The Impacts of Internal Integrations and Relationship Commitment on

External Integration

By
Xiande Zhaoa, Baofeng Huob,c,∗, Willem Selend, Jeff Hoi Yan Yeunga

ELSEVIER: Journal of Operations Management29 (2011) 17–32

Review on November 2020

School of Mechanical and Industrial Engineering
Department of Mechanical Engineering
KIoT ,Wollo University
 Outlines
1.Introduction
2. Literature review and research hypotheses
3.Research design and methodology
4. Analysis and results
5. Discussion and managerial implications
6. Conclusions and future research
7.1. Research Strength
7.2. Research gaps
7.3.Could Be Adopt….???
 1.Introduction

Supply chain integration (SCI) has emphasis by academicians

and practitioners
• Frohlich and Westbrook, 2001; Narasimhan and Kim, 2002; Vickery et al.,
2003; Droge et al., 2004; Swink et al., 2005; Das et al., 2006; Swink et al.,
2007; Zhao et al., 2008; Braunscheidel and Suresh, 2009; Flynn et al., 2010).
• SCI both integration of internal functions, integration with customers and
suppliers(Stank et al., 2001b).
 Introduction cont....

Despite increasing attentions, but infant and limited on

 Relationships between internal and external integration
 Interests in SCI, our understanding of what influences SCI.
 E.g .Stevens, 1989, 1990)described the relationship b/n I &E
Integrations but , there is limited empirical evidence (Hillebrand
and Biemans, 2003).
 Previous findings about relationship were inconsistent results
 Introduction cont....

Impact of (II) on (EI) in areas such as

• Information sharing (Carr and Kaynak, 2007.

• New product development (Koufteros et al., 2005).

• Other a reverse relationship from (EI) to (II) from the perspective of external
and internal collaboration (Salvador et al., 2001; Sanders and Premus, 2005;
Sanders, 2007).

• Therefore, there is a need for empirically testing the relationship b/n (ii)
&(EI) (ES) &(CI) to improve our understanding of the mechanism of SCI.
 Introduction cont....

This study addresses two major research questions:

Q(1) How do (II) &(RC) to customers and suppliers influence(EI) with
customers and suppliers?
Q(2) What are the differences in the relationships b/n (II),(RC)& (EI) for
companies with different ownerships, in different industries and regions?
 2.Literature Review and Research Hypotheses

SCI “the degree to which an organization strategically collaborates

with its supply chain (SC) partners and manages intra and inter-
organization processes
To achieve effective and efficient
 Flows of products, Services, Information, Money and Decisions, with the
objective of providing maximum value to its customers.
 Literature Review Cont…

A. External integration
A firm can partner with its key supply chain members (customers suppliers).
 To structure their inter-organizational
 Strategies, practices, procedures and behaviors

 Into collaborative, synchronized and manageable full fill (Chen and Paulraj,
2004; Stank et al., 2001b).
 Literature Review cont…

External integration includes

 Strategic agreement with suppliers and customers, in which the company builds

strategic partnerships with its suppliers and customers and

 Jointly develops strategies facing market opportunities (Narasimhan and Kim, 2002),

 Information sharing, synchronized planning, and

 working together resolve problems.

 Form collaborative relationships with trading partners, and leverage their core

competency while reducing transaction osts (Zhao et al., 2008).

 Literature Review

Internal integration: A firm can structure its organizational

 Practices, Procedures and Behaviors
 Into collaborative, synchronized and manageable processes fulfill CR(Cespedes,
1996; Chen and Paulraj, 2004; Kahn and Mentzer, 1996).

Internal integration: mainly involves

Data and information system integration through the use of (ERP),
Real-time searching of inventory and operating data,
Integration of activities in different internal functional areas,
Cross-functional cooperation, or working together across different functions in
process improvement or new product development.
Information sharing, strategic cooperation, Stank et al. (2001b), Carr and
Kaynak (2007), Ward and Zhou (2006).
2.2. Research hypotheses
 2.2. Research hypotheses Cont…

H5.The interaction of II& RC to the customer is positively related to (CI)

H6. The interaction of (II)&RC to the supplier is positively related to (SI).

H7. The impact of RC to the customer on (CI)will be significant for Chinese

controlled companies, but non-significant for foreign controlled companies.

H8. The RC to the supplier on(SI)will be significant for Chinese controlled

H9. The impact of (II)on (CI) will be different between Chinese controlled
companies and foreign controlled companies.
H10. The impact of (II) on (SI) will be different between Chinese controlled
companies and foreign controlled companies.
 3. Research design and methodology
Questionnaire design

• literature and theoretical framework described earlier,

• A survey instrument was designed to measure relationship commitment and varying types of SCI.

• the questionnaire also included the demographic profile of the company such as industry, ownership, size and location.

• Using a 7-point Likert scale

• with “1” for “strongly disagree” and “7” for “strongly agree”. These

• items were used in several later studies in the Operations Management

• area (e.g. Fynes and Voss, 2002; Fynes et al., 2005).

Sampling and data collection

• To test the proposed hypotheses, 4569 companies were randomly selected from five major cities

in China representing the national economy of China (Zhao et al., 2006).9These five cities
 Research design and methodology cont…

3.5. Reliability and validity

Content validity was supported by previous literature, executive interviews, and
pilot tests.

Reliability by Cronbach alpha values use and in all constructs are reliable for
this research (Nunnally, 1978).

Also used the corrected item-total correlation (CITC) reliability test (Kerlinger,
1986).

Based on the Cronbach’s alpha values and CITC values, we conclude that the
scales are reliable.

Estimated structural equation model(SEM).

 4. Analyses and results
The results of hypotheses tests 1–4 using SEM are shown in Fig. 2 and Table 4.
All four standardized coefficients are shown to be significant at the 0.05 level, suggesting
support for hypotheses 1–4.
 Analyses and results count….
• Table 4: Results of hypotheses 1–4 tests using SEM.

Un Standardize t-value Outcome

standardized d
coefficient coefficient
Internal integration→customer 0.53* 0.57* 9.32 Supported
integration (H1)
Internal integration→supplier 0.42* 0.44* 8.31 Supported
integration (H2)
RC to the customer→customer 0.31* 0.19* 4.91 Supported
integration (H3)
RC to the supplier→supplier 0.21* 0.14* 3.67 Supported
integration (H4)
 Analyses and results count….

Since
 RC to the customer has a positive influence on (CI),
 As does (RC)to the supplier have on(SI).
 The (II) has a positive influence on both (CI) &(SI)
• Also company size has a positive impact on supplier and customer
integration.
 Analyses and results cont…
Further explore the relationships among (RC), (Ii)and (EI), we also
tested the interactive effect of relationship commitment to

customers and suppliers and internal integration, on external integration with

customers and suppliers (Tables 5 and 6).

No significant interactive effect found,(ii)&RC influence (EI) independently,

and not interactively. Since H5 & H6 were not supported.

Additional no significant mediating effects for the relationships b/n

II,RC&EI.
 Analyses and results cont…
Impacts of RC to the customer on CI are different in companies with
different ownerships.
While RC to the customer/supplier has a significant positive impact on
customer/supplier integration in Chinese controlled companies,
it is not significant for foreign controlled companies. Supported
H7&H8

impacts of II on EI are significant for both Chinese controlled companies

and foreign controlled companies. H9 & H10 are not supported.
 Analyses and results cont…
• (II)has a positive influence on(EI) for the companies in all type of three
industries.
• In contrast, only (RC) to the supplier in the metal, mechanical and
engineering; and textile and apparel industries showed a positive impact on
(EI).
• Likewise, (RC) to the customer showed a positive impact on (EI)only in the
electronics and electrical industry.
 Analyses and results cont…
• As such, the importance of internal integration and relationship commitment
in improving external integration may be different across regions.
• Overall, the results in show that (II) has strong and significant impacts on (EI)
across regions and industries,
• But the effects of RC to customers/suppliers on integration with
customers/supplier depend on the type of industry and region.
 5. Discussion and managerial implications

5.1. Improving external integration through internal

integration or relationship commitment
(II) is an enabler for external customer and supplier integration,

An effective approach to enhance (EI) is to pursue (II). Supported by Suresh (2009), Carr and Kaynak

(2007) and Koufteros et al. (2005).

RC significantly influences (EI), for both customer and supplier sides.

Though stronger (RC) to customers and suppliers are more likely to have a greater extent of customer and

supplier integration.

This finding is partially supported by earlier studies, such as Morgan and Hunt (1994), Chen and Paulraj

(2004), and Zhao et al. (2008), who found that, with a higher level of relationship commitment, supply

chain partners become integrated into their key customers’ business processes and more closely tied to

established goals.
5. Discussion and managerial implications cont…

The impact of (II) on (EI) is much stronger than that of (RC),

Findings indicate that companies must greatly improve their internal
systems &achieve a higher degree of (II)in order to achieve effective
integration with their customers or suppliers.

There is no interactive effect of RC and (II) on (EI).

Since (II) &(RC) are two different approaches to (EI).
 5. Discussion and managerial implications cont…

5.2.The approaches to external integration in different

contexts.

(II) has strong and significant impacts on (EI) in different

regions and industries.

But the effects of (RC) to customers/suppliers on

integration with customers/supplier depend on the type of

industry and region.

 6. Conclusions and future research

This research contributes to the literature by developing and empirically testing

a relationship
commitment—SCI model based on a sample of manufacturing firms in China.
The model includes RC to both the customer and the supplier,
Three types of SCI.
Empirical evidence is presented for the enabling influences of (II)and (RC)on
(EI), simultaneously.
Demonstrated the positive effects of RC on (EI) in Chinese controlled
companies, whereas such effects were statistically non-significant in foreign
controlled companies.
 Strength of the paper

• The relation ships were empirically tested.

• Culture and geographical issue are good concept.

• Research methods

Paper selection criteria

Citation(158),
Reputation of the journal and publisher,
Volume and issue of the paper (29 (2011) 17–32) is considered.
 The study gaps

 Dose not clearly define integration and collaborations.

 The study only show the impacts of SCI on EI

 But what? and does not shows their impacts on various performance levels (quality,
financial, flexibility.)

 Use only geography, firm size as pillars but not considered knowledge, technology,
production process,

 Dose not see the issue of SC. Performance, SC Suitability.

 The extent of interactive relation(II CI,II SI,II CI) II,CI SI,CI II),(SI CI,SI II,SI SI)
were not studied
Things we learn and adopt in our firm.

• The impact of (II) on (EI) is much stronger than that of (RC)

• Since our firm could priority to integrate Internally than EX.
• During firm integration the company size, geography, culture also
considered.
• Firm integration could be emphasis on the context and the scenario of the
environments.