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Supply chain integration (SCI) in e-business has attracted considerable attention from researchers and practitioners (Frohlich 2002; Rai et al. 2006; Rosenzweig 2009; Saeed et al. 2011). SCI refers to the ability of a firm to strategically coordinate supply chain processes with channel partners (Devaraj et al. 2007; Esper et al. 2010; Frohlich and Westbrook 2002). SCI in e-business resolves the trade-offs of low-cost, real-time, and broad channel deployment in traditional supply chain management (SCM) (Boyer and Hult 2005; Frohlich and Westbrook 2001). Thus, SCI is considered a critical organizational capability that allows firms to derive competitive advantage (Boyer and Hult 2005; Frohlich and Westbrook 2001; Lee and Whang 2004; Rai et al. 2006; Tsai and Ghoshal 1998). Governments and professional associations, especially in the emerging economy of China, strive to promote SCI (Cai et al. 2010; Liu et al. 2013; Zhao et al. 2011). However, firms in China experience difficulty in developing SCI and materializing its purported benefits (Cai et al. 2010; Huo et al. 2013). Given the importance of Chinese firms in global supply chains and the low degree of SCI, which may jeopardize the efficiency and effectiveness of global SCM, factors that will facilitate SCI development in China should be investigated (Huo et al. 2013; Zhao et al. 2008). Unfortunately, research on these factors in emerging economies is scarce, and the present understanding of the factors that enable SCI in China is limited (Zhao et al. 2008).
The present paper is an effort to address this gap in the literature. A critical review suggests that market orientation (MO), which reflects the orientation of the firm toward the creation of superior value for customers, is a critical factor that affects the development of organizational capabilities (Braunscheidel and Suresh 2009; Martin and Grbac 2003; Min et al. 2007). Specifically, MO determines the important strategic choices of firms and directs firms to acquire, allocate, and utilize resources to develop organizational capabilities, such as dynamic (Menguc and Auh 2006), collaborative (Hyvönen and Tuominen 2007), and relational (Smirnova et al. 2011) capabilities. Thus, we refer to the MO theory to investigate its effect on SCI development in Chinese firms. Following Narver and Slater (1990), we conceptualize MO as a construct of three dimensions, namely, customer orientation, competitor orientation, and inter-functional coordination. These dimensions reflect the objective of a firm to deliver superior customer value “based on knowledge derived from customer and competitor analyses and the process by which this knowledge is gained and disseminated throughout the organization” (Kumar et al. 2011, p.16). Scholars have indicated that these dimensions are not necessarily synergistic and can diversely affect organizational capabilities (Liu et al. 2013; Smirnova et al. 2011). Thus, examination of the effects of these MO dimensions on SCI will help clarify their contribution to organizational capabilities.