The performance of contingencies of supply chain information integration: The roles of product and market complexity
Christina W.Y. Wong a,n, Kee-hung Lai b,1, Edward W.N. Bernroider c,2 a Business Division, Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong b Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong c Institute for Information Management and Control, Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria a r t i c l e i n f o
Received 17 September 2014
Accepted 27 February 2015
Available online 20 March 2015
Supply chain information integration
Supply chain management
Market complexity a b s t r a c t
Although information integration is generally considered beneficial for supply chain management, the performance of supply chain information integration is found with mixed results in both practices and the extant literature. Based on the organizational information processing theory, this study aims to show how the contextual factors pertaining to product and market complexity moderate the relationship of supply chain information integration with financial and operational performance outcomes. Using survey data collected from 188 wholesale trading firms, we found that the extent to which supply chain information integration has a positive impact on business performance is contingent on the level of product and market complexity. Specifically, supply chain information integration facilitates greater performance improvements when it serves less complex products or is operated under a highly complex market environment. The study findings provide insights to managers and advance theoretical development by providing empirical evidence that supply chain information integration is helpful for mitigating uncertainties in supply chain management and the performance contingencies of such integration on the two contextual factors. & 2015 Elsevier B.V. All rights reserved. 1. Introduction
The globalized business nature of today requires supply chain information integration, both inside and outside the organizational boundary, for responsive managerial decisions such as forecasting and inventory replenishment to fully satisfy the rapidly changing requirements of international production and marketing activities. In view of the growing importance of collaborations amongst their supply chain partners to satisfy customer needs, supply chain integration becomes crucial for firms to coordinate business activities with their supply chain partners. Supply chain information integration is referred to as the electronic connectivity of firms with their trading partners to facilitate supply chain collaboration (Bernstein and Haas, 2008;
Schoenherr and Swink, 2012; Wong et al., 2011b). Such integration reflects the organizational ability to generate and disseminate accurate and timely information to support coordination of activities across partner firms in the supply chain (Lai et al., 2008; Wong et al., 2013;
Zaheeruddin and Mandviwalla, 2005). Although a standardized information sharing platform is intuitively appealing for firms to improve their supply chain coordination and hence operational efficiency and cost reduction (Gable, 2010), it was reported that different layers of complexity, such as heterogeneous data sources and the sheer volumes of information, create challenges for platform implementation (Bohlouli et al., 2013). Consistently, Forrester, a technology and market research company, anticipates that around 60% of companies are unable to achieve their expected return on investment (ROI) from technological expenses for integrated supply chain management (SCM). These reports are skeptical about the business value of supply chain information integration, and question if the technological outcomes are universal or contingent on contextual conditions in managing the supply chain.
While the query about the performance contingencies of supply chain integration has raised attention in the supply chainmanagement literature (Flynn et al., 2010; Wong et al., 2011b), little is known about how the contextual conditions in a supply chain (e.g., market complexity and product complexity) affect the results of information integration across supply chain partners. There are few anecdotes rationalizing the success or failure factors for supply chain information integration. As the management of a supply chain involves physical product flows enabled by information sharing amongst partners (Li and Williams, 1999), we extend this rationalization to the operating characteristics in terms of product andmarket conditions under which supply chain information integration is of particular importance to firms’ financial and operational value. While SCM is crucial to manage
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Int. J. Production Economics http://dx.doi.org/10.1016/j.ijpe.2015.03.005 0925-5273/& 2015 Elsevier B.V. All rights reserved. n Corresponding author: Tel.: þ852 2766 6415; fax: þ852 2773 1432.
E-mail addresses: email@example.com (C.W.Y. Wong), firstname.lastname@example.org (K.-h. Lai), email@example.com (E.W.N. Bernroider). 1 Tel.: þ852 2766 7920; fax: þ852 2330 2704. 2 Tel.: þ43 1 31336 4443; fax: þ43 1 31336 90 746.
Int. J. Production Economics 165 (2015) 1–11 product development activities, including product design, materials sourcing, production, and distribution, it is essential to ensure the right products are made and distributed to the right markets to fully satisfy customer needs. The globalized supply chain networks demand managers to search and consolidate market and operational intelligence from various partners and sources for responsive decision making. Such complexity is accentuated with more parties intermediating product development and marketing activities in the supply chain.