Investigating the relationships between internal integration and external integration and their impact on combinative competitive capabilities

This paper examines the interaction of internal integration and external integration and investigates the causal impact of their relationship on competitive capabilities in automotive suppliers in Thailand. In addition, a hybrid model for competitive capabilities is tested to confirm the configuration of competitive capabilities through external integration. An empirical study was carried out and structural equation modelling was employed to analyse the theoretical model. Internal integration was found to have a positive relationship with external integration. In particular, supplier integration requires a high level of internal integration in order to transform internal resources and build the firm’s capabilities. A high level of product quality achieved through internal and external integration leads to an enhanced delivery capability. Also, the findings suggest that low cost and flexibility capabilities are developed in parallel and do not follow a cumulative pattern. The study provides insight into the practices of supply chain integration in an emerging economy in which the outcomes may be different from other more developed countries. In addition, the study responds to the calls in the literature to investigate further the little studied interactions between the constructs of internal and external integration and provides further empirical evidence of the cumulative model of competitive capabilities.