The effects of supply chain integration on customer satisfaction and financial performance: An organizational learning perspective

Within the context of supply chain integration this study illuminates the role of customer satisfaction and associated performance impacts through the lens of organizational learning theory. This study investigates the relationships among internal integration, external integration (i.e. with customers and suppliers), customer satisfaction, and financial performance using survey data collected from 214 manufacturing firms in China. The results suggest that internal integration significantly influences both dimensions of external integration, customer and supplier integration; and that supplier integration is significantly and positively related to financial performance. The results also show that customer satisfaction is significantly and positively related to financial performance and fully mediates the relationship between customer integration and financial performance. Consistent with organizational learning theory the study shows that internal integration is an enabler for external integration which suggests that companies need to progress from good internal practices and processes to effective management of external processes. In particular this study positions the benefits of integration as accruing from learning and financial performance being correlated to information flows. This study suggests that integration is the mechanism whereby information is transmitted and subsequently synthesized. The contextualization and organization afforded through internal integration facilitates determining what information to bring in from outside the organization and knowing what to do with the information when it arrives. Hence a contribution of this study is to tie supply chain integration to the literature and principles of organizational learning theory thereby opening a new perspective on the topic. (C) 2013 Elsevier B.V. All rights reserved.