Managing Internal Supply Chain Integration: Integration Mechanisms and Requirements

DOIhttp://doi.org/10.1111/jbl.12165
Date01 December 2017
Published date01 December 2017
Managing Internal Supply Chain Integration: Integration
Mechanisms and Requirements
Virpi Turkulainen
1
, Joseph Roh
2
, Judith M. Whipple
3
, and Morgan Swink
2
1
University College Dublin
2
Texas Christian University
3
Michigan State University
In response to globalization, diversication, and other organizational drivers, managers continue to seek organizational designs that promote
integration. We study this phenomenon by focusing on requirements and mechanisms for internal supply chain integration (SCI). Using
qualitative interview data, we examine how managers in manufacturing rms integrate internal supply chain activities. We elaborate and extend
the information processing view by studying why organizations integrate (integration requirements) and how integration mechanisms are associ-
ated with different integration requirements. Four patterns of integration requirementmechanism linkages emerged from our study, depicting
integration mechanisms that are associated with a particular integration requirement, and those that are not. We provide a detailed examination
of the multidimensional nature of integration requirements, as well as an increased understanding of how integration mechanisms are used to
manage different integration requirements. These ndings offer deeper insights into organizational integration, enhancing the understanding of
integration in the context of internal supply chains, while also contributing to the literature on organizational design. For supply chain managers,
these ndings describe ways in which organizational design decisions can support internal SCI efforts with varying aims.
Keywords: supply chain integration; internal integration; requisite integration; integration mechanisms; information processing view; qualitative
research
INTRODUCTION
Supply chain integration (SCI) refers to degrees of collaboration
and coordination across intraorganizational and interorganiza-
tional boundaries spanning internal, customer, and supplier
dimensions (Flynn et al. 2010). This study focuses on internal
SCI, dened as integration within the rms own boundaries,
across its internal supply chain functions (Chen et al. 2009).
Internal integration is important, as it is the base from which
supplier and customer integration are developed (Flynn et al.
2010).
Despite its importance, internal integration remains poorly
understood (Frankel and Mollenkopf 2015) and research on SCI
is considered incomplete(Flynn et al. 2010, 58). Most research
on integration (internal or external) has focused on the perfor-
mance implications of SCI (e.g., Ellinger et al. 2000; Germain
and Iyer 2006; Swink et al. 2007; Narasimhan et al. 2010; Terje-
sen et al. 2012; Swink and Schoenherr 2015), yet, a recent
metastudy on the performance effects of SCI reports signicant
inconsistency and noticeable variationin ndings (Mackel-
prang et al. 2014, 71). In order to develop a deeper understand-
ing of integration, research needs to move beyond performance
outcomes (Pagell 2004; Chen et al. 2009; Terjesen et al. 2012;
Sanders et al. 2013) to examine the contextin which integra-
tion occurs. Such a focus would build greater insight into organi-
zational designs and processes that enable effective and accurate
processing of information(Frankel and Mollenkopf 2015, 21).
As Kahn and Mentzer (1996) illustrate, varying organizational
contexts pose different needs for integration. Moreover, differ-
ences in contextual demands for integration may explain the
inconsistencies and variation found in previous integration stud-
ies.
The purpose of this study was to develop more detailed under-
standing of integration by addressing both the contextual why
and executional howquestions of integration, using a theory
elaboration approach (e.g., Ketokivi and Choi 2014). In order to
understand the effects of integration, it is important to know the
rationale for integration, because an organizations integration
requirement establishes the context in which its selected means
for integration operate. For example, a rm that has recently
made a new acquisition is likely to have different internal SCI
requirements (e.g., managing synergies between the new and
existing divisions) compared to a rm that is expanding an exist-
ing business to a new market (e.g., sharing best practices learned
from other divisions already operating in that new market). Fur-
thermore, different integration requirements are also likely to
drive organizations to use different integration mechanisms (e.g.,
centralization vs. lateral mechanisms; Galbraith 1973). Thus,
understanding the integration requirements (i.e., the whyof
integration) as well as the means for actually accomplishing inte-
gration (i.e., the howof integration) is critical.
We examine internal SCI using the information processing
view (IPV), because this theoretical perspective addresses both
information processing needs and capacities as the whyand
howquestions related to integration (Galbraith 1973; Daft and
Lengel 1986). Researchers have often employed the IPV as a
theoretical lens to examine internal SCI (e.g., Swink et al. 2007;
Flynn et al. 2010; Turkulainen and Ketokivi 2012). To elaborate
the IPV, we analyze data from in-depth interviews with supply
chain managers, which include detailed descriptions of specic
information processing needs and integration mechanisms used
to facilitate information processing capacities. Studying internal
Corresponding author:
Virpi Turkulainen, School of Business, University College Dublin,
Carysfort Avenue, Blackrock, Co. Dublin, Ireland; E-mail: virpi.
turkulainen@ucd.ie
Journal of Business Logistics, 2017, 38(4): 290309 doi: 10.1111/jbl.12165
© Council of Supply Chain Management Professionals
integration in this way is important for three reasons. First, even
though early researchers proposed that organizations face differ-
ing integration requirements (March and Simon 1958; Lawrence
and Lorsch 1967a,b; Galbraith 1973), subsequent research has
not examined integration requirements in detail, and not in a sup-
ply chain management context. It is important to understand inte-
gration requirements in order to comprehend the role of context,
as it is likely to be associated with the specic integration mech-
anisms used (Lawrence and Lorsch 1967a,b; Galbraith 1973).
Second, integration is multidimensional (Kahn and Mentzer
1996), yet SCI research has often operationalized integration
mechanisms within a single, consolidated construct (e.g., Froh-
lich and Westbrook 2001; Fugate et al. 2006; Germain and Iyer
2006; Flynn et al. 2010). In practice, however, different integra-
tion mechanisms might be used to different degrees (Lawrence
and Lorsch 1967a; Bensaou and Venkatraman 1995). Accord-
ingly, we examine patterns in the usage of individual integration
mechanisms for certain requirements. Finally, integration mecha-
nisms vary in sophistication and in information processing capac-
ity and directly affect both the cost and effectiveness of
integration (e.g., Lawrence and Lorsch 1967a; Galbraith 1973;
Joyce et al. 1997). Understanding integration requirementmech-
anism linkages may lead to improvements, not only in informa-
tion processing capabilities, but also in crafting cost-appropriate
and effective integration strategies.
INTEGRATION: THEORETIC BACKGROUND
The concept of integration has been central to organization
science since the seminal works of March and Simon (1958) and
Lawrence and Lorsch (1967a,b). Lawrence and Lorsch (1967b)
dene integration as the quality of the state of collaboration that
exists among organizational units(p. 11). This denition
focuses on achieved integration (Turkulainen and Ketokivi
2012). Achieved integration is a state variable: When achieved
integration is high, the organization works as a unied whole
and is able to transfer, process, and exploit information across
the organization (Galbraith 1973; Turkulainen and Ketokivi
2012).
This state of achieved integration is reached through the
implementation of various integration mechanisms (Lawrence
and Lorsch 1967b). Integration mechanisms facilitate coordi-
nated action across large numbers of interdependent roles(Gal-
braith 1974, 28). Prior researchers identify (but do not
specically examine) a variety of integration mechanisms in the
supply chain context, including standardized processes/guideli-
nes, information systems, job rotation, and cross-functional teams
(e.g., Flynn and Flynn 1999; Pagell 2004; Swink et al. 2007;
Flynn et al. 2010; Narasimhan et al. 2010; Terjesen et al. 2012).
These mechanisms can be classied into two main categories:
impersonal mechanisms (e.g., rules, regulations, and standards)
and personal mechanisms (e.g., teams, integrator roles, direct
contacts; Galbraith 1973; Daft and Lengel 1986).
A third concept of integrationoften ignoredis requisite
integration, which refers to the requirements or needs for integra-
tion (Lawrence and Lorsch 1967a,b; Galbraith 1973). Figure 1
illustrates the proposed relationships among these three integra-
tion constructs and incorporates IPV tenets as well. IPV argues
that organizations vary according to the information processing
requirements that they face, and thus, managers implement inte-
gration mechanisms that affect the organizations capacity to pro-
cess the necessary information (Galbraith 1973; Daft and Lengel
1986; Flynn and Flynn 1999). The integration mechanisms
selected need to support (t) the integration requirements in
order for integration to be achieved (Lawrence and Lorsch
1967a,b; Galbraith 1973; Daft and Lengel 1986; Flynn and Flynn
1999).
According to the IPV, there are two complementary forces that
drive integration requirements: uncertainty and equivocality (Daft
and Lengel 1986). Whereas uncertainty generally refers to a lack
of information, equivocality refers to ambiguity of information,
resulting in confusion, lack of understanding, and conicting
interpretations (Daft and Lengel 1986). Uncertainty is reduced by
processing greater amounts of information and is effectively
managed with impersonal integration mechanisms, such as stan-
dardization and centralization of decision making (Galbraith
1973; Daft and Lengel 1986), which provide a codied blue-
print for action that is impersonally specied(Van de Ven et al.
1976, 323). Equivocality, on the other hand, can be reduced by
personal integration mechanisms that establish common meaning,
including integrator roles and teams (Van de Ven et al. 1976;
Daft and Lengel 1986). Personal mechanisms facilitate making
mutual adjustments (Thompson 1967) and provide a means for
synchronous feedback that enable debate, clarication, and
enactment more than simply provide large amounts of data
(Daft and Lengel 1986, 559).
Research that explicitly addresses requisite integration is
sparse. Some studies mention that integration is required to man-
age subgoal pursuit (e.g., March and Simon 1958; Lawrence and
Lorsch 1967b), while others indicate that integration is needed in
order to achieve synergies and economies of scale (e.g., Porter
1985; Gupta and Govindarajan 1986; Frohlich and Westbrook
2001), to share information (Flynn and Flynn 1999; Narasimhan
et al. 2010), and to manage different thought worlds (Flynn et al.
2010). However, none of these studies explicitly investigate req-
uisite integration. Moreover, none of these studies conceptualize
requisite integration as being multidimensional, even though a
collective view of this work indicates that requisite integration
indeed has many forms. To address this, we enhance the under-
standing of the multidimensional nature of requisite integration
(why), as well as the ways that integration mechanisms are
used to manage different integration requirements (how).
RESEARCH METHODOLOGY
Method for theory elaboration
Our research aim is theory elaboration, as opposed to theory
testing or theory generation. Theory elaboration is useful when
conceptual ideas or preliminary models exist that can be used to
approach the empirical context, yet detailed premises of the the-
ory are not sufcient to deduce explicit hypotheses for theory
testing (Lee et al. 1999; Ketokivi and Choi 2014). Our research
builds on and elaborates the IPV (Galbraith 1973). Given that
prior research has not established the multidimensionality of inte-
gration requirements, or whether different integration
Managing Internal Supply Chain Integration 291

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