Developing supplier integration capabilities for sustainable competitive advantage: A dynamic capabilities approach
| Date | 01 November 2014 |
| Author | Martin Wetzels,Evelyne Vanpoucke,Ann Vereecke |
| DOI | http://doi.org/10.1016/j.jom.2014.09.004 |
| Published date | 01 November 2014 |
Journal
of
Operations
Management
32
(2014)
446–461
Contents
lists
available
at
ScienceDirect
Journal
of
Operations
Management
jo
ur
nal
ho
me
pa
ge:
www.elsevier.com/locate/jom
Developing
supplier
integration
capabilities
for
sustainable
competitive
advantage:
A
dynamic
capabilities
approach
Evelyne
Vanpouckea,∗,
Ann
Vereeckeb,
Martin
Wetzelsa
aMarketing
and
Supply
Chain
Management
Department,
School
of
Business
and
Economics,
Maastricht
University,
PO
Box
616,
6200
MD
Maastricht,
The
Netherlands
bOperations
and
Technology
Management
Center,
Vlerick
Business
School
and
Ghent
University,
Reep
1,
9000
Gent,
Belgium
a
r
t
i
c
l
e
i
n
f
o
Article
history:
Available
online
16
September
2014
Keywords:
Dynamic
capability
Buyer–supplier
integration
Operational
performance
Dynamics
Supply
base
complexity
a
b
s
t
r
a
c
t
Previous
research
describes
supplier
integration
as
a
competitive
resource
that
manufacturers
use
to
create
economic
rents.
Considering
the
mixed
results
obtained
from
linking
supplier
integration
with
performance
outcomes,
a
‘dynamic’
component
–
or
the
ability
to
reconfigure
the
supply
chain
to
adapt
to
changing
environments
–
appears
critical
to
creating
a
sustainable
competitive
advantage.
This
study
identifies
integration
sensing,
seizing
and
transforming
as
sub-capabilities
that
together
form
a
dynamic
capability,
referred
to
herein
as
supplier
integrative
capability
(SIC).
That
is,
SIC
enables
buyers
to
sense
changes
in
the
supply
environment
by
sharing
information
with
suppliers,
seize
opportunities
presented
by
establishing
procedures
to
analyse
this
information
and
make
long-term
changes
to
existing
processes.
A
global
sample
from
the
industrial
sector
reveals
that
the
three
capabilities
exhibit
complementarity
and
must
exist
simultaneously
for
the
capability
to
be
effective,
which
then
enhances
both
process
flexibility
and
cost
efficiency
and
helps
firms
avoid
the
traditional
trade-off
of
cost
and
flexibility.
In
addition,
market
and
technological
dynamics
strengthen
the
effect
of
SIC
on
operational
performance;
supply
base
complexity
attenuates
this
link.
©
2014
Elsevier
B.V.
All
rights
reserved.
1.
Introduction
As
supply
chain
managers
scrape
their
cost
barrels,
looking
for
costs
to
eliminate,
companies
seek
more
innovative
models
that
can
not
only
reduce
costs
but
also
improve
services.
Such
innova-
tive
models
often
are
inspired
by
changes,
customer
requests
and
opportunities
in
the
market
that
require
firms
to
renew
themselves
by
altering
their
resources
and
competences
over
time.
Accord-
ingly,
supply
chain
managers
must
adapt
their
integration
practices
to
changes
in
the
market
by
exploiting
their
‘dynamic’
capabilities
(Teece,
2007;
Teece
et
al.,
1997)
to
renew
their
supplier
integra-
tion
practices
and
change
their
resources
(processes
or
products)
(Danneels,
2011).
As
indicated
by
Jarrat
(2004),
all
well-designed
relationship
practices
require
continuous
adaptations.
In
practice,
61%
of
manufacturing
companies
worldwide
acknowledge
that
supply
chain
integration
can
contribute
to
their
profits
by
facilitating
new
waves
of
transformational
processes
in
∗Corresponding
author.
Tel.:
+0032
485
063
663.
E-mail
addresses:
e.vanpoucke@maastrichtuniversity.nl
(E.
Vanpoucke),
Ann.vereecke@vlerick.com
(A.
Vereecke),
m.wetzels@maastrichtuniversity.nl
(M.
Wetzels).
the
supply
chain
(Underwood
and
Agg,
2012).
For
example,
the
head
of
value
chain
management
at
Novartis
explains
that
to
stay
ahead
of
competition,
the
vaccine
firm
must
share
information
with
suppliers;
set
up
systems
and
procedures
to
create
smooth
supply
flows,
which
in
turn
help
resolve
every
day
supply
prob-
lems;
and
ensure
that
buyers
and
suppliers
both
develop
innovative
supply
chain
projects
to
support
long-term,
cooperative
objectives
(Deshais,
2012).
Moreover,
as
stated
by
the
Director
of
Integrated
Logistics
at
Kuehne
and
Nagel:
‘Businesses
cannot
simply
sit
back
on
their
laurels
and
organizations
will
need
to
constantly
evalu-
ate
and
adjust
their
supply
chain
operations.
The
challenge
is
that
it
can
become
a
rather
perpetual
and
cyclical
process
that
seems
to
require
constant
re-evaluation
and
change
as
the
ground
moves
beneath
it’
(Underwood
and
Agg,
2012).
But
not
all
firms
are
equally
successful
in
setting
up
such
capa-
bilities.
Whereas
Frohlich
and
Westbrook
(2001)
argue
that
higher
levels
of
inter-organizational
integration
practices
lead
to
better
operational
and
firm
performance,
other
studies
suggest
negative
effects
of
supplier
integration
(Anderson
and
Jap,
2005;
Villena
et
al.,
2011).
Because
some
firms
fail
to
benefit
from
integration
practices,
while
others
successfully
manage
supplier
integration
to
create
value
(Kale
et
al.,
2002),
we
seek
to
determine
which
factors
lead
to
successful
supplier
integration
and
posit
that
differences
in
http://dx.doi.org/10.1016/j.jom.2014.09.004
0272-6963/©
2014
Elsevier
B.V.
All
rights
reserved.
E.
Vanpoucke
et
al.
/
Journal
of
Operations
Management
32
(2014)
446–461
447
performance
improvements
might
depend
on
the
extent
to
which
a
buyer
can
adapt
its
supply
chain
to
new
realities.
In
particular,
research
has
shown
that
using
suppliers’
exper-
tise
and
knowledge
affects
a
buyer’s
ability
to
learn,
adapt
and
create
change
(e.g.,
Clark
and
Fujimoto,
1991;
Jarrat,
2004;
Kim
et
al.,
2011;
Ragatz
et
al.,
2002).
This
learning
process
can
be
stim-
ulated
by
creating
integrative
capabilities,
such
as
processes
to
(1)
exchange
information,
(2)
analyse
the
information
and
(3)
adapt
the
supply
chain
to
cope
with
the
new
realities.
Accordingly,
we
propose
that
companies
can
set
up
successful
supplier
integra-
tive
capabilities
(SIC)
that
enable
them
to
improve
operational
and,
ultimately,
financial
performance.
Moreover,
three
reasons
might
explain
why
companies
fail
to
develop
SIC:
(1)
buyers
and
sup-
pliers
fail
to
exchange
the
necessary
information;
(2)
even
if
they
share
this
information,
they
may
have
difficulties
systematically
analysing
it
to
understand
what
is
happening
in
the
supply
chain
and
(3)
even
if
they
share
and
analyse
the
information,
they
may
not
possess
the
capability
to
exploit
the
information
and
reconfigure
their
supply
chain
to
respond
to
environmental
challenges.
Our
research
thus
contributes
to
supplier
integration
literature
in
four
ways.
First,
we
conceptualize
and
test
the
notion
that
sup-
plier
integration
constitutes
a
dynamic
capability,
related
to
success
in
buyer–supplier
relationships.
Second,
using
survey
data
from
a
global
sample
in
the
industrial
sector,
we
show
that
firms
with
SIC,
including
all
three
sub-capabilities
of
integration
sensing,
seiz-
ing
and
transforming,
can
increase
their
operational
and
financial
performance.
Third,
we
describe
how
market
and
technological
dynamics,
as
well
as
supply
chain
complexity,
moderate
the
rela-
tionship
between
SIC
and
performance.
Fourth,
we
apply
dynamic
capabilities
to
understand
why
some
firms
enjoy
greater
benefits
from
supply
chain
integration
and
thus
build
a
foundation
for
inter-
disciplinary
research.
Starting
from
the
resource-based
view,
we
introduce
the
idea
of
a
dynamic
capability
and
apply
it
to
the
notion
of
supplier
inte-
grative
capability.
Next
we
formulate
our
hypotheses
and
discuss
our
research
model
in
Section
3,
then
present
the
results
of
the
empirical
hypotheses
tests
in
Section
4.
Finally,
we
offer
discuss-
ions
of
the
implications
of
the
results
for
OM
researchers
(Section
5)
and
practitioners
(Section
6),
as
well
as
some
limitations
and
recommendations
for
further
research
(Section
7).
2.
Theoretical
framework
and
hypotheses
development
2.1.
From
the
RBV
to
dynamic
capabilities
The
resource-based
view
of
the
firm
(RBV)
is
a
theoreti-
cal
framework
that
seeks
to
explicate
how
firms,
as
bundles
of
heterogeneous
resources
that
are
valuable,
rare,
inimitable
and
non-substitutable,
achieve
sustainable
competitive
advantages
(Barney,
1991;
Penrose,
1959;
Peteraf,
1993).
The
value
of
the
RBV
lies
in
its
ability
to
identify
which
resources
define
a
firm’s
success.
A
capability
view
complements
the
RBV
by
identifying
which
capabilities
help
firms
apply
their
resources
across
mul-
tiple
environments
or
situations.
According
to
a
Schumpeterian
(1950)
perspective,
it
is
difficult
to
maintain
sustainable
compet-
itive
advantages
in
dynamic
environments,
so
firms
constantly
must
reconfigure
their
resources
to
fit
changing
situations.
In
turn
firms
need
dynamic
capabilities
that
enable
them
to
create,
extend
and
modify
the
ways
they
earn
their
living
(Helfat
et
al.,
2007).
Similar
to
Teece
et
al.
(1997)
and
Eisenhardt
and
Martin
(2000,
p.
1107),
we
define
dynamic
capabilities
as
‘the
firm’s
process
to
use
resources
–
specifically,
to
integrate,
reconfigure,
gain
and
release
resources
–
to
match
and
even
induce
market
change.’
With
these
organizational
and
strategic
practices,
firms
achieve
new
resource
configurations
as
their
markets
evolve.
In
turn,
dynamic
capabilities
drive
the
creation,
evolution
and
recombination
of
other
resources
into
new
sources
of
competitive
advantage.
In
contrast
to
operational
capabilities,
which
enable
a
firm
to
earn
a
living
in
the
short
term
and
maintain
the
status
quo
(Helfat
et
al.,
2007),
dynamic
capabilities
help
it
constantly
renew
oper-
ational
capabilities
(Winter,
2003)
and
address
long-term
changes
in
its
environment.
Helfat
and
Winter
(2011)
also
caution
that
the
line
between
operational
and
dynamic
capabilities
is
unavoidably
blurry,
because
change
is
always
occurring
to
some
extent.
Dis-
tinctions
such
as
new
versus
existing
business
cannot
differentiate
between
operational
and
dynamic
capabilities,
and
some
capabili-
ties
even
serve
dual
purposes
(Helfat
and
Winter,
2011).
Even
with
these
overlaps
though,
operational
and
dynamic
capabilities
sup-
port
distinct
purposes,
i.e.,
short-term
and
long-term
performance
improvements
(Helfat
et
al.,
2007;
Winter,
2003).
2.2.
Defining
SIC
as
a
dynamic
capability
Some
dynamic
capabilities
enable
firms
to
enter
new
business
or
create
new
products
or
processes
(Helfat
et
al.,
2007).
Across
these
types
of
dynamic
capabilities,
information
processing
capabilities
consistently
serve
to
help
the
firm
identify
the
nature
of
the
chang-
ing
environment
and
thus
sense
opportunities
(Helfat
et
al.,
2007;
Pierce
et
al.,
2002).
We
focus
on
supplier
integrative
capabilities
(Helfat
et
al.,
2007)
as
essential
routes
to
learning
from
suppliers
and
adapting
the
supply
chain
to
changes
in
supply.
Integration
refers
to
‘the
unified
control
of
a
number
of
suc-
cessive
or
similar
economic
or
especially
industrial
processes
formerly
carried
out
independently’
(Webster,
1966,
p.
1175).
In
a
buyer–supplier
context,
supplier
integration
is
the
degree
to
which
a
manufacturer
partners
with
its
suppliers
to
structure
inter-organizational
strategies,
practices
and
processes
into
collab-
orative,
synchronized
processes
(Droge
et
al.,
2012;
Flynn
et
al.,
2010;
Katunzi,
2011).
Swink
et
al.
(2007)
defines
operational
inte-
gration
as
the
coordination
of
daily
flows,
such
as
transactions,
material
movements
and
ordering
processes,
to
achieve
effective
movements
of
products,
services,
information,
money
and
deci-
sions,
which
in
turn
provides
maximum
value
to
the
customer
at
low
cost
and
high
speed
(Flynn
et
al.,
2010;
Frohlich
and
Westbrook,
2001).
Starting
from
these
definitions,
we
define
supplier
integra-
tive
capability
as
a
dynamic
capability
that
contains
processes
to
achieve
effective
and
efficient
product
and
information
flows
between
buyers
and
suppliers
(Carr
and
Pearson,
1999;
Swink
et
al.,
2007),
as
well
as
the
ability
to
adapt
these
processes
to
environmen-
tal
change.
Then,
in
line
with
previous
research,
we
argue
that
SIC
serves
dual
purposes:
It
enables
communication
and
coordination
across
organizational
units
and
firms
(Fortune
and
Mitchell,
2012),
such
that
it
can
facilitate
smooth
operations
and
delivery
processes,
and
it
supports
dynamic
purposes,
such
as
introducing
a
new
dis-
tribution
channel
or
sourcing
from
different
regions
to
mitigate
supply
risks.
Thus
SIC
might
be
dynamic
and
operational,
depend-
ing
on
its
nature
and
intended
use
(Helfat
and
Winter,
2011).
Most
extant
literature
addresses
operational
goals
(e.g.,
Frohlich
and
Westbrook,
2001;
Vereecke
and
Muylle,
2006);
we
seek
to
add
a
dynamic
view.
2.3.
Processes
underlying
SIC
Teece
(2007)
identifies
three
core
processes
of
a
dynamic
capability:
(1)
sensing,
(2)
seizing
and
(3)
transforming.
These
sub-capabilities
are
complementary,
such
that
only
when
they
are
combined
and
aligned
can
they
produce
a
dynamic
capabil-
ity.
Transforming,
which
is
responsible
for
modifying
integrative
processes,
particularly
ensures
the
dynamic
nature
of
the
capa-
bility,
in
that
it
is
the
ability
to
adapt
processes
to
changing
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