Effect of supply chain integration on the relationship between diversification and performance: evidence from Japanese and Korean firms

Abstract Supply chain strategies and practices depend on not only the nature of the business, the competitive environment, and technological intensity of the product, but also on product and market characteristics. Consequently, supply chain integration (SCI) strategies should be evaluated in the light of a company’s market and product strategies. This paper examines the effect of SCI on the relationship between diversification and a firm’s competitive performance. The results of the study can be useful in integrating supply chain strategy into market and product diversification (PD) strategy. By comparing the main and interaction effects of SCI and diversification on performance, the paper shows that SCI strategy modifies the relationship between diversification and performance. Additionally, it is argued that coordinated use of SCI and diversification strategies has a significant effect on firm performance.