A Virtual Integration Theory of Improved Supply-Chain Performance
Authors: Wang, Eric T.G.; Tai, Jeffrey C.F.; Wei, Hsiao-Lan
Journal: Journal of Management Information Systems (2006)
DOI: 10.2753/mis0742-1222230203
Organizing and maintaining a competent and flexible supply chain is a major challenge to manufacturers in today's increasingly competitive and uncertain environments. Virtual integration represents the substitution of ownership with partnership by integrating a set of suppliers through information technology (IT) for tighter supply-chain collaboration. From the systems and control perspectives, this study develops a theory of virtual integration with an empirical model to examine the role that virtual integration plays in facilitating manufacturers to achieve greater manufacturing flexibility and comparative cost advantage. Based on a survey of Taiwanese manufacturing firms, our results show that environmental uncertainty tends to motivate manufacturers to increase their manufacturing flexibility, with both virtual integration and supplier responsiveness playing a vital enabling role. The results demonstrate the importance of supplier responsiveness for manufacturers to gain manufacturing flexibility and comparative cost advantage in supply-chain operations. Environmental uncertainty, thus, might first appear as a threat to a manufacturer, but with the help of IT and more responsi…