Abstract
The premise of this paper is that coordination between market‐related diversification strategies and supply chain management (SCM) strategies will lead to better performance than when the two strategies are pursued independently. Viewed in this perspective, this research proposes that (supply chain) SC integration plays an intermediate role in influencing the relationship between diversification and performance. In order to confirm the validity of the above proposition, structural equation model was used to analyze the interrelationships among SC integration level, diversification level, SCM performance, and firm performance. The results of this study suggest that in small firms in which the direct effect of diversification on firm performance is absent relatively, the level of SC integration may be a critical intervening variable that could lead to successful diversification, while in case of large firms, SC integration may play an important infrastructural role for direct effects of diversification level on firm performance. This is helpful in developing a framework for linking a firm's SC integration strategy to its market/product diversification strategy, and also in identifying how SCM function can play a role in developing and supporting corporate competitive strategy to improve organizational performance.
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