The contingency effects of environmental uncertainty on the relationship between supply chain integration and operational performance

• Date: 01 September 2011
• Author: Christina W.Y. Wong,Sakun Boon‐itt,Chee Yew Wong
• DOI: http://doi.org/10.1016/j.jom.2011.01.003
• Published date: 01 September 2011

Journal of Operations Management 29 (2011) 604–615

Contents lists available at ScienceDirect

Journal of Operations Management

journal homepage: www.elsevier.com/locate/jom

The contingency effects of environmental uncertainty on the relationship

between supply chain integration and operational performance

Chee Yew Wonga,1, Sakun Boon-itt b,∗, Christina W.Y. Wongc,2

aLogistics Institute, Hull University Business School, Hull HU6 7RX, UK

bDepartment of Operations Management, Thammasat Business School, 2 Prachan, Rd Pranakorn, Bangkok 10200, Thailand

cBusiness Division, Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong

article info

Article history:

Received 16 February 2009

Received in revised form 24 January 2011

Accepted 27 January 2011

Available online 5 February 2011

Keywords:

Environmental uncertainty

Contingency

Supply chain integration

Operational performance

abstract

This paper extends prior supply chain research by building and empirically testing a theoretical model of

thecontingency effects of environmental uncertainty (EU) on the relationships between three dimensions

of supply chain integration and four dimensions of operational performance. Based on the contingency

and organizational information processing theories, we argue that under a high EU, the associations

between supplier/customer integration, and delivery and flexibility performance, and those between

internal integration, and product quality and production cost, will be strengthened. These theoretical

propositions are largely confirmed by multi-group and structural path analyses of survey responses col-

lected from 151 of Thailand’s automotive manufacturing plants. This paper contributes to operations

management contingency research and provides theory-driven and empirically proven explanations for

managers to differentiate the effects of internal and external integration efforts under different environ-

mental conditions.

© 2011 Elsevier B.V. All rights reserved.

1. Introduction

Growing evidence suggests that supply chain integration (SCI)

has a positive impact on operational performance outcomes, such

as delivery, quality, flexibility and cost (Rosenzweig et al., 2003;

Dröge et al., 2004; Devaraj et al., 2007; Swink et al., 2007; Flynn

et al., 2010). Sousa and Voss (2008) suggested that when the value

of a best practice, such as SCI, is supported by empirical evidence,

research should shift from the justification of its value to the under-

standing of the contextual conditions under which it is effective.

Among other factors, environmental uncertainty (EU) has been

identified as a contextual factor which may affect the effectiveness

of a best practice (Thompson, 1967; Venkatraman, 1989; Souder

et al., 1998).

Some recent studies argue that SCI–performance relationships

are moderated by EU (O’Leary-Kelly and Flores, 2002; Fynes et al.,

2004; Koufteros et al., 2005). However, these studies are prob-

lematic in three areas. First, the use of different approaches in

conceptualizing SCI, performance and EU constructs disallows a

meaningful comparison of, or conclusion about, the contingency

∗Corresponding author. Tel.: +66 2613 2201; fax: +66 2947 8912.

E-mailaddresses: c.wong@hull.ac.uk (C.Y. Wong), sboonitt@tu.ac.th (S. Boon-itt),

Christina.WY.Wong@inet.polyu.edu.hk (C.W.Y. Wong).

1Tel.: +44 1482 347548.

2Tel.: +852 2766 6415; fax: +852 2733 1432.

effects of EU. Second, the evidence reported so far indicates that

SCI–performance relationships are not always moderated by EU

(Fynes et al., 2004; Koufteros et al., 2005), and even if moderating

effects exist, their direction varies (O’Leary-Kelly and Flores, 2002).

For example, Koufteros et al. (2005) found insignificant moderating

effects of EU on the relationships between supplier/customer inte-

gration and quality/product innovation. O’Leary-Kelly and Flores

(2002) found positive relationships between marketing/sales plan-

ning decision integration and firm performance under a high, but

not a low EU. However, their results surprisingly indicated that the

relationships between manufacturing planning decision integra-

tionand firm performance are positive under a low, instead of a high

EU. Anchored in the premise that EU creates the need for SCI, some

studies argue that SCI–performance relationships will become sig-

nificant or stronger under a high EU. Such a “theory” cannot explain

the above mixed findings. The lack of a theoretical explanation is

the third, and perhaps the most pressing issue that deserves more

research attention.

This paper builds and empirically tests a theoretical model to

explain the contingency effects of EU on the salient operational

performance outcomes of SCI. This paper differs from others in

a number of aspects. We conceptualize both SCI and operational

performance as multidimensional constructs, instead of the uni-

dimensional approach applied by others (e.g., Stank et al., 1999;

Rosenzweig et al., 2003). We have collapsed SCI into three dimen-

sions – internal, supplier, and customer integration – to enable the

examination of the performance impacts of different SCI dimen-

0272-6963/$ – see front matter © 2011 Elsevier B.V. All rights reserved.

doi:10.1016/j.jom.2011.01.003