From Supply Chain Integration to Operational Performance: The Moderating Effect of Market Uncertainty

Abstract

This research examines the moderating effect of market uncertainty on the causal effects from supply chain integration to operational performance of a typical supply chain. Based on an extensive and critical literature review, two exploratory conceptual hypotheses have been developed for the non-linear relationship between the supply chain integration and operational performance of the original equipment manufacturer; and how may that relationship be moderated by a specific construct of market uncertainty. Empirical survey instrument has been designed and applied to gather the data from a wide spectrum of automotive industry in China. Confirmative factor analysis and threshold regression analysis were used as the primary research methodology to test the hypotheses. We find strong support to the hypotheses from the empirical evidence, which leads to the finding that the relationship between the supply chain integration and operational performance is 'non-linear', and the 'non-linearity' can be significantly moderated by the market uncertainty as one of the key environmental factors for the supply chain. This study extends the current literature by contributing for the first time the discussion of an analytical model that represents the causal effects from supply chain integration to its operational performance with respect to the market uncertainty as a moderating factor.Key words: Automotive industry; market uncertainty; operational performance; supply chain integration; supply chain management. IntroductionResearchers have long articulated the necessity of a close integration between manufacturers and their suppliers and customers in attempt to deliver the supply chain's optimum performance (Tavakoli et al. 2012; Flynn et al. 2010;Turkulainen and Ketokivi 2012;Zhao et al. 2013;Huang et al. 2014;Prajogo et al. 2015). The degree of interactions between the participating member of the supply chain and the appropriate inter-relationship postures have 2 become the widely acknowledged key enablers for supply chain success (Tyagi, et al., 2015).Supply chain integration and its processes that help to develop high level collaboration and partnership with supplier and buyer have been regarded as the undisputable factors for supply chain success (Droge et al. 2012;Wilden et al. 2013;). However, with the increased supply chain complexity and sprawling global diversity over the last decade, there has been a call to rethink the universal necessity as well as the theoretical validity of supply chain integration (SCI) under the renewed business environment in respect to its highly acclaimed contribution to the supply chain's competitive performance (Lambert and Cooper 2000;Asian et al. 2009;Liu and Cruz 2012;Huang et al. 2014;D. I. Prajogo et al. 2015;Sharifkhani et al. 2016; Somarin et al. 2017(a)).We argue that it is far from being certain that the level of the SCI integration will always be positively correlated with the optimum performance (Graham et al. 2005;Wook Kim 2006; Kim 2009). However, evidently, many p...

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