Does Supply Chain Integration Pay? Mediating Effects of External Integration and the Contribution of Internal Integration to Performance

The economic crisis has demonstrated that highly integrated supply chains are as strong as their weakest link. Therefore, one of the key topics in supply chain research has recently been how companies integrate externally with customers, to adapt to changing demands, and with suppliers, to ensure efficient and highly responsive material supply (Chen et al. 2009; Rosenzweig et al. 2003; van der Vaart and van Donk, 2008). Research on supply chain integration has focused on customer and supplier integration as well as on internal, or intra‐organizational, integration which improves the interfaces among corporate functions. However, research on the contribution of supply chain integration to performance has shown inconsistent results. Few studies take interactions among the integration perspectives into account. Recently, Flynn et al. (2010) tried to find evidence for a moderating effect of internal integration. Since internal integration is a prerequisite for external integration (Morash and Clinton, 1998), we propose that the relationship between internal integration and performance is mediated by external integration. Specifically, we find evidence that internal integration has a significant effect on operational performance, which is mediated by customer integration. Moreover, our research reveals that the interactions among internal, customer, and supplier integration go beyond the findings of Flynn et al. (2010), which projected that asymmetric, customer‐oriented integration patterns are more efficient than balanced integration patterns.