SUPPLY CHAIN INTEGRATION AND FIRM PERFORMANCE: THE MEDIATING EFFECT OF COMPETITIVE ADVANTAGE AMONG LARGE MANUFACTURING FIRMS IN KENYA

Abstract

Intense competitive pressures have forced firms to go beyond their neighbourhoods to achieve
competitive advantage. A feasible course of action for firms is embracing supply chain
integration. However, there is concern on whether competitive advantage has a mediating role
on the link connecting supply chain integration to firm performance. This study endeavoured to
explore this link. It was anchored on resource-based view theory. A cross-sectional descriptive
research design was applied with primary data. The respondents of the study were persons who
were in charge of the supply chain function in the sampled firms. From a sample size of 200
firms, 94 usable questionnaires were obtained resulting in a response proportion of 47%. The
main data analysis method was PLS-SEM. The links connecting supply chain integration to
competitive advantage and competitive advantage to firm performance were both found to be
significant. The overall outcome of the mediation analysis was that there was a significant
partial complementary mediating influence of competitive advantage on the connection linking
supply chain integration to company performance. This helps to settle the debate to some extent
on whether it is fruitful for companies to integrate their supply chain operations. These outcomes
are also in congruence with resource-based perspective in the sense that integrating internal
operations can be regarded as a rare, non-substitutable, valuable and imperfectly imitable
resource. The study findings will also be useful to policy makers in developing appropriate
legislations such as protection of copyrights and patents. Moreover, the findings of the study are
expected to provide directions to scholars on the possible influence of supply chain integration
on organisational performance with the possibility of competitive advantage acting as a
mediating variable. This is particularly pertinent in the context of the developing world where
such studies are scarce.
Key words: competitive advantage, supply chain integration, firm performance, PLS-SEM,
manufacturing firms in Kenya