Supply chain integration and national collectivism

Abstract

Integration at an intra-organizational and supply chain (SC) level has been well studied to determine its benefits and drawbacks. The foundation of these studies is their assumption that managers choose integration based on economic considerations. Following the behavioral theory of the firm (BTF), strategic decisions are not always based on economics but are subject to the usual phenomena associated with aspirational levels. In this respect, the potential influence and consequences of national culture-building aspiration levels on the integration choice of decisionmakers remain unrecognized. This study researches the relationship between national collectivism values and the observed internal and external SC integration (SCI) of companies. We postulate that national collectivism values generate an aspirational need that moves integration–as a potential choice to satisfy this need–more into decisionmakers' focus. We explore the influence of two dimensions of a national culture of collectivism values (in-group and institutional) on decisionmakers' choice of higher or lower degrees of plant-level integration. In addition, we explore the operational performance efficacy of firms' integration practices. We combine data from two multi-country datasets, using mixed-effect models to analyze data from seven countries. The results indicate national collectivism values are positively related with plant-level use of internal but not of external SCI. Furthermore, SCI is positively related to operational performance. The study supports and extends BTF. It supports the assumption of behavioral forces in modern firms’ decision making and adds national culture as an external force to the theory.