Effect of supply chain integration on the relationship between diversification and performance: evidence from Japanese and Korean firms

TLDR

Supply‑chain strategies depend on business nature, competitive environment, technological intensity, and product and market characteristics, so supply‑chain integration must be assessed in the context of a firm’s market and product strategies. This study investigates how supply‑chain integration influences the link between diversification and competitive performance. Results show that supply‑chain integration alters the diversification‑performance relationship and that jointly applying integration and diversification strategies significantly boosts firm performance.

Abstract

Abstract Supply chain strategies and practices depend on not only the nature of the business, the competitive environment, and technological intensity of the product, but also on product and market characteristics. Consequently, supply chain integration (SCI) strategies should be evaluated in the light of a company’s market and product strategies. This paper examines the effect of SCI on the relationship between diversification and a firm’s competitive performance. The results of the study can be useful in integrating supply chain strategy into market and product diversification (PD) strategy. By comparing the main and interaction effects of SCI and diversification on performance, the paper shows that SCI strategy modifies the relationship between diversification and performance. Additionally, it is argued that coordinated use of SCI and diversification strategies has a significant effect on firm performance.