The impact of institutional pressures on supplier integration and financial performance: Evidence from China

With the rapid development of Chinese manufacturing industry and economy, there is an increasing emphasis on the Chinese institutional environment. In this study, we examine the impact of the three aspects of institutional pressures – normative, mimetic, and coercive – on the two dimensions of supplier integration – system and process – and their impact in turn on financial performance. We test the relationships with data collected from 617 manufacturers in China. Our results show that normative and mimetic pressures are positively related to both system and process integration; while coercive pressures are only positively related to process integration and not significantly related to system integration. The results also indicate that both system and process integration have a positive impact on financial performance. By developing and testing a theoretical model about institutional pressures, supplier integration, and financial performance in the context of the Chinese manufacturing industry, this study contributes to both the institutional and supply chain management literature, as well as providing a better understanding of Chinese manufacturing practices.