Effect of Supply Chain Integration on Business Performance and Competitiveness of Philippine SMEs

Abstract

This study aims to determine the relationship of supply chain integration with the performance and competitiveness of small and medium enterprises (SMEs) in the Philippines. A survey of 384 companies was conducted to measure the customer integration, supplier integration, and internal integration of SMEs. Structural equation modelling was used to test the hypotheses. The results show that the internal integration of SMEs strongly influences their business performance or growth and competitiveness. Customer integration directly and indirectly (through internal integration) influences the business performance and competitiveness of SMEs. Accordingly, the effect of supplier integration on business performance (growth) and competitiveness of companies is fully mediated by internal integration.