Structure-integration relationships in oil and gas supply chains

Abstract

PurposeAlthough studies have demonstrated the importance of supply chain integration (SCI) strategies in improving firm performance, very little is understood about how the organizational structure (OS) of focal firms affects the successful implementation of SCI initiatives across supply chains (SCs). Taking into consideration the importance of the oil and gas (O&G) industry, as well as the impact of uncertainties on OS and strategy choices, it is important to understand how OS and SCI affect the operational performance of O&G SCs. The paper aims to discuss this issue.Design/methodology/approachTaking a contingency approach and using a global sample of 181 O&G firms, this study examines the mediating role of internal, customer, and supplier integration on the relationship between three main dimensions of OS – the degree of centralization, formalization, and hierarchical relationships and operational performance, using structural equation modeling.FindingsFindings reveal that OS dimensions negatively impact operational performance. Further testing for the mediation found that by increasing SCI, O&G SCs can mitigate the negative effect of high centralization, formalization, and hierarchical relationship on operational performance.Research limitations/implicationsClassifying OS into “structuring” and “structural,” this research provides evidence on which of the two has a stronger negative impact on operational performance. This is significant since it may be difficult for O&G companies to restructure and reform their OS.Originality/valueThis study examines the impact of OS and SCI on improving the operational performance of the O&G SCs. Theoretical and practical contributions to the field of operations management and organizational studies are also discussed.