Supply Chain Integration, Competitive Advantage, Environmental Dynamism and Performance of Large-scale Manufacturing Firms in Kenya

Abstract

Intense competitive pressures have forced firms to go beyond their neighbourhoods to achieve competitive advantage. A feasible course of action for firms is embracing supply chain integration. However, there is concern on whether implementing supply chain integration results in enhanced firm performance. Hence, the major aim of this research was to investigate the link connecting supply chain integration implementation and performance of large manufacturing companies in Kenya. In particular, the study examined the link connecting supply chain integration, competitive advantage, environmental dynamism to firm performance. The study was anchored on four theories; resource-based view, resource dependence theory, systems theory and network theory. The objectives of the study were attained through four main hypotheses. The study used positivist research lens. A cross-sectional descriptive research design was applied with primary data. The respondents of the study were persons overseeing supply chain functions in the sampled firms. From a sample size of 200 firms, 94 usable questionnaires were obtained resulting in a response proportion of 47%. The main data analysis method was partial least squares structural equation modelling (PLS-SEM). The outcomes of the study are that; first, supply chain integration has a positive and significant effect on organizational performance. Next, there was a significant partial complementary mediating influence of competitive advantage on the connection linking supply chain integration and company performance. The study also found that environmental dynamism has an overall significant and negative moderating effect on the link connecting supply chain integration to firm performance. Both customer uncertainty and government policy had significant negative moderating effect on the connection linking supply chain integration to firm performance while supplier uncertainty, competitive intensity and technological uncertainty had no moderating effect. Finally, the study found that supply chain integration, competitive advantage and environmental dynamism had a significant combined effect on firm performance. The study affirms that the performance of manufacturing firms in Kenya can be strengthened by implementation of supply chain integration. This helps to settle the debate to some extent on whether it is fruitful for organizations to integrate their supply chain operations. The results are consistent with the resource dependence theory that supply chain integration reduces uncertainty via integration with suppliers and customers leading to improved performance. These outcomes are also in congruence with resource-based perspective in the sense that integrating internal operations can be regarded as a rare, non-substitutable, valuable and imperfectly imitable resource. The study findings will also be useful to policy makers in developing appropriate legislations such as protection of copyrights and patents. Moreover, the findings of the study are expected to provide directions to scholars on the possible influence of supply chain integration on organisational performance with the possibility of competitive advantage and environmental dynamism acting as mediation and moderation variables respectively. This is particularly pertinent in the context of the developing world where such studies are scarce.