COMMITMENT, ADOPTION, AND PERFORMANCE ...

AWARENESS IS NOT ENOUGH: COMMITMENT, ADOPTION, AND PERFORMANCE IMPLICATIONS OF SUPPLY CHAIN INTEGRATION

Yao “Henry” Jin Department of Supply Chain Management Walton College of Business University of Arkansas, Fayetteville, Arkansas, USA Amydee M. Fawcett Department of Supply Chain Management Walton College of Business University of Arkansas, Fayetteville, Arkansas, USA Stanley E. Fawcett Department of Operational Sciences, Air Force Institute of Technology Wright-Patterson Air Force Base, Ohio, USA)

Jin, Yao “Henry”, Fawcett, Amydee M., Fawcett, Stanley E. (2013) “Awareness is not enough: commitment, adoption, and performance implications of supply chain integration,” International Journal of Physical Distribution & Logistics Management, Vol 43, Iss 3, pp. 205-230. Corrected final copy available via Emerald at: http://dx.doi.org/10.1108/IJPDLM-10-2011-0169

AWARENESS IS NOT ENOUGH: COMMITMENT, ADOPTION, AND PERFORMANCE IMPLICATIONS OF SUPPLY CHAIN INTEGRATION

Abstract Purpose: Given the tension between the rationale for and resistance to supply chain integration (SCI), our purpose is to provide an update on the rhetoric and reality of SCI and to test and extend theory related to its adoption and efficacy. We do this by examining changes in the level of engagement in SCI and integration’s influence on firm performance. Design/methodology/approach: We employ a multi-method—survey and interview— replication approach to 1) gauge the extent to which companies are increasing their engagement in SCI and 2) assess integration’s influence on firm performance. Findings: Despite managerial awareness of SCI’s potential benefits, levels of integration have remained relatively unchanged over time. However, a small number of firms reported a major focus on end-to-end integration. We find that integration is positively related to operational performance and firm performance. Integration’s primary influence is through productivity and customer service. The interviews indicate a general shift toward major commitment to SCI, and that commitment to SCI influences both the degree of integration engagement and integration’s influence on performance.. Originality/value: Using a replication methodology, we demonstrate that integration can improve operating and firm performance. The multi-method approach enables us to delve into the paradox between the positive performance impact and the lack of progress toward greater integration engagement, offering insight into resistors to integration, and construct a maturity framework for commitment to SCI. Keywords: Supply chain integration, Collaboration, Integrated Business Models, Theory of Planned Behavior, Replication Study Paper type: Research paper

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AWARENESS IS NOT ENOUGH: COMMITMENT, ADOPTION, AND PERFORMANCE IMPLICATIONS OF SUPPLY CHAIN INTEGRATION

Introduction Over the past quarter century, supply chain integration (SCI) has been called “the ultimate core capability” (Fine, 1998) and the “enabler of winning business models.” (Lyons, 2003) Central to the success of SCI is a coordinated approach to design and govern value-added processes from “suppliers’ suppliers to customers’ customers.” (Elliff, 1996) Over the years, theories have been articulated to explain the competitive power of resource integration across organizational boundaries (see for example Axelrod, 1984; Dyer and Singh, 1998; Gulati and Singh, 1998). Yet, the implementation status and competitive influence of SCI has been consistently questioned. Fawcett and Magnan (2002) found that SCI is more rhetoric than reality. Sabbath and Fontanella (2002) described the supply chain phenomenon as “the most used, the most frequently misunderstood, the most popular—and the most disappointing—strategy that has come along to date.” Barratt (2003) noted that, “progress has been slow.” The discrepancy between the promise of and the progress toward SCI led Daugherty et al. (2006) to ask, “Is collaboration paying off for firms?” SCI promises two core benefits. First, intensifying competition has led managers to realize that their firms lack the resources and capabilities to succeed in a dynamic and chaotic global marketplace (Tyndall, 1998; Dyer and Singh, 1998; Mentzer et al., 2001; Daugherty et al., 2006; Fawcett, Magnan, and Ogden, 2007). SCI mitigates this deficiency by enabling a company to excel at specific value-added activities for which it possesses unique advantages and relying on supply chain partners to provide the complementary capabilities it lacks (Dyer and Singh, 1998; Gulati and Singh, 1998; Jacobides, 2006; Fawcett, Ellram, and Ogden, 2007; Holcomb and

Hitt, 2007). Second, beyond anecdotal success stories, several performance benefits of SCI have been documented. For instance, high levels of internal integration increases connectivity throughout the firm and leads to simplified value-added processes (Daugherty et al. 2009). External integration increases visibility (Barratt and Oke, 2009; Cantor, Corsi, and Grimm, 2009), which enables firms to lower costs (Ellram and Siferd 1998), lessen forecast error (Williams and Waller, 2010; Williams and Waller, 2011), minimize the bullwhip effect (Lee et al. 1997; Machuca and Barajas, 2004), and reduce procurement costs (Acharya, Kagan, and Manfredo, 2009). These integration-enabled benefits drive market growth and profitability (Allred, Fawcett & Wallin, 2011). However, despite SCI’s competitive appeal, experience shows that relatively few companies have made breakthrough progress toward meaningful integration (Johnson & Borger, 1977; Stevens, 1989; Ellinger, Keller, & Hansen, 2006). Beth et al. (2003, p. 64) noted that “despite years of technological and process advancements, an agile, adaptive supply chain remains an elusive goal,” implying that the difficulty is embedded within the structure and culture of individual organizations as well as supply chains (see also Parker and Anderson, 2002; Daugherty et al., 2006; Fawcett et al., 2007). Functional structures, conflicting goals, and competition for scarce resources diminish the willingness of decision makers across the value chain to work together (Anderson, 1982; Porter, 1991; Bowersox, Closs, & Stank, 1999; Moberg Speh & Freese, 2003; Min, Mentzer, & Ladd, 2007; Wong & Wong, 2008). Asymmetrical power and opportunistic behavior reduce trust and exacerbate the human tendency to avoid vulnerability and protect potentially idiosyncratic resources (McCarter and Northcraft, 2007). These structural and sociological realities increase resistance to the implementation of integrative initiatives.

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Given the tension between the rationale for and resistance to supply chain integration, our purpose is to test theory related to the adoption and efficacy of supply chain integration. To do this, we replicate the Fawcett and Magnan (2002) study on SCI adoption and implementation status. By employing the same multi-method approach, our replication study allows us to examine two focal issues over time as social and business environment has evolved (Goldsby and Autry, 2011): 1) the extent to which companies are increasing their engagement in supply chain integration and 2) assess integration’s influence on firm performance. Our analysis more fully and affirmatively answers Daugherty et al.’s (2006) question regarding the payoff associated with SCM. We likewise confirm Daugherty et al.’s finding that companies can—and must—do better. Our findings extend theory by evaluating the fundamental question, “Why aren’t companies doing better?” We find that most companies lack the organizational commitment to invest in and develop vital integrative skills and routines. As a result, only a comparatively small number of firms are leveraging SCI to achieve differential performance.

Emergence, Adoption, and Impact of SCI: A Brief Review To evaluate the adoption and efficacy of SCI, it is important to understand both the context from which SCI emerged and the theoretical rationale underlying its implementation. It is also needful to explore the decision process through which managers decide how to allocate scarce resources in their efforts to achieve distinctive advantage. Finally, it is necessary to empirically assess SCI’s influence on firm performance.

Understanding the Motivation for SCI The term “business model” emerged in the 1990s and to describe “a firm’s underlying core logic and strategic choices for creating and capturing value within a value network.”

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(Shafer, Smith, and Linder, 2005: 202). For most of the twentieth century, the scale-economy and efficiency-oriented goals explicated by the theory of the firm (Coase, 1937) and transactioncost economics (Williamson, 1979) defined business model design. From these perspectives, the firm is the core unit of competition and network relationships are managed to minimize cost and risk. Suppliers were selected largely via competitive bidding and often managed at arms length, which frequently resulted in adversarial buyer/supplier relationships (Hayes and Wheelwright, 1984; Fawcett and Birou, 1993). The success in the 1980s of Japanese firms employing just-intime philosophies, however, led to a reexamination of business model design and supply chain relationships (Schonberger, 1986; Womack, Jones, and Roos, 1991). Companies like Honda and Kawasaki employed a networked approach to competition, relying more heavily on suppliers for advantage (Nelson, Mayo, and Moody, 1998; Schonberger, 1982). Companies across industry sectors sought to replicate networked business models (Womack and Jones, 1996). Even as networked business models began to capture market share and managerial attention, strategic theorists articulated a resource-based view (RBV) to how firms attain differential performance (Wernerfelt, 1984; Dierickx and Cool, 1989). The RBV argued that a firm is “a collection of productive resources” that can be exploited to create advantage (Penrose, 1959; Rubin, 1973; Wenerfelt, 1984). Firms with a distinctive resource base—i.e., valuable, inimitable, rare, and non-substitutable—could achieve differential and durable advantage (Dierickx & Cool, 1989; Barney, 1991). Importantly, theorists began to argue that vital resources are often “embedded in inter-firm resources and routines.” (Dyer and Sigh, 1998: 650) Under this relational view, collaborative supply chain relationships are a source of complementary resources and competitive advantage (Fawcett, Magnan, & Ogden, 2007; Ketchen, Hult, & Slater, 2007). The “static” view of RBV transitioned to focus on how a firm integrates and

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deploys resources across firm boundaries (Mahoney & Pandain, 1992; Teece, Pisano, and Shuen, 1997; Priem & Butler, 2001). This dynamic-capabilities perspective suggests that success depends on a firm’s ability to sense changing market needs and reconfigure network resources to meet those needs (Eisenhardt & Martin, 2000, Newbert, 2007; Teece, 2007; Barreto, 2010). In summary, the success of collaborative exemplars like Honda and Toyota popularized integrative business models, leading more firms to test SCI. Similarly, the theoretical explication of the relational view persuasively argued that cooperative strategies led to inimitable advantage and supernormal rents. As such, academics have begun to investigate the imitability and impact of SCI (e.g., Frolich and Westbrook, 2001; Fawcett and Magnan, 2002, Hendricks and Singhal, 2003; Rosenweig, Roth, and Dean, 2003; Bagchi et al. 2005; Mello and Stank, 2005; Daugherty et al. 2006; Mitra and Singhal, 2008; Richey et al., 2010; Kotzab et al., 2011; Wong, Boomit, and Wong, 2011). The question arises, “Do these practical and theoretical motivations influence the decision to adopt SCI?”

Exploring the Adoption of SCI Each year, thousands of business books are published promoting “management ‘tools’ promising to make their users incredibly successful by showing them new ways of doing business.” (Rigby, 2001) Managers must assess the applicability of these tools and determine which to engage in to improve firm performance. A study conducted by Bain & Company indicated that companies struggle with this evaluation-and-adoption process, noting. 1. Seventy-two percent of managers indicate they are constantly seeking to find and adopt practices to keep their companies on the cutting edge of management practice. 2. Eight-one percent of managers report that most of tools they adopted “promise more than they deliver.” (Rigby, 2001)

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Within this context of market dynamism, intense competition, and ever-emerging strategic practices, managers have had to evaluate the appropriateness of pursuing SCI. The theory of planned behavior, which emerged from social psychology and extends the theory of reasoned action, informs decision processes related to adoption behaviors. Specifically, the theory of planned behavior argues that attitude, subjective norms, and perceived behavioral control combine to influence behavioral intention, which leads to actual behavior (Fishbein and Ajzen, 1975; Sheppard, Hartwick, and Warshaw, 1988; Hale, Householder, and Greene, 2003). •

Attitude emerges from an individual’s belief regarding the consequences or outcomes associated with a specific behavior. Positive expected outcomes increase behavioral intention.

•

Subjective norms arise from an individual’s perception of how others perceive the behavior and whether or not others believe the individual should adopt the practice. Positive social perceptions, including those of colleagues and experts, lead to positive behavioral intention.

•

Perceived behavioral control is vital since circumstance can confound the link between behavioral intention and actual behavior. The extent to which managers perceive they can influence or control outcomes; i. e, achieve success, strengthens behavioral intention.

Although the theory of planned behavior has been employed in studies related to adoption decisions in advertising, consumer behavior, healthcare, and sustainability, it has rarely been used to explain implementation choices in logistics management. Therefore, we briefly discuss attitude, subjective norms, and perceived behavioral control as they relate to engagement in SCI. As attitude depends on expected outcomes, success stories tend to create a desire to adopt. With respect to SCI, anecdotal evidence in the automotive industry raised expectations that integration can provide supernormal returns (Dyer, 1996, Nelson, Mayo, and Moody, 1998). Beyond anecdotes, research suggests that SCI can drive profitability via revenue growth (Fawcett, Magnan, and Ogden, 2007) and cost reductions (Hult, Ketchen, and Slater 2004; Lee 2004). Specific operational benefits include faster new product development, shorter order fulfillment lead times, greater agility, and lower inventory costs (Clark and Hammond 1997;

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Cachon and Fisher 2000; Fawcett, Magnan, and McCarter 2008; Frohlich 2002; Hult, Ketchen, and Slater 2004; Radjou 2003). Empirical findings linking integration to performance set the stage for managers to expect positive outcomes from their own integration initiatives (Flynn, Huo, and Zhao, 2010; Wong, Boonitt, and Wong, 2011). Managers’ intention to engage in SCI should therefore be strengthened. The influence of subjective norms on managers’ intentions to engage in SCI is less certain. Studies have yet to measure how managers perceive and relate to social pressure regarding SCI. Research does suggest, however, that many managers perceive adversarial relationships as counterproductive (Schonbeger, 1982; Schonberger, 1985; Fawcett and Birou, 1992; Banerji and Sambharya, 1996). Procedural justice further argues that exploitation of asymmetrical power is often perceived as unfair (Korsgaard, Schweiger, and Sapienza, 1995; Griffith, Harvey, and Lusch, 2006; Hornibrook, Fearne, and lazzarin, 2009). For instance, in 1992, J. Ignacio Lopez, CPO at General Motors, voided supplier contracts, putting purchased items out to bid (Laseter and Sharma, 2010). Lopez’s saved GM $4 billion (Tully, 1995), but outraged the public. Over a decade later, suppliers rated GM as the worst customer to do business with (Tierney, 2005). Overall, trust-based relations are perceived as more socially responsible than those found on the adversarial end of the relationship continuum (Timmers, 1998; Hammel, 2000; Hofer et al., 2009). Given these social norms, managers are likely to view collaborative relationships favorably, reinforcing their intention to engage in integration. Perceptions regarding control hinge on managers’ views regarding their ability to coordinate value-added activities. Recent research indicates that inter-firm governance and coordination capabilities are improving (Defee et al. 2009; Richey et al., 2010). Much of the improvement is attributable to advances in information technology, which enable the

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transformation to integrative processes (Hammer, 1990; Mabert and Venkataraman 1998; Hult, Ketchen, and Slater 2004). Better connectivity allows members of a supply chain to share information and coordinate initiatives (Frolich 2002; Wu et al. 2006; Gaukler, Seifert, and Hausman, 2007). For instance, proactive sharing of POS data is associated with improvement to operating efficiency and profitability (Attaran, 2004; Williams and Waller, 2010; Williams and Waller, 2011), which leads to better relationships, increased ideation, and unique forms of collaboration (Tippins and Sohi 2003; Lee 2004; Liker and Choi 2004; Cheng and Grimm, 2006). Enhanced information capabilities and a better understanding of governance issues should increase managers’ confidence in their ability to effectively engage in integration activities. To summarize, the literature provides evidence that managers are likely 1) to possess positive attitudes toward SCI, 2) perceive tightly coupled relationships to be socially responsible, and 3) have confidence in their ability to use technology to attain sought-after benefits. Thus, in accordance with the theory of planned behavior, engagement in SCI should increase over time, which leads to our first hypothesis: Hypothesis 1: The extent to which firms engage in SCI has increased since the Fawcett and Magnan (2002) study was conducted. Assessing SCI’s Influence on Performance To more fully appreciate whether or not firms should dedicate scarce resources to engage in SCI, we must assess integration’s performance effect. Indeed, the central goal of strategic decision-making is to enable firms to leverage resources to outperform their counterparts (Porter, 1991). From a theoretical perspective, the relational view argues that advantage may be achieved through positive relations that lower conflict frequency (Cahill et al., 2010) and foster inter-firm integration (Allred et al. 2011). As firms work collaboratively, they are able to develop unique,

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hard-to-replicate relational capabilities (Singh and Mitchell, 2005). Theory does not, however, argue for universal SCI. Rather, integration has merit when potential partners possess 1) unique complementary capabilities that if comingled can produce distinctive value and 2) the governance skills needed for effective integration (Fawcett, Magnan, and Ogden, 2007). An overview of germane SCI literature is shown in Table 1. An initial point that emerges from this literature is that researchers have defined SCI quite differently and used diverse approaches to assess its merit. Such definitional issues make a literature-based assessment of SCI’s competitive impact difficult. A second conclusion is that although most empirical studies report a positive integration-to-performance linkage, the results are not conclusive. These observations are consistent with Fabbe-Costes and Jahre (2007; 2008), who performed extensive literature reviews to assess SCI’s performance impact and share several pertinent thoughts: 1. Despite extensive interest in SCI, “there are very few papers on the relation between performance and integration.” (2007: 847) 2. “Most studies suffer from weak measures either of SCI or of performance or both.” (2007: 847) 3. “Among the 31 papers providing empirical evidence of the link between SCI and performance, 19 conclude that more is better, while 12 provide more ambivalent results. . . . In papers with ambivalent results, most still support the idea that more is better.” (2008: 140141) 4. “Our most important point in this paper is that results cannot be taken for granted and that more research is necessary.” (2007: 847) Insert Table 1 Here Germane Supply Chain Integration Literature

One issue that confounds the integration-to-performance relationship is that SCI is inherently difficult. Cousins and Menguc (2006: 617) state simply, “the process of integration is not a simple one.” Other researchers have noted that the vast majority of firms are at relatively early and/or unsophisticated stages of SCI (Frohlich and Westbrook, 2001; Fawcett and Magnan,

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2002; Daugherty et al., 2006). Similarly, research suggests that a company’s capabilities can determine the effectiveness of integration activities. For instance, Das, Narasimhan, and Talluri (2006) note that internal integration must precede external integration to achieve positive outcomes. Kotzab et al., (2011) concurred, specifically identifying firm readiness as a determinant of SCI performance success. Another factor that creates ambiguity regarding SCI’s performance effect is that the relationship is nuanced. Several authors have found that various operational performance dimensions mediate the integration-to-performance relationship. For instance, Vickery et al., (2003: 533) report that integration’s influence is through customer service, noting, “it is this enhanced customer service that then engenders financial performance.” More recently, Allred et al., (2011) found that market share growth and profitability improve only in the presence of integration-enabled productivity and customer satisfaction. Despite environmental and execution challenges, the literature does suggest that SCI has a positive influence on performance. Specifically, SCI appears to positively influence operational performance in the areas of customer service (Boyer, Prud’homme, and Chung, 2009; Allred et al. 2011) and productivity (Zacharia, Nix, and Lusch, 2009; Hofer, Knemeyer, and Dresner, 2009). Improved operational performance should lead to better overall organizational performance as measured via two profit-statement effects: top-line growth (Pettus, 2001; Mentzer et al. 2004; Lai, 2009) and bottom-line profitability (Hendricks and Singhal, 2003; Acharya, Kagan, and Manfredo, 2009; Allred et al. 2011). Simultaneously increasing revenues while reducing costs so that margins meet or exceed industry averages should lead to superior performance over time. Therefore, we propose that high levels of integration engagement lead to improved operational performance and thus to enhanced organizational performance.

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Hypothesis 2a: High levels of integration engagement are positively related to operational performance as measured by customer satisfaction. Hypothesis 2b: High levels of integration engagement are positively related to operational performance as measured by productivity. Hypothesis 3a: High levels of operational performance (customer satisfaction and productivity) mediate the influence of integration engagement on firm performance as measured by profitability. Hypothesis 3b: High levels of operational performance (customer satisfaction and productivity) mediate the influence of integration engagement on firm performance as measured firm growth.

Research Methods As a replication study, we adopted the multi-method research approach and instruments employed by Fawcett and Magnan (2002). Such an approach is vital to evaluating process issues over time. Moreover, the emerging literature reveals that SCI is a complex phenomenon and suggests that contingent strategies may be needed to effectively manage SCI initiatives. Although issues involving longitudinal engagement patterns and competitive benefits can be tested deductively, to understand the contextual “why” questions, an inductive approach is required. Inductive approaches also provide the flexibility to travel back and forth between emerging theory and the data. In this way, the findings can be influenced by and give more meaning to emerging theory. To ground the research, we conducted an extensive literature search involving key word searches on the words “supply chain” in combination with “integration,” “coordination,” and “collaboration” using ABI Inform and ProQuest databases. This pre-field investigation provided the context to interpret our findings—expressly, to appreciate the promise of SCI and assess the state of progress toward effective integration.

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Survey Process Sample Frame. Senior-level managers (e.g., director, vice-president, CEO) with broad organizational accountability, collaborative interactions, and access to overall firm-level performance data were selected as key informants. We approached three professional associations—the Council for Supply Chain Management Professionals (CSCMP), the Institute for Supply Management (ISM), and the Association for Operations Management (APICS)—to compile a mailing list consisting of their senior-level executives. Data Collection. The survey process followed Dillman’s Total Design Method. Three mailings of a cover letter, an instruction sheet, and the survey were sent out. To promote as high a response rate as possible, we employed a shortened and slightly modified version of the instrument developed by Fawcett and Magnan (2002). Further, we used pre-notification phone calls to invite managers to participate. Overall, 505 usable surveys were returned for a response rate of 18.3 percent. Table 2 provides detailed response rates broken down by professional organization. The relative sample sizes and proportions from each of the three professional associations were consistent, suggesting sample equivalence. Firm size was used as a control variable. No significant differences were found. Insert Table 2 Here Respondent Composition: Sampling Frame and Firm Size

Non-response bias was evaluated using two methods. First, a comparison of early-versuslate responses was performed (Armstrong and Overton 1977). Specifically, responses from the first mailing were compared with responses from the third mailing. T-tests for each of the constructs of interest were performed—no significant differences were found, suggesting no

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response bias. Second, to more clearly verify that the respondents and non-respondents were not uniquely different, the demographic profiles of the two groups were compared. To minimize mailing and survey administration costs, we tracked respondents, allowing us to identify nonrespondents. Demographic profiles for 300 randomly selected non-respondents (100 from each sampling frame) were developed using Dun and Bradstreet databases. These profiles were compared to those of the respondents. No significant differences were found, suggesting no response bias. Construct Evaluation. Since our survey was administered to respondents from three separate organizations (APICS, ISM, and CSCMP), we examined Configural, Metric, Measurement Error, and Scalar Invariance across our sample frame as proposed by Rungtusanatham et al. (2008). Overall, the measurement equivalence tests justified pooling the survey responses across respondent groups. Using the pooled data, we used confirmatory factor analysis to evaluate construct validity (see Table 3) The standardized factor loadings were all significant and sufficiently large, above the .60 threshold (Chin, 1998). Further, the average variance extracted exceeds .50 for each construct, indicating convergent validity (Fornell and Larcker, 1981). Equally important, the shared variance scores are all small—well below the variance extracted as well as the .50 standard—which suggests adequate discriminant validity (see Table 4) (Fornell and Larcker, 1981). These findings imply that we can be reasonably confident that the measured items reflect the theoretical constructs they are designed to measure. Further, we conducted Harman’s singlefactor test, which generated a clear multi-factor solution with the most influential common factor explaining less than the recommended 50 percent threshold (Podsakoff and Organ, 1986). Also, the use of rigorous tests establishing convergent and discriminant validity showing factors to be

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distinct and unique allows us to conclude that common method bias does not unduly affect the interpretability of the findings (Podsakoff, MacKenzie, Lee, & Podaskoff, 2003). Insert Table 3 Here Construct Loadings and Measurement Properties

Insert Table 4 Here Correlation Matrix with Square Root of AVE

Company Interview Process Sample and Context. Case studies can provide depth of understanding regarding multifaceted issues like SCI (Yin 1981; Meredith Raturi, Amoako-Gyampah, and Kaplan 1989; McCutcheon and Meredith 1993). Therefore, following the initial stages of the survey data collection, a series of detailed interviews were conducted to complement and contextualize the survey findings (Pettigrew 1990). We sought a context that could serve as an “extreme case” (Eisenhardt, 1989b). Extreme cases are useful in theory building since the dynamics under investigation are often better defined and more easily documented than in other scenarios (Pratt et al., 2006). We therefore selected companies that had publically committed to compete via cooperative strategies. We conducted 57 interviews across four supply chain positions: retailers, finished-goods providers, suppliers, and service providers. The typical interview lasted 2 to 4 hours. Table 5 shows the overall demographic statistics for the interview companies. By design, the participants in our interview panel possess similar characteristics to those included in the Fawcett and Magnan (2002) study. Insert Table 5 Here Qualitative Sample: Channel, Ownership, Sales, Profits, and Employee Levels

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Once a company agreed to participate, a brief overview of the research objectives and a copy of the interview protocol were provided (Spradley 1979). A semi-structured interview guide assured comparability of findings and allowed for flexibility to seek insight into unique practices that became evident during the interview (see Table 6, Panel A). During each interview, extensive notes were made for later reflection. These notes were then translated into structured case write-ups to avoid “data asphyxiation” (Pettigrew 1990). Importantly, each case was viewed as a “stand-alone entity” to help identify unique patterns and to validate generalized theory in cross-case comparisons (Eisenhardt and Graebner, 2007). Table 6, Panel B shows the steps used to improve reliability and validity of the inductive approach. Insert Table 6 Here Elaborating the Case Study Method

Data Analysis. As the interview process continued, the researchers met to compare notes. This iterative discussion-based process was used to dissect the results, derive a consensus regarding their meaning, and improve the process for upcoming interviews (Eisenhardt 1989a; 1989b; Seidel, 1998). After all of the interviews were conducted, we performed a rigorous qualitative analysis. First, each case was viewed as a “stand-alone entity” to help describe the identity of the resistors encountered and how they influenced decision-making and behavior. Following the inductive process, we searched the data for emerging themes. Although we noticed similarities and differences among the cases, to maintain the independence of the replication logic, we refrained from further analysis until we had completed the interviews. Second, only after we completed all of the write-ups did we begin the cross-case analysis. Our goal was to identify and match patterns to develop a more robust and complete theoretical picture (Eisenhardt, 1991). Because of the nuanced answers as well as the diversity of language

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and terms used by the interviewed managers, we pursued an iterative manual evaluation process to obtain the best possible interpretation of the interviews. Using the literature as background, we pursued an iterative, open-coding process—i.e., we traveled back and forth among the case write-ups and emerging constructs (Eisenhardt and Graebner, 2007). As we began to identify common statements, we formed provisional categories to explain differences in SCI engagement levels (Corbin and Strauss, 1990). From the perspective of the theory of planned behavior, maturity of commitment to integration emerged as a particularly salient factor to explain the adoption of and engagement in SCI. Managerial responses guided the development of the maturity stages into which each company was then categorized.

Engagement in Supply Chain Integration Managers’ intent and efforts to adopt SCI depend on their awareness of and belief in the benefits of these strategies. In 2002, Fawcett and Magnan reported, Nearly 88% of all respondents rated SCM to be an important part of their business strategy. The aggregate average score of 5.70 strongly evidences that materials managers view supply chain management as an important contributor to organizational competitiveness. This finding supported Sabbath and Fontanella’s (2002) claim that SCI was “the most used, . . . the most popular . . . strategy that has come along to date.” Rather than replicate the “fad-versusstrategy” question, we asked managers, “How satisfied are you with your company’s overall SCI initiatives?” The mean response of 4.31 (1=not at all satisfied; 7=highly satisfied) indicates ambivalence toward SCI. The response pattern (see Table 7) shows that less than 10% of firms are effectively integrating value-added activities. Most struggle to establish the routines required to achieve relational advantage and note that SCI is delivering merely “OK” results. This result adds credence to Sabath and Fontanella’s (2002) belief that SCI is “the most disappointing strategy that has come along to date.”

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Insert Table 7 Here Managerial Satisfaction with Supply Chain Integration

Integration Engagement Over Time: Survey Results In 2002, Fawcett and Magnan assessed the extent to which companies were engaged in the following four types of supply chain integration. •

Cross-functional process integration within the four walls of the company, which is often the primary building (or stumbling) block in SCI (Das et al., 2006).

•

Upstream integration with valued first-tier suppliers, which was found to be the heart of many companies’ inter-firm integration initiatives.

•

Downstream integration with valued first-tier customers, which is often needed to capture the business of important customers.

•

Complete forward and backward integration from “supplier’s supplier to the customer’s customer,” which is described as the theoretical integration ideal. To make a longitudinal comparison possible, we asked managers the same question,

“How extensively is your firm engaged in the following process integration efforts?” (1=not engaged; 7=totally engaged). Focusing on the aggregate response, we see in Table 8 that despite the highly touted success stories and the frequently reported benefits of CSI, managers reported no significant change in overall integration engagement (4.16 in Period 1 versus 4.19 in Period 2). This finding contradicts Hypothesis 1. In fact, managers reported slightly lower levels of engagement in cross-functional, upstream, and downstream integration. Only complete forward and backward SCI experienced a significant positive change is (3.37 to 3.68, p