An Improved Measurement Model for Internal Integration: A Systems and Contingency Approach

Introduction

Supply Chain Integration (SCI) has received increasing attention among academicians and practitioners alike in recent years (Frohlich & Westbrook, 2001; Vickery et al., 2003; Rozenweig et al., 2003; Droge et al., 2004; Swink et al., 2007; Flynn et al., 2010; Lin et al., 2010; Zhao et al., 2011; Schoenherr & Swink, 2012). The literature broadly defines SCI as the extent to which a firm is strategically interconnected and aligned to its supply chain partners (Jayaram et al., 2010; Schoenherr & Swink, 2012). SCI consists of the integration of internal functions, as well as the integration with customers and suppliers (Zhao et al., 2011). Despite the increasing research interests in SCI, our understanding of the individual dimensions is very limited. While some studies focuses on dimensions such as customer and supplier integration (Cousins & Menguc, 2006; Homburg & Stock, 2004; Koufteros et al., 2007), others use omnibus definitions for SCI with single measurement item (Armistead & Mapes, 1993; Rosenzweig et al., 2003). As Flynn et al (2010) contend, many conceptualizations of SCI are incomplete and leave out central link of internal integration.

Internal integration is arguably the basis of SCI (Wong et al., 2011). It removes functional barriers (Flynn et al., 2010) and enables cooperation across internal functions (Morash & Clinton, 1998). Without Internal Integration, different functions work at cross-purposes. This leads to wastage of efforts and resources (Pagell, 2004). Investigation of the construct of Internal Integration is important for the following reasons: First, many prior studies have narrowly conceptualized Internal Integration. Second, some prior studies use a single measurement item to measure this construct. It is well established that psychometric properties of any construct will be substantially improved by use of appropriate multiple measurement items. Third, use of single item fails to account for the processes that need to be considered for strengthening internal integration. Fourth, granular understanding of the construct of Internal Integration is essential to improve our understanding of the mechanism of SCI. Finally, this study will help practitioners focus their limited resources on the important processes that constitute Internal Integration.

In this study, we develop an improved measurement model for Internal Integration by using multiple measurement items. Since buyers and suppliers perspectives on integration practices are different (Nyaga et al., 2010; Ambrose et al., 2010), we enhance the methodological rigor and quality of the measures by collecting data from the buyer and supplier firms that constitute the buyer – supplier dyad (Heide & John, 1990; Dong et al., 2001). In order to eliminate any potential methods effect and to bring cleaner factor structures, we use Confirmatory Factor Analysis Multi-Trait Multi-Method (CFA MTMM) approach (Bryne, 1994). The remainder of the paper is organized as follows. In the next section, we review the theoretical background of Internal Integration. We then present an improved measurement model. We then validate the model using results from an empirical study. In the final sections, we discuss the contributions of this study and directions for future research.