The aim of this paper is to identify antecedents to supplier integration in China. A deductive approach was deployed by building on a qualitative pre-study and various strands of SCM literature. All in all, 14 hypotheses were derived and subsequently tested by drawing on an empirical sample collected from 88 manufacturing firms operating in China. The data was then analyzed using partial least squares (PLS) analysis. The results indicated that supplier integration was positively influenced by collaborative supplier capabilities, continuous supplier development, and supplier quality mindset. These in turn proved to be sequentially influenced by supplier top management support, buyer-side leadership effectiveness and internal support.
Without doubt, China has become the most important supplier market in the world over the last decades. The high political stability, comparatively low economic uncertainty, and low comparative price levels have all contributed to attractiveness of the country (Eltschinger, 2007 and Qu and Brocklehurst, 2003). At the same time, the degree of outsourcing in most industries has increased over time, leading to an increased dependency on supplier's for value creation (Quesada et al., 2006, Tiemann et al., 2000 and Wagner et al., 2008). Besides freeing up resources, reducing assets on the balance sheet and creating a more flexible and agile organization, product complexity today makes it virtually impossible for individual firms to possess all the technical expertise and capabilities needed to develop and produce products and services (Binder et al., 2007, Wagner et al., 2008 and Wolters and Schuller, 1997). In order to avoid excessive transaction costs when outsourcing business activities, companies nowadays try to get the best from both worlds by creating “a virtually integrated enterprise” (Browne and Zhang, 1999) where relatively independent parts of the value chain can work in sync. In the quest for synchronization of business processes, supplier integration has become a critical element. In order to better tap into the Chinese supplier base, companies increasingly try to integrate more domestic suppliers into their global supply chains.
However, both anecdotal and empirical evidence (Lockström et al., 2010, Murray et al., 2004, Pyke et al., 2000 and Wilkinson et al., 2005) indicate that many foreign companies in China are experiencing difficulties in sourcing strategic supplies from domestic suppliers and in forming long-term partnerships with them. In China, these difficulties seem to be more frequent in industries that are characterized by high requirements on quality, delivery and intellectual property protection (Holweg et al., 2005 and Zhang and Chen, 2006).
The goal of this paper is to test and validate existing theory on supplier integration within the specific context of the Chinese business environment by analyzing empirical data gathered through a quantitative research methodology. More in-depth, the paper aims at answering the following research questions:
•
How can buyers and suppliers operating in China collaborate more effectively?
•
What are the antecedents to supplier integration in a Chinese business context?
•
How do buyer- and supplier-related factors interplay as antecedents?
Supplier integration has become increasingly important as a means to reduce product life cycle costs, improve quality and improve time-to-market. In this section, contributions to theory and implications for managers are discussed.
