Impact of supply chain risk on agility performance: Mediating role of supply chain integration

Abstract

Supply chain literature highlights the importance of agility performance for firms facing supply chain risk. However, the literature explaining the ways in which companies facing supply chain risk organize the key elements of their supply chain to enhance agility performance provides space for more research. We use dynamic capabilities view to explain why supply chain risk may motivate companies to integrate their supply chain to enhance agility performance. Structural equation modeling is used to test the hypotheses using data of 770 manufacturing companies obtained from the sixth version of International Manufacturing Strategy Survey. Empirical examination provides evidence that (a) a firm's supply chain risk has positive association with supplier and customer integration, (b) supplier, internal, and customer integration have positive impact on agility performance, though the impact of internal integration is weak, (c) supplier and customer integration mediate the relationship between a firm's supply chain risk and agility performance, and (d) supplier and customer integration mediate the relationship between internal integration and agility performance. The findings of this paper suggest that companies cope with supply chain risk by using integrative practices with suppliers and customers that enhance agility performance. Internal integration is the foundation for building up supplier and customer integration for agility performance. Future research may examine these relationships over time and in different industries and contexts.