The Impact of Supply Chain Integration and Internal Control on Financial Performance in the Jordanian Banking Sector

Miklós Pakurár,József Popp,Hossam Haddad,János Nagy,Judit Oláh

doi:10.3390/su11051248

Abstract

The aim of this paper is to use a recently developed framework of supply chain integration (SCI) to examine the influence of a set of relationships between SCI and internal control on financial performance in the Jordanian banking sector. SCI consists of external integration and internal integration. External integration includes customer integration and supplier integration. This study utilizes survey data from 249 employees in the Jordanian banking sector and tests the research framework and hypotheses using exploratory factor analysis. The impact of supply chain internal and external integration and internal control significantly affected financial performance. The impact of the examined factors on financial performance is as follows, in decreasing order: internal integration, supplier integration, customer integration, and internal control. This study’s contribution to supply chain management is in its integration of SCI and internal control variables to propose a practical framework for the banks to use, and its development of a measurement tool for managers to determine the effects of internal and external integration and internal control on financial performance.

Highlights

In the 21st century, organizations have found themselves working in a rapidly changing environment characterized by vicious competition, globalization, competition between competitors, diversification, the rising expectations and demands of various customers, an emphasis on corporate social responsibility [1,2] and performance-related issues
The correlation was tested between the dependent variable—financial performance—and the independent variables—external integration, internal integration, and internal control—using Spearman’s non-parametric test, certain assumptions about the distribution of values in a sample, and a parametric test
The correlation shows that all eight items for customer integration are significantly, as well as positively, associated with the dependent variable financial performance

Summary

Introduction

In the 21st century, organizations have found themselves working in a rapidly changing environment characterized by vicious competition, globalization, competition between competitors, diversification, the rising expectations and demands of various customers, an emphasis on corporate social responsibility [1,2] and performance-related issues. Following the emergence of the concept of supply chain management (SCM) at the beginning of the 1980s, it quickly attracted the attention of academics and professionals alike. In recent years, it has clearly proliferated in the literature on SCM in service and production. Chain management is defined as all those activities that are involved in and associated with the flow and transformation of goods from the extraction of the raw material stage to the end user, and the flow of information [4]. Turkulainen et al [3] defined it as flows of services, products, finance, or information, from the source to the final customer [5]

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