The effects of internal versus external integration practices on time-based performance and overall firm performance
Cornelia Droge, Jayanth Jayaram, Shawnee K. Vickery
Journal of Operations Management · 2004 · Volume 22 · Issue 6
DOI: 10.1016/j.jom.2004.08.001
Abstract
This paper examines the effects of integration practices on time-based performance and on overall firm performance (financial and market share). Integration practices are grouped into two categories: (1) external strategic design integration, which reaches across firm boundaries to involve suppliers and customers and (2) internal design-process integration, which comprises more tactically oriented, integration practices that match design requirements and process capabilities. First, regression results show that both internal and external integration are related to time-based performance, which in turn is related to firm performance. Thus, twoindirectroutes to firm performance are identified. Second, hierarchical regression reveals that integrationdirectlyaffects firm performance even after time-based performance is accounted for. Finally, we found that theinteractionof internal and external integration is significantly related to both market share and financial performance (after controlling for all other effects). This latter result suggests that thejointuse of external and internal integration practices has a synergistic effect on firm performance.
Keywords
Internal and external integration, Time-based competition, Firm performance, Hierarchical regression
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