Firms are attempting to integrate with their supply chain partners to achieve superior firm performance. This study draws on social capital theory and supply chain literature to investigate how top managers' managerial ties influence supply chain integration, which consequently improves firm performance. This study further examines how the relationship between top managers' managerial ties and supply chain integration is moderated by market turbulence. By using triple-respondent, matched data of 176 Chinese manufacturing firms, we find that top managers' business ties are positively related to supply chain integration, whereas their political ties are not. Supplier and customer integration contribute to firm performance. Furthermore, market turbulence negatively moderates the business ties–supply chain integration relationship, but it positively moderates the political ties–supply chain integration linkage.
As Chinese firms are becoming important for global supply chain, the low degree of supply chain integration (SCI) among Chinese firms or between international and Chinese firms impedes the efficiency of global supply chain management (SCM) (Liu, Ke, Wei, Gu, & Chen, 2010; Liu, Ke, Wei, & Hua, 2015; Zhao, Huo, Flynn, & Yeung, 2008). SCI reflects the extent to which a firm cooperates with key suppliers and customers to manage inter-firm business processes (Frohlich & Westbrook, 2001; Jayaram, Tan, & Nachiappan, 2010; Wiengarten, Humphreys, Gimenez, & McIvor, 2016). This integration enables firms to facilitate the flow of information, materials, products, and services across the supply chain at the operational level (Schoenherr & Swink, 2012; Wiengarten et al., 2016). Therefore, the literature widely regards SCI as an effective way to improve firm performance (Flynn, Huo, & Zhao, 2010; Huo, Ye, Zhao, & Shou, 2016; Wong, Boon-itt & Wong, 2011; Zhao, Feng, & Wang, 2015). The benefits of SCI have been acknowledged theoretically (Van der Vaart & van Donk, 2008), but firms are still struggling with its development (Cao, Huo, Li, & Zhao, 2015; Huo et al., 2016; Zhao et al., 2008). The SCM literature indicates that full integration with key suppliers and customers is rare and difficult to achieve (Huo et al., 2016) because of potential organizational, political, and resource-related challenges (Cao et al., 2015; Wiengarten, Pagell, Ahmed, & Gimenez, 2014). Under this condition, managers, especially those in Chinese firms, are left with minimal guidance on how to proceed with SCI (Van der Vaart & van Donk, 2008). Therefore, the examination of SCI drivers in China is imperative and useful to practitioners and academics. Scholars show increasing interest in the role of informal personal ties of top managers, namely, managerial ties, in SCM, especially in the Chinese context (Chen, Huang, & Sternquist, 2011; Shou, Zheng, & Zhu, 2016; Wang, Childerhouse, Kang, Huo, & Mathrani, 2016; Wang, Ye, & Tan, 2014). Scholars believe that firms may rely on top managers' managerial ties to develop and sustain supply chain relationships (Shou et al., 2016; Wang et al., 2016). For example, Cai, Jun, and Yang (2010) proposed that guanxi is positively related to information sharing with suppliers. Top managers' managerial ties have been widely categorized into business and political ties (Luo, Huang, & Wang, 2012; Peng & Luo, 2000). Business ties reflect the informal personal ties of the top managers of a firm with the top managers of other firms, whereas political ties refer to the informal personal ties of top managers with government officials (Sheng, Zhou, & Li, 2011). Both top managers' business and political ties have been proposed as important factors for firm competitive advantage in China (Luo et al., 2012; Peng & Luo, 2000). However, few SCM studies have empirically investigated the relationship between top managers' managerial ties and SCI.