Supply Chain Integration and Firm Performance in Iranian Food Industry

Over the past two decades, various notions from perspective of different researchers regarding SCM have been put to test. One of the crucial issues, in this regard, is the concept of Supply Chain Integration. In fact, supply chain integration provides a firm with the major opportunities to achieve improved performance and enhance its market position. So, supply chain is of interest for companies’ managers as a basic principle, and in addition to focus on internal operations of their firm, managers look for establishing long term relationship with suppliers and customers based on mutual commitment and trust. This paper aims to report on an investigation of supply chain integration, and how this leads to firm performance. This will be accomplished by identifying the three-ways relationship between the level of supply chain integration, utilizing supply chain management practices, and firm performance. So, strategy of supply chain integration can be related to its competitive strategy that will provide a collection of useful strategies. From the results of LISREL analysis on Iranian manufacturing firms in food industry, this paper finds that supply chain integration does not affect firm performance directly. Rather, it affects firm performance, indirectly, through the mediator variables, supply chain management practices. In other words, supply chain integration, first, improves firm’s supply chain management practices including procurement, production, and distribution practices; and through these factors enhances its performance.