Supply Chain Integration and Its Impact on Operating Performance: Evidence from Chinese Online Companies

Abstract

The present study explores the effect of supply chain integration on the operational performance of an internet-based online business based in China. The study is based on primary data collected through a questionnaire distributed to supply chain professionals of the stated companies. After distributing the questionnaire and collecting the responses, an exploratory factor analysis is conducted to validate the instrument. Afterward, the confirmatory factor analysis (CFA) analysis is conducted, and finally, the structural equation modeling (SEM) technique is used to determine the validity of the research hypotheses. The results indicate that integrating different aspects of the supply chain positively impacts the operating performance, improving the financial performance of the companies involved in the integration process.

1. Introduction

The primary goal of any business is to increase the wealth of its owners, who, in most cases, are the shareholders. The business can only achieve this objective if it can continuously increase its income using sales and, at the same time, control its expenses. This function is mostly considered the marketing function as it enables the business to retain and recruit new customers, thus ensuring profitability and long-term survival of the company, along with ensuring the maximization of shareholders’ wealth to the greatest extent. This is considered common knowledge. Still, this function involves the supply chain, as the timely supply of products and services to customers and manufacturers ensures the retention and growth of the customer base [1]. In the past, this function was mostly dependent upon using physical resources for communication and planning. With the advent of information technology, this function has also become virtual, and a new term, “virtual supply chain management,” has come into being. This function has received and continues to receive lots of academic attention. The main reason for this attention mainly relates to the optimum use of limited resources, which virtual supply chains enable. According to [2], this function optimizes the resources required to manage the supply chain and aids and improves the overall performance of many other functions such as marketing, finance, and human resource management. Although virtual supply chain management presents a valuable opportunity for the organization to improve its performance, at the same time, it also represents a considerable challenge. The change from typical supply chain management to virtual supply chain management is not always smooth. Academics have sighted many reasons for such issues, including poor response to change by employees and management alike, lack of knowledge, and most of all, the realization of threats. Other issues may include legal aspects related to data of suppliers and customers, which in the virtual supply chain mostly act as active partners [3].

To increase sales and cut costs, the simplicity of supply chain operations made possible by advancements in information and communication technologies (ICTs) has reduced commissioning times significantly. As a result, supply chains (SC) may be used more effectively and efficiently if they give accurate market demand information. Due to their adaptability to market demand, corporations began to compete in ICT-supported SCs rather than traditional SCs. It led to the development of studies to re-design SC systems utilizing information technology [2,3].

There was an increase in the number of suppliers and consumers and the diversification of goods and services, which prompted the development of the virtual supply chain (VSC) [4]. VSCs face issues not linked to ICT but optimal management systems, which are continually growing and improving. VSCs are critical in disseminating customer and market information and developing unexpected solutions [5]. Another key proposal is the development of standards for measuring ICTs in SCs performance and adequacy and creating a legal framework for ICTs use in SCs [6]. To maximize the value of VSCs, large manufacturing organizations should reevaluate their yearly production plans when employing them. However, doing so may save time on planning, halt production more quickly, and make fewer engineering revisions [7].

These aspects mentioned above present a significant challenge to internet-based online businesses (IBOBs), especially those based in China, as to keep pace with the ever-changing market and growing competition, the majority have no choice but to transition from a typical supply chain to a virtual supply chain in the shortest possible time. Keeping in view that virtual supply chains are based upon cooperation between customers and businesses, including data sharing related to projected and actual sales in realtime. Only then can the supply chains be integrated, and benefits can be reaped by all parties involved in SC. [8].

The businesses involved in the supply of goods to customers based outside their countries are commonly known as “cross-border enterprises” or IBOB. Customers of IBOB come from a variety of customs jurisdictions spread across a considerable distance. Online network platforms (such as Amazon and eBay) handle transactions, whereas “offline” logistics systems handle the delivery of products. As a result, supply chains play a more significant role in IBOB transactions than traditional corporations. Managing cross-border supply chains necessitates an agile, adaptable, and collaborative response from corporations to consumers’ requirements. The integrated supply chain has developed into an inevitable trend in the evolution of IBOB organizations as a critical style of operation for the sustainable supply chain management. The rivalry in the market has fundamentally changed due to the globalization of the economy, resources, technology, procurement, and markets. Complete supply chain management has replaced the traditional management of a single firm in a supply chain. SCI is a critical tool for gaining a competitive edge and creating organizational value [9]. Companies may obtain a competitive edge by using SCI, which is essential for the healthy growth of IBOB. During the COVID pandemic, supply chain issues have been observed to increase dramatically. Issues such as over/under-stocking products, lack of logistical support and shipping delays, increased freight costs, etc. have resulted in low operational productivity and profits for many businesses worldwide.

Consequently, many core processes of SCM, such as distribution, storage, production, and procurement, along with SCM-related customer relations, have been digitalized, leading to enhanced business efficiency and autonomous business operations; yet, the long-term effects of these SCM integrations are still under review [10]. Hence, these improvements in SCM integration have allowed researchers to conduct empirical studies surrounding the problems in the supply chain and performance of firms during the COVID era [11]. Recently, a digital model was developed in India for small to large-scale businesses to help sustainable supply chains [12]. They proposed how digitalizing supply chain management can reduce the SCM cost and enhance the textile business’s operating profits.

The value of Chinese internet-based online businesses has been surging; on average, they are registering over 25% growth. For example, TMall has sold a lot of smart home equipment [13]. According to recent stats, these businesses will account for CNY 12 trillion in 2020. The current trend suggests that they can sustain compounded annual growth of 20% in the future. These businesses have enabled China to become the largest supplier of car parts, household items, fashion accessories, and electronics. The virtual supply chain network for IBOBs spans over 120 countries around the globe. Considering these facts, understanding how SCM integration will help these businesses enhance their operating and financial performance is of utmost importance.

2. Literature Review and Research Hypothesis

Every business is a collection of resources that can be used to transform the existing resources into specialized competencies. These specialized competencies or capabilities enable the business to attain and maintain a competitive advantage over its competitors in both the long and short term. This notion is based upon a “resource-based view” or resource-based theory [14]. Therefore, a business mainly pools capital, entrepreneurship, and labor resources. These resources are physical and based on unique ideas and innovations.

Given that almost all businesses in a specific economic and business environment have similar resources, innovation becomes a deciding factor for gaining a competitive edge over the competition [15]. The efficient management of the supply chain in this respect also proves to be a decisive factor as it links different types of resources present at the disposal of a business [16]. The advent of I.T. gave businesses a golden opportunity to integrate different aspects of the supply chain most efficiently and cost-effectively [17]. This integration allowed flexibility in terms of supply chain processes and better communication amongst the customers, but the businesses needed to incur costs in the form of investment in I.T-based equipment and adaptation of the integration process. Such an investment is justified as it reduces the overall uncertainty and improves decision-making as the information is readily available [18].

The supply chain and its processes are subjected to consistent changes as the businesses and the overall economic environment are dynamic rather than constant. Therefore, the supply chains must be resilient for businesses to survive and thrive in such a dynamic environment. The supply chains must be flexible and dynamic. This can only be achieved by virtualization or integration of customers’ and suppliers’ processes using I.T. [19].

This integration is known as virtualization, and now it is the basic requirement of a dynamic and highly competitive business environment, specifically for IBOBs [6]. The virtualization and integration of supply chains ensure flexibility and improve the supply chain’s overall efficiency for both customers and suppliers, ensuring that both parties benefit [20].

Supply chain virtualization has been made possible by the internet with the help of “artificial intelligence” algorithms, which limit human involvement in different processes, including decision-making [21]. Virtualization has also enabled businesses to overcome many barriers, such as distance communication [22]. At the same time, virtual supply chains have enabled the business to become flexible enough to accommodate the overall traditions, cultural norms, and values of both suppliers and customers [23].

The integration of the supply chain is equally vital for the customers and the suppliers, but at the same time, one must keep in mind that SCI may be separated into customer and supplier integration from the standpoint of the integration object. A manufacturer’s integration of suppliers and customers may be characterized as “the degree to which a manufacturer works with its suppliers and consumers to inter-organizational strategies, practices, and procedures into collaborative, synchronized operations” [24]. In our studies, we categorized the following two types of I.T.: supplier I.T. and customer I.T. Second, SCI may be divided into the following two categories based on content: system integration and process integration [16,25]. Integrating systems is mostly a matter of integrating the inputs of several entities [26]. Manufacturers, for example, set up network systems and collaboration platforms to maintain excellent ties with suppliers and consumers. To better understand their customers’ expectations, manufacturers work with suppliers to assist them in improving manufacturing methods and product quality. Customers are also allowed to participate in the design and production processes. The “hard” and “soft” sides of SCI, respectively, are represented by system and process integration in this view [15].

2.1. Traditional and Virtual Supply Chains

2.1.1. Traditional Supply Chain

A traditional supply chain has been defined as an integrated, one-direction manufacturing process in which the raw materials are transformed into a finished product, including the final delivery to the customers [27]. The traditional SC depicts the manufacturing of products to the flow of commodities and services from manufacturers, producers, and distributors to end-users, establishing an integrated logistics management business model. With the rise of information technology and an increase in competitiveness along with globalization, businesses have been forced to compete with businesses all over the globe to survive. The effectiveness of a business’s logistics operations is one of the primary factors of its performance since proper management and integration of such activities allow the organization to gain additional benefits, such as the seamless flow of supplies, information, and products. As a result, using communication and information technology in SCs has become a vital tool for gaining a competitive advantage over peer businesses [28]. Since the beginning of this century, rapid progress has been seen in the advancements of techniques and technologies based on global digitalization in all business areas. The businesses had to adopt new processes and techniques; the same was observed in supply chain management. Major advantages of this shift to modernization in the SCM have increased procurement, production, storage, distribution, and customer relations efficiency, leading to a better operating performance with respect to the number of products and increased revenues and profits [10]. Implementing integrated SC also helps identify the existing SCs weaknesses [29]. Along with these benefits, the major drawback observed post-post-implementation of integrated SCM is increased financial and environmental costs [6], and cyber security and data privacy risks [30].

2.1.2. Virtual Supply Chains

These benefits of integrated SC have led businesses to become more innovative and reduce their dependence on physical resources. As a result, the business quickly moved toward virtual supply chains as it eliminated many physical resources, depending mainly upon virtual structures managed by AI-based programs [31]. They are managed and operated by computers and are connected via electronic links using the internet. These networks span across the globe and may not even have a physical presence, thus saving precious physical resources [32]. These networks mirror the physical supply chain models but enable the suppliers to seek and fulfill the customers’ orders across borders without having any physical interaction [33]. All communication is conducted via digital means using electronic platforms, saving customer and supplier resources. Simultaneously, customers and suppliers need the necessary technology and knowledge to become part of this virtual network and reap its benefits [34].

Although there are distinct organizational boundaries between typical SC participants, in a VSC, the borders between organizations become increasingly blurred as partnerships, and collaborative network linkages are formed between the suppliers and the customers.

Traditional SCs, on the other hand, have a lower degree of production, distribution, product mix, and volume flexibility than VSCs. VSCs, on the other hand, have a shorter lead time. While traditional vertical relationships between SC partners are still important, VSCs are characterized by “quasi-vertical structures” that emphasize the SC partners’ independence. At the same time, this system requires the highest degree of integration among the customers and suppliers, from ordering to delivery of the finished product [35]. Contrary to general belief, these systems are modular rather than a single integrated structure, mimicking the different processes of physical supply chain management [36].

Every virtual counterpart in VSCs must have worldwide access to all the necessary information about actual items, such as their physical attributes, origin, owner, and perceptual environment [37]. As a result, a virtual SC has limited access to the actual product. Manufacturers still serve as the cornerstone of SC and play an essential role in the VSC. Thus, they must enhance their virtual capabilities. Organizational barriers have been increasingly blurred, resulting in a greater interdependence between production and the rest of the supply chain (SC). Regarding VSCs, some claim that without adequate information exchange among their partners, the benefits of implementing VSC technology cannot be fully realized [36]. Regardless, because VSC provides more flexible and cost-effective SCM, the business managers have been focusing on integrating the suppliers and customers in their supply chain, emphasising enhancing connectedness, quality and reducing related costs [30].

2.2. Virtual Supply Chain and Performance of Companies

The internet and the internet of things have become part and parcel of every business that seeks to survive and grow in this dynamic environment [38]. One of the decisive factors in such a competitive business environment is the flow of information. This flow of information has to be in real-time, which can only occur if the information systems of customers and suppliers are integrated via a virtual network [39]. Previous studies on the topic, such as Sanders and Premus [32], state that supply chain integration tends to stabilize and reinforce the existing customer-supplier relationship. As such, collaborations strengthen the ability to make strategic decisions regarding production, inventory management, sales, and distribution [40]. Strategic cooperation is only possible due to operational efficiency improvement, which can mainly be attributed to the SCI [41,42]. The positive impact of SCI on the operational efficiency of customers and suppliers has been documented by [18,43].

IT-based processes have been the subject of research in the past. According to the existing literature, IT-based processes tend to enhance the overall efficiency of supply chains [44]. These processes enable businesses to integrate many supply chain-related processes, such as coordination, integration, and overall collaboration amongst different processes from start to end of the supply chain [45]. They are improving the supply chain processes and using I.T. to manage limited financial and human resources efficiently. This leads to an increase in the overall efficiency of the business, which is reflected in improved financial performance [46]. These processes have enabled companies to adopt “Just in Time”, enabling the smooth flow of information within different complex processes [44,47]. The overall efficiency of business processes tends to increase due to technologies such as EDI, as overall communication tends to improve, resulting in improved business processes and customer satisfaction [48].

Additionally, I.T. can assist companies in strengthening their cooperative partnerships [49]. I.T. is seen as a major enabler of supply chain coordination, supply chain collaboration [50], and SCI due to its favorable impact on supply chains [18]. Prior research has revealed that several characteristics, such as integration, partner reliance, relationship effectiveness between the different partners of the supply chain, and the formation and maintenance of long-term partnerships, influence the efficacy of I.T. in SCI [47]. At the same time, one of the major issues identified in this respect is the lack of an adequate SCI network I.T. application between different supply chain partners; this usually hinders the smooth flow of information between different partners. As a result of such hindrances, the efficiency of the entire supply chain process comes into question [34].

The integration of the supply chain has been furthered by the rapid growth of ITs (such as the internet), which has dramatically affected. With IT, SCI can supply businesses with timely, accurate, and reliable data to facilitate effective cooperation and communication [45]. I.T. is founded on networks that provide information flow between suppliers and consumers, enabling suppliers to improve their projections to manufacture parts and components on time and provide constructive feedback [51].

Prior studies have demonstrated that I.T. strengthens and maintains supply chain collaboration frameworks and agreements across firms [52]. I.T. can achieve operational and strategic coordination in the context of SCI [15]. Existing studies have proved that I.T. has a positive effect on SCI. Several studies, including those by [8], have shown that E-Business technology improves the integration of product information and intra- and inter-organizational communication [53]. It is demonstrated that integrating supply chain processes facilitates operational decisions. Making the information required for effective decisions is available at every critical point, which tends to improve the overall efficiency of operations [54] links this aspect to improvement in the production process, both in terms of cost-saving and improvement in quality. Such improvements in the efficiency of the businesses tend to positively impact the financial performance of the business as well [55]. Online shopping and customer feedback have increased many-fold over the past few years, leading organizations to integrate customers and suppliers into their manufacturing and supply chain processes [56].

Further, the proponents of Total Quality Management also stress the involvement of customers in all product development processes, leading to many organizations focusing on customer involvement in their SC [57], which has been facilitated by digitalization. The objective of organizations to move to demand-driven supply chains leads to the integration of customers along with suppliers into their VSCs [30]. This dual real-time connectedness with the customers as well as the suppliers, facilitated by cloud based VSC applications, results in efficient and cost-effective manufacturing processes, leading to an increase in the operational and financial performance of the businesses and attaining a competitive edge in the market. Figure 1 represents the research model.

Based upon the literature review and research mentioned above model and following research hypotheses are formulated in

Table 1. Development of hypothesis.

Hypothesis	Literature
H1a. The use and synchronization of IT-based system by customers positively impacts the integration of customer manufacturing/supply processes.	Jelassi et al., (2020) [30]
H1b. Use and synchronization of IT-based systems positively impact the integration of customer ordering and inventory systems.	Rymarczyk (2022) [10] Ruzo-Sanmartín (2022) [58]
H1c. Integration of customer manufacturing/supply is positively related to operating performance.	Ruzo-Sanmartín et al., (2022) [58]
H1d. Integration of customer I.T. systems is positively related to operating performance.	Ruzo-Sanmartín et al., (2022) [58]
H2a. The use and synchronization of IT-based systems by suppliers positively impact the integration with suppliers’ manufacturing process.	Piprani et al., (2020) [59,60] Ruzo-Sanmartín (2022) [58]
H2b. Suppliers’ use and synchronization of IT-based systems positively impact the integration with suppliers’ I.T. systems.	Piprani et al. (2020) [59,60] Jajja et al., (2018) [61]
H2c. Integration of suppliers manufacturing processes is positively related to operating performance.	Fujimoto (2019) [29] Koppenhagen & Held, (2021) [60]
H2d. Integration of suppliers’ I.T. systems is positively related to operating performance.	Koppenhagen & Held, (2021) [60]
H3. Operating performance has a positive impact on the financial performance of the sample companies.	Xu et al., (2014) [46] Han et al., (2017) [55] Gang et al., (2015) [62]

.

3. Research Method

3.1. Sample Size

To validate the sample, we first chose the top five industries of the IBOB, with the following steps: As a first step, we selected the companies from the company list. Only companies in fashion accessories, household appliances, clothing, fashion accessories, and footwear were chosen, the breakup of which is provided in

Table 2. Composition of the sample concerning the industry.

Industry Type	Percentage of Sample
Clothing	20%
Fashion accessories	20%
Footwear	20%
Household appliances	20%
Auto parts	20%

below.

The choice of companies was based on the overall trade volume in consultation with the IBOB. It was performed with the help of the cross-border e-commerce department of China. Only companies with employees ranging between 200 and 500 were considered. A questionnaire was only sent to the employees working in senior or mid-level management with a sufficient understanding of the online or virtual supply chain-based operations. The researcher also ensured that these companies had a virtual supply chain and that their supply chain-based operations were synchronized with customers and suppliers. The potential respondents were identified, and the questionnaires were sent to them after they consented to become part of the survey. A total of 1500 questionnaires were sent to different companies and their officials, who fulfilled the abovementioned criterion. Since the response rate in such studies is usually very low, it was decided to follow up with calls, e-mails, and text messages to confirm if the respondents had received the questionnaire. After three weeks, we received only 360 replies, and 342 of them were valid and included in the study. The overall response rate was 22.8%, which might be considered low, but a literature study indicates that it is usually the case in such surveys, as mentioned [63]. The breakup of the respondents concerning their designation is provided in

Table 3. Percentage composition of respondents.

Position	Percentage of Sample	Respondents
Senior manager	20%	68
Operational manager	41%	141
Management professionals	21%	71
Others	18%	62
Total	100%	342

.

As indicated in Table 2 above, 41% of the respondents were operational managers, while 20% were senior managers and other management professionals. The remaining 18% were consultants. All the respondents had adequate management experience; the baseline criterion was four years. Thus, based on their experience, all the respondents had adequate knowledge of integrated supply chain management.

3.2. Reliability and Validity

The exploratory factor analysis was conducted to verify the survey questionnaire’s validity. The results of the EFA indicate that the construct loading for every item was more than 0.60. The values of the cross-loading of the factors were also very low. This indicates that all the constructs in question had very good unidimensionality [64], and the details are mentioned in

Table 4. Results of exploratory factor analysis.

	FP	OP	CIBS	ISIS	ISMP	ICIS	ICMP	SIBS
CIBS1	0.122	0.095	0.115	0.094	0.019	0.046	0.032	0.797
CIBS2	0.106	0.044	0.114	0.031	0.209	0.097	0.131	0.719
CIBS3	0.122	0.161	0.101	0.085	0.055	0.141	0.148	0.716
ISMP1	0.093	0.053	0.797	0.081	0.081	0.116	0.124	0.162
ISMP2	0.096	0.053	0.748	0.176	0.104	0.084	0.145	0.096
ISMP3	0.044	0.044	0.704	0.196	0.091	0.121	0.095	0.097
ISIS1	0.051	0.076	0.122	0.186	0.096	0.781	0.109	0.085
ISIS2	0.053	0.108	0.042	0.197	0.072	0.777	0.121	0.168
ISIS3	0.063	0.074	0.158	0.143	0.123	0.785	0.063	0.048
SIBS1	0.007	0.034	0.078	0.805	0.057	0.186	0.082	0.077
SIBS2	0.042	0.109	0.106	0.772	0.001	0.151	0.051	0.099
SIBS3	0.031	0.073	0.141	0.752	0.093	0.123	0.066	0.029
ICIS1	0.153	0.146	0.051	0.079	0.796	0.052	0.114	0.046
ICIS2	0.12	0.063	0.128	0.013	0.809	0.129	0.124	0.089
ICIS3	0.163	0.106	0.093	0.106	0.779	0.102	0.073	0.033
ICMP1	0.063	0.085	0.141	0.111	0.063	0.055	0.778	0.094
ICMP2	0.114	0.007	0.065	0.062	0.137	0.095	0.799	0.109
ICMP3	0.159	0.105	0.151	0.043	0.107	0.132	0.747	0.099
OP1	0.197	0.758	0.145	0.044	0.191	0.103	0.036	0.104
OP2	0.033	0.789	0.034	−0.019	0.302	0.137	0.007	0.077
OP3	0.088	0.794	0.022	0.062	0.065	−0.02	0.025	−0.048
OP4	0.025	0.723	−0.052	0.111	0.088	0.007	0.109	0.215
FP1	0.769	0.107	0.114	0.014	0.119	−0.014	−0.006	0.112
FP2	0.761	0.101	0.027	0.006	0.068	0.018	0.093	0.027
FP3	0.786	0.046	0.036	−0.022	0.118	0.099	0.124	0.055
FP4	0.777	0.052	−0.107	0.043	0.054	0.002	0.134	0.124
FP5	0.778	0.075	0.117	0.044	0.066	0.053	−0.011	0.037
Eigenvalues	7.546	2.341	1.841	1.566	1.851	1.964	1.928	1.512
Cumulative variance %	36.017	40.015	61.279	55.146	56.355	74.234	73.510	80.040

Note(s): The “bold and italic” values in the table indicated the rotated factor loading for each item used in the research; all the values are significant. CIBS = customer IT base system. ISIS = integration supplier IT system. ISMP = integration supplier manufacturing/process system. FP = financial performance. OP = operation performance. ICIS = integration customer IT system. ICMP = integration customer manufacturing/process system. SIBS = supplier IT base system.

.

4. Results

After confirming that all the questionnaire constructs were unidimensional, the researchers proceeded to the next step, i.e., exploratory factor analysis, for factors reduction, which is similar to [65] provided in

Table 5. Results of CFA.

	Factor Load
Item	CIBS	ISIS	ISMP	FP	OP	ICIS	ICMP	SIBS
CIBS1	0.813
CIBS2	0.809
CIBS3	0.881
ISIS1		0.856
ISIS2		0.793
ISIS3		0.862
ISMP1			0.906
ISMP2			0.758
ISMP3			0.821
FP1				0.841
FP2				0.812
FP3				0.772
FP4				0.870
OP1					0.808
OP2					0.762
OP3					0.841
OP4					0.771
OP5					0.863
ICIS1						0.824
ICIS2						0.819
ICIS3						0.809
ICMP1							0.856
ICMP2							0.782
ICMP3							0.830
SIBS1								0.875
SIBS2								0.837
SIBS3								0.817
Eigen Values	7.356	5.287	2.138	1.789	1.624	1.551	1.328	1.127
Cumulative Variance Explained	37.269	41.984	48.529	52.342	58.291	64.237	71.522	80.544

below.

The values of Cronbach’s alpha for almost all the constructs were above 0.80, except for the following four constructs: ISMP2, FP3 OP4, and ICMP3. Their values were below 0.8 but above 0.70, which applies that they are also acceptable. The CFA results regarding Cronbach’s alpha values were not surprising, given that all the constructs had very good unidimensionality. The results indicate the reliability of validity constructs and overall instruments as held by reliability [66]. Please refer to

Table 6. Correlation analysis.

Item	CIBS	ISIS	ISMP	FP	OP	ICIS	ICMP	SIBS	Cronbach’s Alpha	Composite Reliability	Average Variance
CIBS	1								0.769	0.80	0.62
ISIS	0.56 **	1							0.782	0.93	0.79
ISMP	0.38 **	0.46 ***	1						0.760	0.82	0.71
FP	0.28 **	0.35 **	0.40 ***	1					0.790	0.88	0.67
OP1	0.42 **	0.41 **	0.23 **	0.28 ***	1				0.815	0.84	0.59
ICIS	0.34 ***	0.22 **	0.44 **	0.27 ***	0.26 **	1			0.783	0.81	0.75
ICMP	0.27 **	0.26 **	0.51 ***	0.33 **	0.34 **	0.27 **	1		0.749	0.87	0.66
SIBS	0.45 ***	0.39 ***	0.29 **	0.36 **	0.40 ***	0.22 **	0.36 ***	1	0.820	0.80	0.55
Mean	4.25	4.60	3.90	4.30	3.60	3.80	3.70	3.90
Std. deviation	1.09	1.28	0.967	1.06	0.927	1.15	1.10	1.18

*** p < 0.001, ** p < 0.01.

for the correlation analysis.

The composite reliability of the coefficients indicated in Table 5 is greater than 0.80. Therefore, verifying the validity of the questionnaire constructs and overall model.

The discriminant validity of each construct was determined by examining the square root of the construct’s average variance, which was greater than the regression coefficients. Therefore, this leads us to conclude the strong presence of discriminant validity for the scale used [67]. Furthermore, the scale’s content validity was ensured by the fact that all dimension items in the study were obtained from earlier supply chain literature, as indicated by the literature review section.

4.1. Hypothesis Testing

AMOS software 26 version was used to conduct the hypothesis testing, and SEM was used to study the causal relationship between different factors. This method was used to study tourism competitiveness [68,69] and large-scale real estate competitiveness [70]. The SEM analysis presented in Figure 2 indicates that except for the H1-d, which stated that the integration of customer I.T. systems is positively related to operating performance, the only hypothesis rejected as its path coefficient was 0.047. At the same time, its p-value was insignificant as it was 0.330. The p-value was greater than the threshold of 0.05. At the same time, all the other hypotheses were accepted. Please refer to Figure 2 and

Table 7. Results of path analysis for the model using SEM.

Path			Estimate	S.E.	C.R.	p
ISMP	<---	SIBS	0.209	0.048	3.946	***
ISIS	<---	SIBS	0.585	0.040	13.354	***
ICIS	<---	CIBS	0.306	0.056	5.944	***
ICMP	<---	CIBS	0.602	0.061	13.933	***
O.P.	<---	ISMP	0.273	0.043	5.728	***
O.P.	<---	ICIS	0.047	0.054	0.973	0.350
OP	<---	ICMP	0.351	0.041	7.304	***
O.P.	<---	ISIS	0.145	0.042	3.044	0.002
FP	<---	OP	0.420	0.051	8.549	***

CIBS = customer I.T. base system, ISIS = integration supplier I.T. system, ISMP = integration supplier manufacturing/process system, FP = financial performance OP = operation performance, ICIS = integration customer I.T. system, ICMP = integration customer manufacturing/process system, SIBS = supplier I.T. base system. *** p < 0.001.

for the results of the path analysis for the model using SEM. Please refer to

Table 8. Hypothesis and results.

Hypothesis	Results
H1a	Accept
H1b	Accept
H1c	Accept
H1d	Reject
H2a	Accept
H2b	Accept
H2c	Accept
H2d	Accept
H3	Accept

for hypotheses and results.

The integration of SCI between customers and suppliers has a positive impact on the overall operational performance of the companies, which is translated into improved financial performance as well. These aspects enable IBOB to survive and grow in a competitive business environment such as China.

In IBOB firms, I.T. encourages an increase in investment in technological entities among suppliers and customers. As a result, IBOB firms and their customers and suppliers benefit from improved communication and collaboration, allowing for more efficient transactions for everyone involved. On the other hand, I.T. makes it easier for customers and suppliers to get involved in various IBOB activities. Intellectual inputs (such as knowledge) are offered to IBOB companies to optimize their processes and improve communication and cooperation. Overall, supplier I.T. is more helpful in integrating systems, while customer IT is much more prominent in integrating processes. With the building projects of network systems, systems, and architectures, IBOB businesses may give greater attention to the convenience of transactions for their upstream suppliers. BOB companies, on the other hand, are focusing more on timely communication with staff participation and responses for their downstream customers. There are differences in I.T. use in improving supply chain cooperation with suppliers and customers, as found [48].

4.2. Discussion and Implication of Results

Integrating different aspects of the supply chain between the companies tends to improve their overall performance. Adopting IT-based processes not only encourages companies to improve their operational performance but also allows them to enhance their technical abilities. These abilities add to their strengths and provide them with a competitive advantage. It holds, especially in the case of IBOB. They operate in both national and international environments, which are highly competitive. By integrating different aspects of supply chains, the suppliers and customers benefit from real-time information, and their communication with their organizations and between various parties involved in the supply chain improves. Thus, the transactions and orders can be executed efficiently, saving all resources for all the parties involved in the process.

Another aspect pointed out by the research is that integrating the entire supply chain mechanism between the supplier and the customer may not be necessary, as supply chain integration requires integrating different modules [4]. In our study, it was determined that the integration of customer I.T. systems did not improve the overall operating performance of companies. The main reason could be that most customers may not be based in China, so they may be using different types of systems that may not be compatible. Such issues might create problems for suppliers and customers, leading to a loss of efficiency. Positively related to operating performance. The findings of the current study are in line with the findings of [15,25], who held that the integration of the supply chain tends to improve the communication between the suppliers and the customers, which is reflected in the operating performance of the companies. The study also validates the findings of [18], who held that the integration of the supply chain tends to improve the operating performance of the companies. It leads to an improvement in the financial performance of the companies.

Improvements in the supply chain tend to simplify and improve the coordination between aspects of the supply chains of customers and their suppliers. Integrating elements such as inventory management, production processes, overall I.T. processes, and ordering mechanisms tend to provide updated information to suppliers and customers. Thus, they are better positioned to coordinate with each other and end-users. This factor significantly improves their operating efficiency. This improvement is reflected in customer satisfaction; thus, they are better positioned to retain their market share and increase their customer base. This finding supports the earlier research of [71].

5. Conclusions, Implications and Future Recommendations

To conclude, it can be said that the use of information technology has emerged as an essential tool for gaining and maintaining a competitive advantage, especially in the case of IBOB based in China. The use of I.T. allows for a smooth flow of information between the customers and suppliers, which allows for better coordination between different components of supply chains. The study’s findings unequivocally demonstrate that I.T. positively affects SCI. SCI gives the flexibility to respond to increasingly globalized markets by enhancing the visibility of the supply chain. It is crucial for the survival and sustainability of IBOB firms. It not only enhances the supply chain’s effectiveness but also improves its overall operating performance, which translates into financial performance. It is possible if the different aspects of the supply chain, such as ordering and manufacturing areas, and synchronization between suppliers and their customers. The use of I.T. encourages increased investment in technological entities among suppliers and customers. As a result, IBOB firms and their customers can benefit from improved communication and collaboration, allowing for more efficient transactions for everyone involved.

The findings offer valuable insights into the supply chain management aspect for IBOB companies, allowing them to gain and maintain a competitive advantage over their competitors by enhancing their performances through the application of I.T. and SCI techniques throughout the entire data-driven supply chain. The IBOB companies should continue investing in and improving their supply chain and integrate their business partners’ different processes from start to end. This integration allows for a smooth flow of information and the creation of a virtual supply chain, which benefits all parties involved in the integrated supply chain. There are important aspects of gaining and maintaining a competitive advantage, as the IBOB business environment, especially in China, is very competitive at the national and international levels. High levels of competition tend to erode profit margins. In such an environment, only improvement in the operational performance can help maintain the profitability and competitiveness of the business. This section may be divided into subheadings. It should provide a concise and precise description of the experimental results, their interpretation, and the experimental conclusions that can be drawn.

To begin, IT has various positive benefits for SCI. It helps SCI react to globalized markets by boosting the visibility of the supply chain. This is vital for the data-driven supply chain management of IBOB worldwide enterprises. In addition to changing company production and operation procedures, this is performed. We explore the disparities between supplier/customer IT and system/process integration, expanding and refining the IT and SCI idea. Looking at the object and the content helps make this difference. The use of IT pushes enterprises to spend more on technological entities that operate as intermediaries between consumers and suppliers. This is common among IBOB-affiliated companies. As a result, IBOB enterprises may improve communication and cooperation with customers and suppliers, increasing their commercial transactions’ efficacy. Advances in information technology make it easier and more accessible for customers and suppliers to attend IBOB enterprises’ events. IBOB organizations may optimize their operations due to intellectual inputs (such as information), which has increased contact and cooperation among them. Suppliers’ information technology is generally better for system integration than customers’ for process integration. We believe system integration emphasizes the input of technically oriented entities, such as information networks, whereas process integration emphasizes the input of intellectually focused entities, such as people and knowledge. The two methods of integration may be stated as follows: The quick stimulation given by integrating systems and processes into companies leads organizations to instantly enhance their production and operation skills, which results in financial advantages for the company.

Our study has important policy implications. First, IT enhances SCI, which means data-driven operations help achieve sustainable supply chain management. This is how IT promotes SCI. International trade will continue to integrate physical and online processes and transactions. The widespread availability of information technology (IT) and good supply chain coordination is crucial for expanding international commerce. The use of IT makes supply chain coordination easier. IBOB organizations should concentrate on entity inputs such as information systems to make the most of ITs. To be enhanced, SCI must now concentrate on intellectual inputs such as personal engagement and knowledge. There is a broad variety of integration across content and information sources. Customers see greater integration of processes than suppliers do of systems.

Second, SCI increases firm performance; therefore, adopting sustainable supply chain management will benefit a company. In other words, SCI helps companies be more competitive. IBOB firms must involve the supply chain in their business operations. To increase operational efficiency and financial success, it is necessary to boost communication and cooperation with customers and suppliers. To achieve various performance levels, IBOB organizations must concentrate on SCI.

Regarding the substance of integration, more emphasis should be given to the direct impact of supplier system/process integration and customer system integration on operational performance. This is crucial when considering the substance of integration. Integration of supplier systems and processes indirectly impacts a firm’s financial performance. Therefore, IBOB organizations that want to boost their financial performance should integrate their customers’ systems and processes. The integration of customer systems has immediate effects, whereas customer processes have direct and indirect effects. If a corporation wants to improve its operational performance, it should engage more closely with its upstream suppliers to integrate its sources. To gain a direct financial advantage, IBOB enterprises must depend on customer engagement and cooperation.

Third, IT can boost a company’s performance thanks to SCI. To satisfy data-driven supply networks, data-driven operations must be paired with environmentally friendly supply chain management. Although SCI is essential for IBOB organizations, establishing an information system takes a considerable upfront investment, and the advantages may not be evident for some time after implementation. Investing more in IT would assist in boosting corporate efficiency via SCI adoption. To tackle IT issues, IBOBs must proactively build information systems and architectures. To achieve SCI and improve corporate performance, stimulate employee participation and intellectual idea development.

One of the research’s major limitations is the limited sample size. It was due to the low response rate and the fact that the current study only included small and medium-sized Chinese IBOBs.

In the future, the researcher can increase the sample size and may include a larger sample by including other industries. Second, researchers can apply cross-sectional research by comparing the Chinese IBOBs with similar businesses based in other countries. Third, future research should investigate the effects of contextual factors on competitive strategies, supply chain integration practices, and company performance, along with the moderation effect. Fourth, it is recommended to restudy the same topic in the same companies over time to evaluate the progress resulting from the application of supply chain integration. Fifth, it is advised to conduct similar studies from the perspectives of suppliers and customers. Furthermore, conducting the study in similar industries in other countries can increase the validity and generalizability of the results. It can also help firms learn about their strengths and weaknesses by comparing themselves with companies in similar industries in other countries.