Implementing supplier integration practices to improve performance: The contingency effects of supply base concentration

Abstract

Companies are recently facing increasing supply chain disruptions that may influence their supply base design choices. However, studies investigating how these choices affect the effectiveness of other supplier management practices, such as supplier integration, are scarce. The aim of this paper is to explore the impact of various types of supplier integration on the buyer's efficiency and innovation, as well as the contingency effects of supply base concentration, an important supply base design choice. Drawing upon Social Exchange Theory, we argue that the expected benefits of supplier integration activities to efficiency and innovation are strengthened by supply base concentration. We test our hypotheses using data collected from 324 manufacturing plants. Hierarchical regression results reveal that some supplier integration types improve performance only under higher levels of supply base concentration, while the effects of other supplier integration types vary according to the type of performance considered or are not significant at all. In addition, the results suggest that developing technologies to share information with suppliers may be counterproductive in driving efficiency. Besides enriching the supplier integration literature, this research offers guidance for managers who wish to improve efficiency and innovation, while also considering the pros and cons of supply base concentration.