Internal and external collaboration and supply chain performance: a fit approach

Abstract

ABSTRACT This study explores the interactional effects and fit of internal and external collaboration on supply chain performance based on the fit theory. Data collected from 205 firms located in China was used to test the hypotheses via partial least squares structural equation modelling, polynomial regression and response surface methodology. The results demonstrate that there is an interactive effect, i.e. fit between internal collaboration and external collaboration on supply chain performance – a phenomenon not previously well understood. The results indicate that not all firms implementing internal collaboration and external collaboration can attain the desired goals. Only when the strength and balance of the two are similar, and at a moderate to upper level, can the supply chain performance be achieved the best; and once a certain threshold value of internal collaboration and external collaboration is achieved, further enhancement in internal and external collaboration will cause the decline of supply chain performance. Our study emphasises the importance of balancing internal constraints and external requirements across the whole supply chain, and provides insights into supply chain collaboration by suggesting that internal collaboration and external collaboration must be fit in the pursuit of supply chain performance.