The impact of subsidiaries’ internal and external integration on operational performance

Demeter, Krisztina, Szász, Levente and Rácz, Béla Gergely (2016) The impact of subsidiaries’ internal and external integration on operational performance. International Journal of Production Economics, 182 . pp. 73-85. DOI 10.1016/j.ijpe.2016.08.014

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Subsidiaries of manufacturing companies operate as members of two distinct networks: the internal manufacturing network of the company and the external network of supply chain partners. Adapting the concept of “dual embeddedness” from international business literature to a manufacturing context, this paper proposes a model explaining the link between internal integration, external integration and operational performance. An international survey containing data on 470 manufacturing subsidiaries is used to operationalize the constructs. Structural equation modeling provides evidence for a full mediation model: external integration mediates the positive impact of internal integration on performance. Based on the results, it is put forward that knowledge generated within the internal manufacturing network can only be converted into subsidiary-level operational performance, if it is shared and recombined with external supply chain partners. The highest performance benefits can only be achieved if both suppliers and customers are involved in this process. A limitation of our approach is that knowledge flows are measured indirectly by assessing the level of integration of a subsidiary in the knowledge flows within the internal network, and the level of integration with suppliers and customers.

Item Type:Article
Uncontrolled Keywords:Manufacturing network; Supply chain; Knowledge sharing; Internal integration; External integration; Dual embeddedness
Divisions:Faculty of Business Administration > Institute of Business Economics > Department of Logistics and Supply Chain Management
Subjects:Logistics, production management
ID Code:2773
Deposited By: Ádám Hoffmann
Deposited On:31 Mar 2017 10:05
Last Modified:31 Mar 2017 10:05

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