
2004). Furthermore, Stonebraker and Liao (2006) proposed 2006). Process integration is the establishment of
that there should be a strategic fit among environmental, collaborative and synchronized processes with suppliers and
strategic (e.g. competitive strategy) and operational (e.g. SCI) customers (Huo et al., 2014a; Kim et al., 2012; Wagner, 2008)
variables to achieve company success. Therefore, in this study, and aims to support product manufacture and delivery. In the
the contingent perspective is adopted to investigate the literature, these two external integration types are usually
relationship between SCI and performance by considering the investigated separately in different research streams. However,
moderating role of firms’ competitive strategies. both are imperative for manufacturers to compete in volatile
The majority of previous studies have focused on markets and may contribute to firm performance in different
investigating the effects of different types of SCI (e.g.
internal and external integration) on firm performance. Figure 1 The conceptual model
Such a classification of SCI is too abstract to reveal the
essence of the effectiveness of various SCI practices. This
classification may be one of the main reasons for
contradictory findings in previous SCI and firm
performance studies. For example, Iyer (2009) and Wong
et al. (2011b) found that environmental uncertainty had a
varying effect on the efficacy of internal and external
integration. Thus, it is necessary to explore the effect of SCI
on firm performance at a more detailed level. In this study,
we identify the content of SCI (i.e. internal, process and
product integration) and explore its effectiveness in
improving firm performance under different competitive
strategies.
The theoretical background and hypotheses are presented
in the next section, followed by a description of the research
methodology and analytical results. Finally, we conclude the
study with the major findings, contributions, limitations and
future research directions.

370
 Supply chain integration on firm performance
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao
ways. Therefore, it is necessary to investigate whether various
external integration practices influence firm performance
differently, especially under different strategic contexts.
Strategic management researchers have identified cost
leadership and differentiation as two dimensions of
competitive strategies (Miller, 1988; Porter, 1991). Firms
pursuing a cost leadership strategy compete mainly on lower
prices and must reduce costs through efficient
sourcing/production/distribution and economy of scale. In
contrast, firms with a differentiation strategy create unique
products/services to command higher prices and typically
need a high level of innovation capability and superior product
quality (Miller, 1988). Unique and multiple features often
differentiate their products/services from those of their
competitors.
2.2 The effect of SCI on firm performance
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Although financial performance has been widely used as a key
output measure of firm performance (Bender, 1986; Boyer,
1999; Boyer et al., 1997), numerous studies have pinpointed
the limitations in relying solely on financial performance
measures in supply chain studies (Eccles and Pyburn, 1992;
Hall, 1983; Johnson and Kaplan, 1987). For example,
numerical performance measures used as simple qualitative
evaluations may not adequately describe firm performance.
Therefore, in this study, we adopt both operational and
financial performance to measure the benefits of SCI.
Internal integration can help functions to leverage each
other’s resources and capabilities to jointly design products,
ensure product quality and reduce duplicated tasks (Flynn
et al., 2010; Schoenherr and Swink, 2012). For example, Tan
(2001) found that internal integration could create a close link
between manufacturing and distribution processes to deliver
products and services in a timely and effective manner.
Efficient external process integration allows manufacturers to
speed up product delivery processes, improve production
planning and reduce inventory obsolescence using accurate
information about customer demands and preferences (Swink
et al., 2007). Further, process integration with suppliers helps
manufacturers reduce mistakes and enhance product quality
through information sharing and joint planning, which are
directly related to the manufacturers’ operational performance
(Petersen et al., 2005). Product integration with suppliers and
customers can enhance manufacturers’ new product
development capabilities, promoting product quality,
flexibility and innovation in addition to product competitive
advantage (Koufteros et al., 2007; Swink and Song, 2007;
Swink et al., 2007). Therefore, we propose our first set of
hypotheses:
H1a. Internal integration is positively related to operational
performance.
H1b. Process integration is positively related to operational
performance.
H1c. Product integration is positively related to operational
performance.
Many studies have investigated the relationship between SCI
and financial performance, and it is generally accepted that the
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Supply Chain Management: An International Journal
Volume 19 · Number 4 · 2014 · 369 –384
former enhances the latter. For example, Frohlich and
Westbrook (2001) concluded that manufacturers with the
widest degrees of supplier and customer integration achieve
the best performance improvements in terms of market share
and profitability. Droge et al. (2004) found that both internal
and external integration were related to financial performance
through time-based performance. Zailani and Rajagopal
(2005) noted that manufacturers with the greatest degrees of
external customer and supplier integration achieved the
highest overall performance improvement. The literature
suggests that internal and external process and product
integration can directly contribute to manufacturers’ financial
performance. Furthermore, it indicates that operational
performance plays an important role in the relationship
between SCI and financial performance. The literature also
provides evidence that operational performance positively
influences financial performance (Elgazzar et al., 2013; Inman
et al., 2011). Therefore, we propose our second set of
hypotheses:
H2a. Internal integration is positively related to financial
performance.
H2b. Process integration is positively related to financial
performance.
H2c. Product integration is positively related to financial
performance.
H3. Operational performance is positively related to
financial performance.
2.3 The moderating effect of competitive strategy
According to contingency theory, the effect of organizational
practices on firm performance is conditioned by the
organization’s strategic posture. Nelson and Winter (1982)
proposed that organizational capabilities are embedded in the
daily routines of operations. Ketokivi and Schroeder (2004b)
used an evolutionary view to explain the difficulties in
imitating organizational processes (i.e. routines) across
different organizations, which implicates the important value
of strategic contingency. In a large sample study, Dean and
Snell (1996) found little support for the positive effects of best
organizational practices, such as JIT and AMT, on firm
performance, citing a lack of consideration for strategic
contingency as the main reason.
Thus, caution should be exercised in examining the
practice – performance relationship from a universal
perspective. The performance effects of organizational
practices, even best practices, are contingent on the strategy
(Ketokivi and Schroeder, 2004a). Therefore, we posit that the
contingent view is also suited to the performance effects of
SCI practices. Next, we discuss the specific theoretical links
among SCI practices, competitive strategies and performance.
2.3.1 Cost leadership strategy
The ultimate goal of any organization is to create customer
value, which is defined by the ratio of quality to cost (Jacobs
and Chase, 2011). Thus, organizations can achieve
competitive advantage through cost reduction or product
premium. Firms pursuing a cost leadership strategy prefer a
highly mechanic organizational structure that emphasizes
 Supply chain integration on firm performance
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao
process efficiency (Porter, 1991). Those firms face fierce price
competition from highly homogeneous products, which makes
it difficult to provide personalized products, thus they are
forced to serve customers with high bargaining power. This
dynamic emphasizes intensive supervision, high-level
engineering skills and process continuity (Kotha and Orne,
1989). Furthermore, organizations with a cost leadership
strategy are inclined to build hierarchical cultures in which
formalized, structured workplaces are created, formal
procedures for governing people’s work are established,
smooth-running organizations are maintained, organizational
stability is pursued, the capacity of information flow is
increased and the efficient management and control of the
whole system is emphasized (Cameron and Quinn, 2011).
Thus, such a strategic orientation and organizational
atmosphere provide an appropriate context for seamlessly
linking the formalized process and information.
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Internal integration focuses on cross-functional
collaboration and real-time process synchronization (Flynn
et al., 2010). To achieve such an objective, organizational
routines must follow a common standard and work in a
centralized system. The inter-functional information
transparency helps firms to achieve accurate demand
forecasts, level scheduling, efficient warehouse
management, etc., which can significantly improve quality
and customer service and reduce waste and production
costs (Swink and Nair, 2007). Thus, internal integration is
expected to be more effective in organizations with a cost
leadership strategy.
Naylor et al. (1999) demonstrated that the goal of process
integration is to eliminate all boundaries to facilitate a smooth
flow of materials, cash, resources and information. Superior
information sharing in process integration can help reduce
uncertainty, which enhances firms’ forecasting and cost
reduction capabilities (Liker and Choi, 2004). Such
organizational routines require a seamless link between the
focal company and its supply chain partners. Top
management commitment, a centralized decision-making
system and mutual trust are thus required to build
cross-boundary integration (Simchi-levi and Simchi-levi,
2007). Hence, process integration is more effective in
organizations with a cost leadership strategy.
However, product integration underscores the high-level
involvement of customers and suppliers to reduce the product
development cost through early supplier involvement
(Handfield et al., 1999). Such involvement may lead to more
overhead costs (Campbell and Cooper, 1999), which are
inconsistent with the strategic orientation of organizations
with a cost leadership strategy. Furthermore, communication
between suppliers and customers is reliant on flexible
organizational structures, workers with multiple knowledge
backgrounds and decentralized systems (Huber, 1991). Thus,
product integration may work inefficiently in organizations
with a cost leadership strategy. Therefore, we propose our
third set of hypotheses:
H4a. The positive relationship between internal integration
and financial performance is strengthened when firms
pursue a cost leadership strategy.
372
Supply Chain Management: An International Journal
Volume 19 · Number 4 · 2014 · 369 –384
H4b. The positive relationship between process integration
and financial performance is strengthened when firms
pursue a cost leadership strategy.
H4c. The positive relationship between product integration
and financial performance is weakened when firms
pursue a cost leadership strategy.
H5a. The positive relationship between internal integration
and operational performance is strengthened when
firms pursue a cost leadership strategy.
H5b. The positive relationship between process integration
and operational performance is strengthened when
firms pursue a cost leadership strategy.
H5c. The positive relationship between product integration
and operational performance is weakened when firms
pursue a cost leadership strategy.
2.3.2 Differentiation strategy
Unlike cost leadership strategy, differentiation strategy
pursues the “premium quality” but not the cost minimization
to provide high customer value (Porter, 1991). Thus, the
notation of differentiator is unique in the market in terms of
special product features, price premiums, high quality,
multiple product features, product or service flexibility, etc.
(Miller, 1988; Nayyar, 1993). The external environment of
the differentiator is characterized by high technological and
demand uncertainties (Miller, 1988). To cope with challenges
in such an environment, organizations with a differentiation
strategy must fortify their research and development
capabilities and cultivate innovative workplace cultures and
teams. According to the analysis conducted by Cameron and
Quinn (2011), an adhocracy culture is most appropriate for
organizations with a differentiation strategy, as it creates a
dynamic, entrepreneurial and creative workplace; encourages
experimentation and innovation; motivates individual
initiative and freedom; and focuses on organizational
flexibility. Thus, the adhocracy culture facilitates
cross-functional coordination and process integration. In
particular, such a culture can motivate organizational learning
and facilitate interactions and communications with external
partners (Huber, 1991).
As we mentioned in the previous section, internal and
process integration underscore information sharing and
partnership across functions and supply chain players.
Therefore, we conclude that organizations with a
differentiation strategy will also provide appropriate contexts
for their organizational routines. Product integration requires
that a multi-knowledge “goalkeeper” for organizations link
efficiently with external partners (Huber, 1991). Thus, the
flexible and innovative cultures of organizations with a
differentiation strategy provide more appropriate contexts for
implementing effective product integration for improving
performance. Recently, Olhager and Prajogo (2012) provided
empirical evidence that external process integration
significantly influenced manufacturers’ performance in
providing differentiated products. Therefore, we propose our
final set of hypotheses:
 Supply chain integration on firm performance
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao
H6a. The positive relationship between internal integration
and financial performance is strengthened when firms
pursue a differentiation strategy.
H6b. The positive relationship between process integration
and financial performance is strengthened when firms
pursue a differentiation strategy.
H6c. The positive relationship between product integration
and financial performance is strengthened when firms
pursue a differentiation strategy.
H7a. The positive relationship between internal integration
and operational performance is strengthened when
firms pursue a differentiation strategy.
H7b. The positive relationship between process integration
and operational performance is strengthened when
firms pursue a differentiation strategy.
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H7c. The positive relationship between product integration
and operational performance is strengthened when
firms pursue a differentiation strategy.
3. Research design
3.1 Questionnaire design
The constructs and measures used in this study are shown in
Appendix 2. We surveyed the literature to identify valid
measures for constructs and adapted extant items. We
submitted the items to academicians and executives for review
and pre-tested them in a sample of about 40 firms with
face-to-face discussions. Based on the feedback, we modified
the wording of some questions and added or deleted items to
ensure that the questionnaire was understandable and relevant
to practices in China.
Two dimensions of competitive strategies were adopted in
this study: differentiation and cost leadership. The
measurement items for competitive strategies were adapted
from Nayyar (1993), Ward and Duray (2000) and Miller
(1988). In the questionnaire, the respondents were asked to
indicate the importance of the listed competitive methods
compared with their overall strategy.
The measures for SCI were mainly adopted from the
literature (Chen and Paulraj, 2004; Flynn et al., 2010;
Narasimhan and Kim, 2002; Stank et al., 2001). The
respondents were asked to indicate the extent to which SCI
practices had been implemented.
The measures for operational performance were adopted
from those featured in Boyer (1998), Boyer and Lewis (2002),
Flynn et al. (2010), Kathuria (2000) and Ward et al. (1998).
The respondents were asked to indicate how their
performance on these items compared with that of their
competitors. The items for financial performance were based
on the works of Gunasekaran et al. (2001), Flynn et al. (2010)
and Vickery et al. (2003). Financial performance was
measured by six items: return on investment (ROI), return on
sales (ROS), market share, growth in ROI, growth on ROS
and growth on market share. The respondents were asked to
indicate their performance on these items relative to that of
their competitors.
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Supply Chain Management: An International Journal
Volume 19 · Number 4 · 2014 · 369 –384
To ensure the questionnaire’s reliability, an English version
was developed first, reviewed and then translated into Chinese
by knowledgeable operations management professors. Then,
the Chinese version was translated back into English by
another group of professors. The back-translated English
version was then checked against the original English version.
Some questions in Chinese were reworded to better reflect the
original meaning of the questions in English. The Chinese
version of the questionnaire was pilot-tested in more than 40
manufacturing companies from Tianjin, Guangzhou and
Hong Kong in China. The data collected from the pilot tests
were also used to check the content validity of the measures.
3.2 Data collection
A mail survey was used to collect the required data. The unit
of analysis was the manufacturing company. The supply chain
managers, operations managers or general managers who were
knowledgeable in answering the questions on competitive
strategies, SCI and performance were selected as the key
respondents. Following Flynn et al. (2010), we used a single
respondent in each company for the survey.
As China is a very large country, we chose three
representative cities from three rapidly developing regions as
the target sampling areas. These three cities were Shanghai,
Guangzhou and Beijing. The database used to form our
sample pool was provided by Ebuywww Company, a source
for professional business research services in China that
cooperates closely with local governments and industry
associations to maintain a full list of companies located in our
targeted cities. Following the suggestion of Li et al. (2005), we
excluded companies with less than 100 employees because
they are seldom involved in sophisticated supply chain
management activities. There were 9,764 companies that met
our criterion.
We followed the approach suggested by Frohlich (2002) to
improve the response rate. First, the companies were called to
solicit their participation, and the best informants were
identified. The research assistants made telephone calls to the
selected companies to introduce this study and to identify the
key informant within the company who would be able to
answer the questionnaire. Of the 3,187 manufacturing
companies randomly selected from the database, only 2,724
companies had correct contact information. Those companies
were contacted by the research assistants and 614 completed
questionnaires were subsequently received, representing a
response rate of about 22.5 per cent. After screening, we
determined that 10 of the 614 questionnaires had not been
completed properly and were thus removed from further
analysis. Finally, 604 samples were used in our subsequent
analyses.
3.3 Non-response bias and common-method bias
The non-response bias was evaluated by comparing the
industry distribution of the respondent companies with that in
the population (Malhotra and Grover, 1998). Table I shows
that the percentages of the respondents were close to those of
the companies in the population in most industries. A
chi-square test (␹2 ⫽ 1.17) indicated no significant difference
between the distribution of the respondents and that of the
overall population (p ⬎ 0.05), suggesting that our sample was
 Supply chain integration on firm performance Supply Chain Management: An International Journal
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384

Table I Industry distribution of respondents and population above 0.70 and thus acceptable in such a study (Flynn et al.,
Respondents Population 1990).
Industries (per cent) (per cent) Next, the construct validity was tested. Convergent and
discriminant validity were assessed using confirmatory factor
Food and beverage 10.10 8.66 analysis. To check the convergent validity, each item was
Electronic and communication linked to its corresponding construct, and the covariances
equipment 8.79 8.38
among the constructs were freely estimated. The model fit
Transportation equipment 8.63 8.79 indices were chi-square (881) ⫽ 2,926.58, root mean square
Textile and garment 33.22 33.37 error of approximation ⫽ 0.067, comparative fit index ⫽ 0.96
Electrical equipment 8.38 10.93 and non-normed fit index ⫽ 0.96, which were better than the
Machinery 16.12 17.74 threshold values recommended by Hu and Bentler (1999). In
Chemicals and petroleum 7.17 6.97 addition, all of the loadings were greater than 0.50 (except for
Plastic and latex 5.37 5.16 four items), and all of the t values were greater than 2.0. The
Total 100 100 results indicated that convergent validity was ensured.
Discriminant validity was assessed by building a constrained
confirmatory factor analysis model for every possible pair of
not biased toward any particular industry. The early and late latent constructs, in which the correlations between the paired
responses on physical assets, annual sales and number of constructs were fixed to 1.0. This was compared with the
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employees were also compared (Armstrong and Overton, original unconstrained model, in which the correlations
1977). The t-test showed no significant differences, indicating among constructs were freely estimated. A significant
that early and late response bias was not a major concern in difference in the chi-square statistics between the constrained
this study. Furthermore, Harman’s single-factor test was and unconstrained models indicated high discriminant validity
performed to examine the possibility of common-method bias (Fornell and Larcker, 1981). In this study, all of the
(Podsakoff et al., 2003). The results showed that there were differences were significant at the 0.001 level, indicating that
nine factors with eigenvalues above 1.0, and the largest discriminant validity was ensured.
variance explained was merely 30 per cent. We concluded that
no single factor emerged from the factor analysis, and no 4. Data analyses and results
general factor explained most of the variance. Accordingly, Table III shows the means, standard deviations and
there was no serious common-method bias in our study. inter-correlations of competitive strategies, SCI and
performance.
3.4 Psychometric testing The hypotheses were tested using a series of hierarchical
According to Flynn et al. (2010), the content validity of the linear regression analyses. The independent variables were
constructs used in this study was established through a search mean-centered before calculating the interaction terms to
of the literature, careful synthesis and the critical evaluation of minimize the effects of multicollinearity. In Model I, the
existing constructs and an iterative construct review by control variables including firm size and industry type were
experts. entered. In Model II, internal, process and product integration
An exploratory factor analysis of the constructs was were entered as independent variables. In Model III, cost
conducted to ensure the unidimensionality of the scales. A leadership and differentiation were entered as independent
principal component factor analysis with varimax rotation was variables. In Model IV, the interactions between three SCI
used to detect the underlying dimensions. The results showed practices and two competitive strategies (i.e. six interaction
that all of the items were loaded on the specific factor they items in total) were entered. The dependent variables were
were intended to measure. Furthermore, all of the factor operational and financial performance. When financial
loadings were greater than 0.40, which was proposed as the performance was selected as the dependent variable,
threshold value by Hair et al. (2006). The internal consistency operational performance was entered as an independent
or reliability of the scale was assessed by Cronbach’s alpha. variable. Tables IV and V summarize the regression results.
Table II indicates that all of the Cronbach’s alpha values were The results indicated that internal integration was positively
and significantly associated with operational and financial
performance, supporting H1a and H2a. Process integration
Table II Reliability
was positively related to operational performance and product
Number of Cronbach’s integration was positively related to financial performance,
Construct questions alpha supporting H1b and H2c. The relationship between
Cost leadership 5 0.817 operational and financial performance was positive and
Differentiation 5 0.675 significant, supporting H3. However, the coefficient of
Internal integration 6 0.797 product integration on operational performance was
Process integration 10 0.895 insignificant and the coefficient of process integration on
Product integration 2 0.545ⴱ financial performance was significantly negative, indicating
Operational performance 10 0.904 that H1c and H2b were not supported.
Financial performance 6 0.896 The interaction terms between SCI practices and
* competitive strategies had different effects on operational
Note: Pearson correlation
and financial performance. Cost leadership had a significant

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Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384

Table III Correlations, means and standard deviations

Construct CL DI II PrcI PrdI OP FP
Cost leadership (CL) 1.00
Differentiation (DI) 0.17ⴱ 1.00
Internal integration (II) 0.45ⴱ 0.30ⴱ 1.00
Process integration (PrcI) 0.55ⴱ 0.31ⴱ 0.70ⴱ 1.00
Product integration (PrdI) 0.10ⴱ 0.37ⴱ 0.26ⴱ 0.30ⴱ 1.00
Operational performance (OP) 0.53ⴱ 0.31ⴱ 0.47ⴱ 0.54ⴱ 0.17ⴱ 1.00
Financial performance (FP) 0.29ⴱ 0.41ⴱ 0.43ⴱ 0.34ⴱ 0.31ⴱ 0.49ⴱ 1.00
Mean 5.42 4.71 4.93 5.06 4.56 5.41 4.64
SD 0.909 0.892 0.866 0.842 1.321 0.810 0.902
*
Note: Correlation is significant at the 0.01 level

and positive moderating effect on the relationship between Therefore, H5a-H5c, H6a, H6b and H7a-H7c were not
internal integration and financial performance, supporting supported. The results are reported in Table VI.
H4a. Differentiation had a significant and positive moderating
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effect on the relationship between process integration and

financial performance, supporting H6b. The insignificant
interaction effect of cost leadership with process and product
integration on financial performance suggested that H4b and
H4c were not supported. The interaction effects of internal
integration and differentiation on operational and financial
performance, the interaction effects of process integration and
differentiation on operational performance and the interaction
effects of product integration and differentiation on
operational and financial performance were insignificant.
5. Discussion and managerial implications
5.1 The role of SCI in influencing firm performance
This study makes several contributions to our understanding
of the relationships among SCI, competitive strategies and
firm performance. Our results regarding the internal
integration – performance relationship are largely consistent
with those of previous studies, which reinforce the need to
break function walls (Flynn et al., 2010; Huo, 2012). Internal
integration is the most important type of SCI and leads to both

Table IV Regression results on operational performance

Dependent variable: operational performance
IV Model I Model II Model III Model IV
Constant 5.700ⴱⴱⴱ 2.866ⴱⴱⴱ 1.882ⴱⴱⴱ 1.928ⴱⴱⴱ
Firm size 0.002 0.005 0.014 0.015
Industry 1 ⫺0.265 0.023 0.020 0.032
Industry 2 0.092 0.045 0.120 0.105
Industry 3 0.274 0.256 0.270 0.258
Industry 4 ⫺0.504ⴱⴱ ⫺0.317ⴱ ⫺0.218 ⫺0.177
Industry 5 ⫺0.027 0.203 0.224 0.240
Industry 6 ⫺0.603ⴱⴱⴱ ⫺0.305ⴱ ⫺0.212 ⫺0.203
Industry 7 ⫺0.520ⴱⴱ ⫺0.256 ⫺0.178 ⫺0.134
Internal integration 0.172ⴱⴱⴱ 0.121ⴱⴱ 0.144ⴱⴱ
Process integration (PrcI) 0.357ⴱⴱⴱ 0.206ⴱⴱⴱ 0.190ⴱⴱⴱ
Product integration (PrdI) ⫺0.002 ⫺0.002 ⫺0.013
Cost leadership (CL) 0.271ⴱⴱⴱ 0.265ⴱⴱⴱ
Differentiation (DI) 0.092ⴱⴱ 0.074ⴱ
II ⴛ CL 0.060
II ⴛ DI 0.070
PrcI ⴛ CL 0.025
PrcI ⴛ DI 0.014
PrdI ⴛ CL 0.013
PrdI ⴛ DI 0.033
F 11.505ⴱⴱⴱ 32.814ⴱⴱⴱ 36.987ⴱⴱⴱ 28.013ⴱⴱⴱ
R2 0.134 0.379 0.449 0.477
Adjusted R2 0.122 0.367 0.437 0.460
⌬R2 – 0.245ⴱⴱⴱ 0.070ⴱⴱⴱ 0.028ⴱⴱⴱ
Notes: *
p ⬍ 0.05; **
p ⬍ 0.01; ***
p ⬍ 0.001

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Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384

Table V Regression results on financial performance

Dependent variable: financial performance
IV Model I Model II Model III Model IV Model V
ⴱⴱⴱ ⴱⴱⴱ ⴱⴱⴱ ⴱⴱ
Constant 5.257 2.264 1.464 0.946 1.005ⴱⴱ
Firm size ⫺0.054ⴱⴱ ⫺0.056ⴱⴱ ⫺0.032ⴱ ⫺0.023 ⫺0.024
Industry 1 ⫺0.113 0.026 ⫺0.021 0.002 0.059
Industry 2 0.005 ⫺0.043 ⫺0.148 ⫺0.112 ⫺0.060
Industry 3 ⫺0.232 ⫺0.375ⴱ ⫺0.429ⴱⴱ ⫺0.428ⴱⴱ ⫺0.386ⴱ
Industry 4 ⫺0.661ⴱⴱⴱ ⫺0.397ⴱⴱ ⫺0.451ⴱⴱ ⫺0.355ⴱ ⫺0.270
Industry 5 ⫺0.349 ⫺0.335ⴱ ⫺0.371ⴱ ⫺0.354ⴱ ⫺0.292
Industry 6 ⫺0.674ⴱⴱⴱ ⫺0.358ⴱ ⫺0.446ⴱⴱ ⫺0.376ⴱ ⫺0.339ⴱ
Industry 7 ⫺0.367 ⫺0.094 ⫺0.132 ⫺0.108 ⫺0.038
Operational performance 0.525ⴱⴱⴱ 0.403ⴱⴱⴱ 0.374ⴱⴱⴱ 0.330ⴱⴱⴱ
Internal integration (II) 0.288ⴱⴱⴱ 0.268ⴱⴱⴱ 0.258ⴱⴱⴱ
Process integration (PrcI) ⫺0.115ⴱ ⫺0.133ⴱ ⫺0.078
Product integration (PrdI) 0.132ⴱⴱⴱ 0.097ⴱⴱⴱ 0.080ⴱⴱ
Cost leadership (CL) 0.011 0.015
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Differentiation (DI) 0.187ⴱⴱⴱ 0.166ⴱⴱⴱ

II ⴛ CL 0.134ⴱⴱ
II ⴛ DI 0.021
PrcI ⴛ CL ⫺0.091
PrcI ⴛ DI 0.117ⴱⴱ
PrdI ⴛ CL ⫺0.010
PrdI ⴛ DI ⫺0.006
F 7.364ⴱⴱⴱ 25.994ⴱⴱⴱ 28.614ⴱⴱⴱ 27.180ⴱⴱⴱ 21.216ⴱⴱⴱ
R2 0.090 0.283 0.367 0.392 0.421
Adjusted R2 0.078 0.272 0.355 0.378 0.401
⌬R2 – 0.192ⴱⴱⴱ 0.085ⴱⴱⴱ 0.025ⴱⴱⴱ 0.029ⴱⴱⴱ
Notes: *
p ⬍ 0.05; **
p ⬍ 0.01; ***
p ⬍ 0.001

operational and financial performance, whereas process and
product integration can only enhance operational and
financial performance, respectively. However, product
integration has no significant effect on operational
performance, perhaps because product integration requires
significant supplier and customer involvement, which can
bring more changes and complexities to quality standards,
delivery schedules and service routines – hindering the
improvement of operational performance. This finding is
partially consistent with that of Koufteros et al. (2005), who
noted that supplier product integration is negatively related to
product innovation and not significantly related to quality.
More interestingly, process integration has a negative and
significant effect on financial performance and may need great
investments such as physical assets, financial resources,
human resources, guanxi (relationship) and manufacturers’
time to produce benefits. Thus, the benefits tend to be
counteracted by the investments in external relationships,
leading to negative improvement in financial performance.
Such a phenomenon can also be explained by the particular
institutional environment of Chinese firms. Although the
reform and opening policy has been in effect for more than 30
years, the Chinese economy is still not a “free market
economy” and governmental intervention greatly influences
firms’ behavior. In terms of inter-organizational relationships,
Chinese manufacturers must invest in relationship building
with their supply chain partners directly and sometimes
indirectly through the government, which implies significant
transaction costs. This finding is supported by Qi et al. (2009),
who noted that the public relationship department plays an
important role in the strategy formulation processes of
Chinese manufacturers.
Because operational performance is highly and positively
related to financial performance, internal and process
integration can improve financial performance indirectly. This
means that process integration can still contribute to financial
performance through the improvement of operational
performance. This finding is consistent with those of some
previous studies (Huo, 2012; Swink et al., 2007).
Our findings that various SCI practices have different
effects on operational and financial performance contribute to
the SCI literature. Overall, they confirm Frohlich and
Westbrook’s (2001) finding that a higher degree of SCI leads
to better firm performance. Our study also provides evidence
that the findings on the effects of SCI on firm performance in
the literature are inconsistent (Flynn et al., 2010). More
importantly, our findings echo the call made by Fabbe-Costes
and Jahre (2008) and Huo et al. (2014a) for SCI studies in
specific practices, such as process and product management.
The different roles of process and product integration extend
our understanding of SCI practices and their direct and
indirect relationships with firm performance.
5.2 The moderating effect of competitive strategy
The influence of competitive strategies on the roles of
practices has been identified in the literature (Prajogo and

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Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384

Table VI Results of hierarchical regression analyses
Hypotheses
H1a. Internal integration ¡ operational
performance
H1b. Process integration ¡ operational
performance
H1c. Product integration ¡ operational
performance
H2a. Internal integration ¡ financial
performance
H2b. Process integration ¡ financial
performance
H2c. Product integration ¡ financial
performance
H3. Operational performance ¡ financial
performance
H4a. Internal integration ⴛ cost leadership ¡
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resources and investments, thus cost leaders cannot leverage
Results their effectiveness in improving financial performance.
In contrast, firms pursuing a differentiation strategy achieve
more financial benefits from process integration than firms
Supported pursuing a cost leadership strategy. These firms usually try to
obtain the premium price, and cost is not their major concern.
Supported
As Olhager and Prajogo (2012) noted, the value of process
integration can be more easily achieved by manufacturers
Not supported
engaged in creating differentiated products or services. A close
observation of Chinese manufacturers also shows that external
Supported
collaboration is more beneficial in providing differentiated
products or services due to the lack of the core technology
Not supported
(Lockström et al., 2010). Furthermore, the differentiation
strategy provides a flexible and collaborative firm culture that
Supported
helps process integration enhance financial benefits.
Therefore, the interaction effect between process integration
Supported
and the differentiation strategy should be more significant in
improving performance in the Chinese context. However,

financial performance Supported

H4b. Process integration ⴛ cost leadership ¡
financial performance Not supported
H4c. Product integration ⴛ cost leadership ¡
financial performance Not supported
H5a. Internal integration ⴛ cost leadership ¡
operational performance Not supported
H5b. Process integration ⴛ cost leadership ¡
operational performance Not supported
H5c. Product integration ⴛ cost leadership ¡
operational performance Not supported
H6a. Internal integration ⴛ differentiation ¡
financial performance Not supported
H6b. Process integration ⴛ differentiation ¡
financial performance Supported
H6c. Product integration ⴛ differentiation ¡
financial performance Not supported
H7a. Internal integration ⴛ differentiation ¡
operational performance Not supported
H7b. Process integration ⴛ differentiation ¡
operational performance Not supported
H7c. Product integration ⴛ differentiation ¡
operational performance Not supported
Sohal, 2006). This study examines whether the relationship
between SCI practices and performance is contingent on
competitive strategies. Our findings show that some
integration practices are more effective under certain
competitive strategies. More interestingly, the results show
that competitive strategies have different moderating effects
on the relationship between SCI practices and performance.
Firms pursuing a cost leadership strategy achieve more
financial benefits from internal integration than firms pursuing
a differentiation strategy. Based on transaction cost economics
theory, the transaction cost of internal exchange is lower than
the exchange with external partners. For example, the internal
information sharing cost is definitely lower than the cost
incurred by information sharing with external supply chain
partners. Although process integration may need the support
of cost leadership to achieve financial performance, it is less
effective when firms pursue a cost leadership strategy. This
may be because process and product integration require more
firms pursuing a differentiation strategy cannot achieve more
financial performance from product integration. A possible
explanation may be that most Chinese firms conduct product
innovation mainly through localization and application
engineering, which means that manufacturers may develop
new products for the local market by imitating the new
technology of foreign competitors and discovering a new
application area for the existing technology. Such product
development is in the infancy stage of innovation. Thus,
Chinese differentiators are weak in relation to the innovative
culture and organizational infrastructure necessary to motivate
breakthrough innovations, hindering the efficiency of product
integration.
Our results also show that the moderating effects of
competitive strategies on the relationship between SCI
practices and operational performance are insignificant,
possibly because the operational performance is more
process-focused and determined by the effectiveness of firm
operational practices. The benefits and costs of SCI are not
only reflected in operational measures, but also in financial
measures such as capital and relational investment. The
competitive strategy is a corporate-level action and financial
performance is a more comprehensive measure compared with
operational performance, which is an operational-level
measure. Thus, when considering the overall effects of
competitive strategies and SCI, the financial performance may
reflect more apparent results.
Our findings on the moderating effects contribute to the
SCI and competitive strategy literature. As Mckone-Sweet
and Lee (2009) indicated, we should combine SCI practices
and competitive strategies into one framework because firms
are adopting them together. The findings confirm that under
different competitive strategies, different dimensions of SCI
have different effects on company performance. In this regard,
this study provides one paradigm for interdisciplinary studies
on supply chain and strategy management.
This study also contributes to the evolution of the SCI
literature. With the development of supply chain
management, SCI has become a key concept in this area.
Before 2000, studies mainly focused on SCI concepts (Huo,
2007), and from 2001 to 2005, the focus was the relationships
between various SCI dimensions and different performance

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 Supply chain integration on firm performance
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao
measures (Flynn et al., 2010; Huo, 2012). Since 2006, various
SCI streams have emerged, such as enablers of SCI (Zhao
et al., 2008, 2013), relationships between different SCI
dimensions (Zhao et al., 2011), contextual SCI studies (Huo
et al., 2014b) and contingency SCI studies (Boon-Itt and
Wong, 2011). This study classifies SCI using a new method
(combined internal vs. external integration and
content-oriented external integration), extending SCI
concepts and dimensions. The effects of new SCI dimensions
on both operational and financial performance are analyzed,
providing more evidence of SCI – performance relationships.
This study examines the moderating effects of competitive
strategies on the relationship between SCI and performance,
enriching contingency SCI studies.
5.3 Managerial implications
Our findings provide guidelines for managers adopting SCI
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practices under different competitive strategies. First, internal
and process integration can directly improve firms’
operational performance. Both internal and product
integration are helpful for financial performance. Although the
beneficial effects of process integration on financial
performance are insignificant, it does not mean that the former
should be abandoned. Process integration can significantly
boost operational performance, suggesting that when
designing and implementing SCI practices, manufacturers
should have a long-term and strategic plan rather than
pursuing the short-term or monetary objective.
Second, the implementation of SCI practices may not
bring universal benefits for manufacturers. Our findings
suggest a contingent view of the SCI practice – performance
relationship. Manufacturers with a cost leadership strategy
should implement internal integration and those with a
differentiation strategy should implement process
integration extensively to achieve better financial
performance. The adoption of product integration should
be cautious. On the one hand, product integration can be
implemented only when manufacturers achieve better
financial performance no matter which types of competitive
strategies are selected. On the other hand, product
integration cannot help manufacturers that are providing
outsourcing services (most Chinese manufacturers) to
improve their operational performance, which is one of the
most important evaluation criteria used by foreign buyers to
make the supplier selection decision.
Third, our findings highlight the characteristics of Chinese
manufacturers in terms of implementing various SCI practices
under different competitive strategies. Chinese manufacturers
are incapable of managing different types of SCI practices. For
example, our findings show that process integration is working
well for operational performance, but not for financial
performance, and product integration is only beneficial for
financial performance. In contrast, internal integration is
valuable for both operational and financial performance.
These findings imply that Chinese manufacturers’ operational
routines are still internal-oriented. It may be that there are
high external transaction- or relationship-management costs
in the Chinese context. Therefore, to increase the supply chain
efficiency of Chinese manufacturers, two things are important.
First, China’s institutional environment must be straight-out.
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Volume 19 · Number 4 · 2014 · 369 –384
Second, Chinese manufacturers need to change their
internal-oriented view to an external-oriented view, especially
for the supplier side.
Finally, our findings are also valuable to overseas buyers
who are customers of Chinese manufacturers. Those buyers
should pay attention to the fact that Chinese manufacturers’
capabilities are in internal streamlining and process
integration. If the overseas buyers’ objective is to minimize
their cost, the current collaboration with Chinese
manufacturers is valuable. However, if the overseas buyers’
aim is to increase their innovative capability, they need to help
Chinese manufacturers to build capabilities in coordinating
with external supply chain partners.
6. Conclusion and limitations
In summary, our results provide an important validation of the
claim that fit between SCI practices and competitive strategies
will determine performance. In general, the correlations
between SCI practices and financial performance are stronger
when firms emphasize competitive strategies. However, the
pattern of interactions between SCI practices and competitive
strategies shows some differences, at least in the Chinese
context. Our study can provide a possible explanation for the
inconsistent findings about the effects of SCI on financial
performance. One of the practical implications is that Chinese
manufacturers may develop their SCI capabilities based on
their competitive strategies.
Although this study makes significant contributions to
academic research and practices, it has several limitations that
open up avenues for future studies. First, we conducted this
study using Chinese samples and thus the findings are more
meaningful in the Chinese context. Hofstede (1980) argued
that the leveraging of organizational practices for competitive
strategies may differ across countries. Hence, it is not clear
how SCI practices are used with competitive strategies to
improve performance in different contexts, such as in different
countries. Future studies can investigate this issue in other
contexts or conduct cross-cultural studies. Second, this study
used a cross-sectional design and cannot reflect the lag time or
long-term effects of SCI practices on performance. Therefore,
future studies could conduct longitudinal studies to examine
the relationship between SCI practices and performance.
Third, this study only examined the moderating effect of
competitive strategies on the relationship between SCI
practices and performance. Future studies could investigate
the causal effects of competitive strategies on the qualitative
facets of SCI. For example, they could explore what kinds of
SCI practices, such as types of information sharing, should be
emphasized under various strategies. Finally, by focusing on
various industries, company sizes and regions, we developed a
broad picture of the relationship among competitive strategies,
SCI practices and company performance. However, these
relationships may not be the same for all company sizes,
industries or regions. Future research should investigate the
effects of these contextual factors on competitive strategies,
SCI practices and company performance, along with the
relationships among them.
 Supply chain integration on firm performance
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao
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 Supply chain integration on firm performance
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao
Appendix 1
Representative contingency studies on SCI are shown in Table AI.
Table AI Representative contingency studies on SCI
Studies Integration types
Boon-Itt and Wong Internal integration; supplier
(2011) integration; customer
integration
Danese and Romano Customer integration;
(2011) supplier integration
Flynn et al. (2010) Supplier integration; internal
integration; customer
integration
Germain and Iyer Internal integration;
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(2006) downstream integration
Iyer et al. (2009) Supply chain integration
Jayaram et al. (2011) Supplier integration;
customer integration
Koufteros et al. Internal integration;
(2005) customer integration;
supplier product integration;
supplier process integration
Schoenherr and Swink Supplier integration; internal
(2012) integration; customer
integration
Wong et al. (2011a) Information integration
Wong et al. (2011b) Supplier integration; internal
integration; customer
integration
Performance measures
Customer delivery
performance
Efficiency
Operational performance;
business performance
Logistical performance;
financial performance
Financial; market;
operational performance
Quality performance;
flexibility performance
Product innovation
performance; quality
performance; profitability
Quality; delivery: flexibility;
cost performance
Customer-oriented
operational performance;
cost performance
Quality; delivery; flexibility;
cost performance
382
Supply Chain Management: An International Journal
Volume 19 · Number 4 · 2014 · 369 –384
Contingencies Major findings
Technological Technological and demand uncertainties
uncertainty; demand moderate the relationships between
uncertainty internal integration and customer delivery
performance, and supplier integration and
customer delivery performance
Supplier integration Supplier integration moderates the
effects of customer integration on
efficiency
Customer and The interaction of supplier and
supplier integration customer integration is positively
related to operational performance
Internal integration The relationship between downstream
integration and logistical performance is
moderated by internal integration
Product turbulence; Product turbulence and demand
demand unpredictability jointly moderate the
unpredictability relationships between supply chain
integration and performance
Firm size; clockspeed Firm size negatively moderates the
relationships between supplier
integration and quality performance,
between customer integration and
flexibility performance Clockspeed
positively moderates the relationship
between supplier integration and
flexibility performance
Uncertainty; Equivocality moderates the link
equivocality; platform between integration and performance
development strategy
Internal integration Internal integration moderates the
relationships between external
integration and delivery and flexibility
performance
Munificence; Environmental munificence moderates
uncertainty; product the relationship between information
type; product integration and customer-oriented
complexity operational performance and cost
performance Environmental uncertainty
moderates the relationship between
information integration and cost
performance Offering durable product
strengthens the effect of information
integration on cost performance A high
level of product complexity strengthens
the effect of information integration on
customer-oriented operational
performance
Environmental Environmental uncertainty moderates
uncertainty the relationship between internal
integration and cost and quality
performance, between supplier
integration and delivery and flexibility
performance and between customer
integration and flexibility performance
 Supply chain integration on firm performance Supply Chain Management: An International Journal
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao Volume 19 · Number 4 · 2014 · 369 –384

Appendix 2
Measurement items (with factor loadings) are shown in Table AII.

Table AII Measurement items (with factor loadings)

Item Loading

Cost leadership. Please indicate the importance of the following competitive methods to your firm’s overall strategy (1 ⴝ most
unimportant; 7 ⴝ most important)
Operating efficiency 0.74
Pursuing cost advantage of raw material procurement 0.76
Pricing below competitors 0.81
Pursuing economy of scale 0.72
Finding ways to reduce cost of production 0.74
Differentiation. Please indicate the importance of the following competitive methods to your firm’s overall strategy (1 ⴝ most
unimportant; 7 ⴝ most important)
Providing product with unique features 0.76
Providing product with many features 0.81
Targeting high-priced product segments 0.58
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Advertising 0.64
Control of distribution channels 0.45
Internal integration. To what extent does your company use the following practices (1 ⴝ not at all; 7 ⴝ extensively used)?
Data integration among internal functions 0.75
Enterprise application integration among internal functions 0.75
Integrative inventory management 0.70
Real-time integration and connection among all internal functions from raw material management through production, shipping,
and sales 0.69
The use of periodic interdepartmental meetings among internal functions 0.55
The use of cross-functional teams for product design 0.43
Process integration. To what extent does your company use the following practices (1 ⴝ not at all; 7 ⴝ extensively used)?
Establishing strategic partnership with suppliers 0.73
Working with suppliers to improve inter-organizational processes with suppliers 0.72
Creating a greater level of trust with suppliers 0.72
Creating linkage with suppliers through information technology 0.65
Sharing information with suppliers 0.71
Establishing strategic partnership with customers 0.67
Working with customers to improve inter-organizational processes with customers 0.64
Creating a greater level of trust with customers 0.70
Creating linkage with customers through information technology 0.57
Sharing information with customers 0.53
Product integration. To what extent does your company use the following practices (1 ⴝ not at all; 7 ⴝ extensively used)?
Involving suppliers in product development stage 0.69
Involving customers in product development stage 0.73
Operational performance. How does your company perform compared with your major competitors (1 ⴝ much worse; 7 ⴝ much
better)?
Overall product quality 0.72
Customer service level 0.77
Pre-sale customer service 0.70
Product supports 0.72
Responsiveness to customers 0.67
Delivery speed 0.70
Delivery dependability 0.72
Volume flexibility 0.70
Product mix flexibility 0.63
New product flexibility 0.64
Financial performance. How does your company perform compared with your major competitors (1 ⴝ much worse; 7 ⴝ much
better)?
Return on Investment 0.82
Return on Sale 0.76
Market share 0.67
Growth in ROI 0.82
Growth in ROS 0.81
Growth in market share 0.73

383
 Supply chain integration on firm performance
Baofeng Huo, Yinan Qi, Zhiqiang Wang and Xiande Zhao
About the authors
Baofeng Huo is a leading Professor of liberal arts and a
Professor of operations management at the School of
Management, Zhejiang University. He received his PhD in
operations management from The Chinese University of
Hong Kong. His research interests are logistics and supply
chain management. His research has been published in the
Journal of Operations Management, Production and Operations
Management, International Journal of Operations and Production
Management, International Journal of Production Research, IEEE
Transactions on Engineering Management, International Journal
of Production Economics and other journals.
Yinan Qi is an Associate Professor of operations management
at the School of Business, University of International Business
and Economics. He received a PhD in operations
management from The Chinese University of Hong Kong and
joined the University of International Business and Economics
Downloaded by UNIVERSITY OF THE PUNJAB At 22:40 06 March 2019 (PT)
in 2006. He has taught courses on operations management,
supply chain management and business strategy game. His
work has been published in publications including Journal of
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384
Supply Chain Management: An International Journal
Volume 19 · Number 4 · 2014 · 369 –384
Operations Management, Decision Sciences and International
Journal of Operations and Production Management.
Zhiqiang Wang is an Assistant Professor at the School of
Business Administration, South China University of
Technology. He received his PhD in operations management
from The Chinese University of Hong Kong. His research
interests are new product development and supply chain
management. His article has been published in Computers and
Industrial Engineering. Zhiqiang Wang is the corresponding
author and can be contacted at: bmzqwang@scut.edu.cn
Xiande Zhao is a Professor of operations management at
China Europe International Business School. He received his
PhD in business administration and MBA from the University
of Utah. Zhao’s teaching and research interests are in the areas
of supply chain management and service operations
management. He has more than 50 articles published in
refereed journals including the Journal of Operations
Management, Journal of Consumer Research, Decision Sciences
Journal, European Journal of Operations Research, International
Journal of Production Research and other journals.
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