A model of contextual factors and inter-organizational integration: A Grounded Theory study of two supply chains

Sammanfattning: The purpose of this thesis is to contribute to understanding of the effect of organizational context on supply chain integration. One result is a context- based model that can provide support for practitioners regarding what level of integration to establish with suppliers and customers. Given the notion that most organizations are dependent on other organizations, it leads to a need for not only cross-functional integration but also for integration across organizational boundaries. However, in many organizations the level of integration with suppliers and customers is often inappropriate, inefficient and limited mainly to dyadic integration of order processing and operational scheduling. The existing literature provides only a limited insight concerning the essential circumstances for the integration and the slow growth of the implementation of inter-organizational integration has been attributed primarily to lack of guidelines for creating business relationships with supply chain partners. In the literature, “the more integration the better performance” solutions have often been presented without consideration of very complex internal and external organizational environments of involved companies. During recent years, questions have been raised regarding the nature of integration with suppliers and customers and the extent to which it can be accomplished. Instead of all-encompassing integration, selectivity has been suggested in terms of what level of integration should be applied to each link of the supply chain. The problem for an organization is not to find “one best way”; rather it is to search for solutions that advance integration and differentiation simultaneously. Preferable level of integration depends on many contextual factors associated with e.g. focal company, industry, competitive environment, and nature and type of products. However, in the previous research the focus has primarily been on studying single or limited sets of contextual factors and their impact on integration. These results are often fragmented, leading to multiple frameworks and models. A unifying model providing recommendations in terms of what level of integration to establish with suppliers and customers considering organization’s specific circumstances is desirable. In this study, a large number of contextual factors of integration with suppliers and customers were identified and structured. Additionally, the relationship between these factors and level of the integration was clarified. The study is based on the Grounded Theory methodology. To understand the effect of context on level of integration, two supply chains (triads) from two different industries - medical devices and fast moving consumer goods - have been selected as core samples. Findings are based on in-depth analysis of qualitative data obtained from fourteen interviews with practitioners such as CEOs, SC managers, sales managers, purchasing managers, and logisticians. Following the Grounded Theory methodology, the analysis of the collected data was conducted in three major rounds divided into six steps. The results were compared with a theoretical frame of reference. The main result of this study is a model that describes the relationship between contextual factors and integration activities with suppliers and customers. The findings suggest that the assumption of a fit between context and integration of the Structural Contingency Theory is applicable also from an inter-organizational perspective. The model can be applied to contextual factors both external and internal to an organization. It is supplemented by structured lists of identified contextual factors and integration activities. Recalling the notion of fit between value of contextual factors and level of integration with suppliers and customers, it can be stated that even low levels of integration can be appropriate as long as they are consistent with the values of certain factors representing organizational context. Furthermore, the model adds to existing models and frameworks as it can be used as a diagnostic tool. Applying this model, an organization can evaluate if current levels of integration fit with the corresponding values of contextual factors. Furthermore, the model support identification of misfits between values of contextual factors and present level of integration and it provides an opportunity to adjust or reevaluate the current levels of integration. The model, in combination with the lists of contextual factors and integration activities, can then be used to develop corrective actions in order to regain the desired fit. Intention of this study was to identify and analyze integration of triads in the studied supply chains, commonly known as Supply chain integration. However, this scope of integration has not been found, which is in line with previous research indicating that triadic integration is rare. To reflect the actual situation in more accurate way it is suggested to use the term Inter-organizational integration, implying dyadic scope of integration, rather than Supply chain integration.