Managing Internal Supply Chain Integration: Integration Mechanisms and Requirements

• Author: Morgan Swink,Judith M. Whipple,Joseph Roh,Virpi Turkulainen
• DOI: http://doi.org/10.1111/jbl.12165
• Date: 01 December 2017
• Published date: 01 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, diversification, 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 firms 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 requirement–mechanism 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 findings 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 findings 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, defined as integration within the firm’s 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 significant

“inconsistency and noticeable variation”in findings (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 “context”in 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 “how”questions 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 organization’s integration

requirement establishes the context in which its selected means

for integration operate. For example, a firm 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 firm 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 “why”of

integration) as well as the means for actually accomplishing inte-

gration (i.e., the “how”of 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 “why”and

“how”questions 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 specific

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): 290–309 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 specific 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 requirement–mech-

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)

define integration as “the quality of the state of collaboration that

exists among organizational units”(p. 11). This definition

focuses on achieved integration (Turkulainen and Ketokivi

2012). Achieved integration is a state variable: When achieved

integration is high, the organization works as a unified 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

specifically 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 classified 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 integration—often ignored—is 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 organization’s capacity to pro-

cess the necessary information (Galbraith 1973; Daft and Lengel

1986; Flynn and Flynn 1999). The integration mechanisms

selected need to support (“fit”) 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 conflicting

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 codified blue-

print for action that is impersonally specified”(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, clarification, 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 sufficient 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