The Performance Effects of Complementarities Between Information Systems, Marketing, Manufacturing, and Supply Chain Processes

TLDR

Manufacturing firms increasingly use advanced enterprise-level information systems to coordinate marketing, supply chain, and internal manufacturing activities, and such IS capability is viewed as enhancing coordination with marketing and supply chain to improve performance. This study presents a model of manufacturing performance that integrates IS capability with interfunctional and interorganizational coordination mechanisms, introducing manufacturing‑IS coordination as a key antecedent. The model is empirically tested using primary data from manufacturing firms matched with objective performance data from secondary sources. Results show that integrated IS capability and its complementary effects with manufacturing, marketing, and supply chain processes significantly predict manufacturing performance, and these findings are robust to endogeneity, heterogeneity, and alternative specifications.

Abstract

Manufacturing firms are increasingly using advanced enterprise-level information systems to coordinate and synchronize externally oriented functions such as marketing and supply chain and internally oriented activities such as manufacturing. In this paper, we present a model of manufacturing performance that simultaneously considers the effects of a firm's integrated IS capability in conjunction with interfunctional and interorganizational coordination mechanisms. Consistent with the complementarity perspective, we view this specific form of IS capability as enhancing manufacturing's coordination with marketing and supply chain functions to drive manufacturing performance. Additionally, the theoretical model presented here introduces manufacturing-IS coordination, a form of coordination not considered in past research, as a key antecedent to integrated IS capability. The research thus provides a comprehensive framework for examining manufacturing performance in contexts that have been transformed by the use of advanced information systems. The theoretical model is tested using primary data collected from manufacturing firms and matched with objective manufacturing performance data from secondary sources. Results show that a firm's integrated IS capability, as well as the complementary effects of IS capability with manufacturing, marketing, and supply chain processes, are significant predictors of manufacturing performance. These findings are robust to concerns of endogeneity, unobserved heterogeneity, and alternative model specification.