ARTICLE IN PRESS

Int. J. Production Economics 120 (2009) 66–78

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Int. J. Production Economics

journal homepage: www.elsevier.com/locate/ijpe

The effects of trust and coercive power on supplier integration$

Jeff Hoi Yan Yeung a,b,, Willem Selen c, Min Zhang b, Baofeng Huo d
a
Supply Chain Management Research Center, CUHK, Hong Kong
b
DSE Department, Faculty of Business Administration, The Chinese University of Hong Kong, Shatin, N.T., Hong Kong
c
Business Administration Department, College of Business & Economics, United Arab Emirates University, Al Ain P.O. Box 17555, UAE
d
School of Management, Xi’an Jiaotong University, China

a r t i c l e i n f o abstract

Article history: Supply chain integration nowadays is considered an important approach to building and
Received 1 September 2007 sustaining competitive advantages. Many previous empirical researches have investi-
Accepted 1 July 2008 gated trust and power between suppliers and customers, yet, the effects of trust and
Available online 17 October 2008
coercive power on supply chain integration are still largely unknown. This study
Keywords: investigates trust, coercive power and their interaction and their impact on internal and
Trust supplier integration, based on data collected in Chinese supply chains. The results reveal
Coercive power that both trust and coercive power improve internal and supplier integration, but when
Supplier integration trust is low, coercive power reduces internal integration. Contradictory to conventional
China
wisdom that coercive power hinders cooperation, this study found that coercive power
improves supplier integration in Chinese supply chains, with or without the presence of
trust. This study provides significant insights for Chinese inter-organizational trust–
power relationship management and supply chain integration practices.
& 2008 Published by Elsevier B.V.

1. Introduction Donk (2008) reviewed 33 survey-based research and find

Nowadays in an ever changing and fiercely competitive
marketplace, solely being cost efficient in supply chain
management (SCM) does not suffice. Instead, supply
chains should be agile, adaptable and aligned to meet
the challenges of competitive environments (Lee, 2004).
In this context, the need for supply chain integration has
echoed in various industries, and companies are learning
that they must collaborate to compete (Bleeke and David,
1993; Hulsmann et al., 2008). Van Der Vaart and Van
$ However, only a few studies elaborated on the initiators of
This research was supported by Center for Supply Chain Manage-
ment & Logistics, Li & Fung Institute of Supply Chain Management &
Logistics.
 Corresponding author at: DSE Department, Faculty of Business
Administration, The Chinese University of Hong Kong, Shatin, N.T. Hong
Kong. Tel.: +852 2609 7779; fax: +852 2603 5104.
E-mail addresses: Jeff@baf.msmail.cuhk.edu.hk (J.H.Y. Yeung),
willem.selen@uaeu.ac.ae (W. Selen), zhangmin@baf.msmail.cuhk.edu.hk
(M. Zhang), bladehuo@hotmail.com (B. Huo).
that supply chain integration greatly improves company
performance. Furthermore, today’s manufacturers are
becoming increasingly reliant on their suppliers to gain
competitive advantages. Partnerships with suppliers have
become the lifeblood of the supply chain, and the issue is
not whether to build partnership with suppliers, but how
(Liker and Choi, 2004). Previous studies have linked the
importance of supply chain integration to competitive
advantage (e.g. Lee and Billington, 1992), supply chain
performance (e.g. Narasimhan and Kim, 2002), opera-
tional performance (e.g. Frohlich and Westbrook, 2001), as
well as low transaction costs (e.g. Zhao et al., 2008).
supply chain integration and how they function. Yet, most
of these studies fail to explain the interrelationship among
the initiators and supply chain integration.
The rationale behind supply chain integration is to
combine partners’ resources and perspectives into a firm’s
value propositions, thus allowing all companies in a
supply chain to excel in performance. Historically, it was

0925-5273/$ - see front matter & 2008 Published by Elsevier B.V.

doi:10.1016/j.ijpe.2008.07.014
 ARTICLE IN PRESS
J.H.Y. Yeung et al. / Int. J. Production Economics 120 (2009) 66–78
found that hidden information and actions among supply
chain partners, as well as lack of trust (Narayanan and
Raman, 2004), refrain companies from cooperating with
their supply chain partners (Fawcett and Magnan, 2002).
The reason for the lack of trust is embedded in the fact
that supply chain partners have differing interests (Beth
et al., 2003). Yet, trust was found to be a pivotal factor that
affects supply chain cooperation (Kelle and Akbulut,
2005).
Alongside with trust, use of power is another impor-
tant supply chain attribute which influences supply chain
practice. Supply chain partners are conditioned by the
power to make substantial investments to sustain busi-
ness relationships (Cox, 2001). Furthermore, the power
structure of the supply chain also greatly influences
supply chain integration (Van Donk and Van Der Vaart,
2005; Zhao et al., 2008).
Although supply chain scholars have expressed great
interest in trust and power, an in-depth examination
of prior studies indicates that most research focuses on
the effects of the sole relationship of power and SCM
(e.g. Crook and Combs, 2007; Griffith et al., 2006), or
trust and SCM (e.g. Johnston et al., 2004; McCarter
and Northcraft, 2007), with little attention paid to the
interaction effect of power and trust in SCM. Hart and
Saunders (1997) proposed that both power and trust play
important roles in the adoption and use of electronic data
interchange between trading partners, and that the
demonstration of trust is related to the use of power.
Ireland and Webb (2007) proposed that firms will be more
fully committed to supply chain relationships when trust
and power are simultaneously managed between partici-
pants. Yet, both previous studies fail to test the postulated
hypotheses with large scale empirical evidence. Our
research covers this gap by integrating resource depen-
dence theory (RDT) (Pfeffer and Salancik, 1978) and
transaction cost theory (TCT) (Williamson, 1975) to
explore the roles of trust and power simultaneously on
supplier integration, using a large scale empirical study.
Most previous empirical research on supply chain
integration, trust, and power are based on Western
economies, while our study focuses on China, which
supply chains play an increasingly important role on a
global scale (Su et al., 2008). In addition, because Chinese
culture varies substantially from a western culture on
issues such as collectivism, high power distance, and
guanxi, this study provides significant managerial insights
on how to use trust and power to influence supply chain
integration in China (Zhao et al., 2006a, 2007, 2008).
2. Literature review and research hypotheses
2.1. Supply chain integration
There is a growing recognition that firms need strategic
resources that lie beyond their boundaries to gain
competitive advantages (Das and Teng, 2000). To obtain
these resources and reduce transaction costs, suppliers
and buyers need to cooperate in processes ranging from
product design, market launch, promotion, and fulfillment,
67
to recycling (Kopczak and Johnson, 2003). Collaborative
relationship between suppliers and buyers is identified as a
vital strategy for securing competitive advantage in a
dynamic environment (Bleeke and David, 1993), or when
entering new markets (Mabert and Venkataramanan,
1998). The establishment and maintenance of such a
relationship is a socialization process which facilitates
two-way information exchange, problem solving, and
knowledge transfer between buyer and supplier (Cousins
and Menguc, 2006), the management process of which is
identified as supply chain integration.
The challenge of supply chain integration is the
managerial capacity for combining resources and compe-
tencies from various supply chain partners and business
units, and directing all relevant parties towards an
expanded resource base and competitive advantage. As
such, it should be strategically managed as an integrated
system, as opposed to individually optimized fragmented
subsystems (Vickery et al., 2003). Supply chain integration
is ‘‘the degree to which a firm can strategically collaborate
with its supply chain partners and collaboratively manage
the intra- and inter-organization processes to achieve
effective and efficient flows of product and services,
information, money and decisions with the objective of
providing maximum value to customers at low cost and
high speed.’’ (Zhao et al., 2008, p. 374). Two key supply
chain integration themes include information sharing and
process coordination.
Information sharing is the degree to which a firm can
coordinate the activities of information sharing, and
combine core elements from heterogeneous data manage-
ment systems, content management systems, data ware-
houses, and other enterprise applications into a common
platform, in order to substantiate integrative supply chain
strategies (Jhingran et al., 2002; Roth et al., 2002).
This makes information sharing both a managerial and
technology issue in a supply chain. Only when informa-
tion sharing is coordinated, will a firm develop a
capability to effectively link those diverse systems. For
example, buyers sharing information about production
plans and demand forecasts with their suppliers can
reduce the well-known ‘‘bullwhip effect’’ (Lee et al.,
1997).
The second theme of supply chain integration is
process coordination, which is the degree to which a firm
can structure its operational processes, as well as the
sharing of resources, rewards and risks across organiza-
tions into consensus agreements, in order to achieve
competitiveness. Process coordination views inter-firm
relationships as strategic assets (Anderson et al., 1994),
and firms must maintain ongoing buyer–supplier rela-
tionships in order to facilitate progressive involvement
between partnering firms (Webster, 1992). Process co-
ordination integrates the processes of different functions
within a company or different firms within a supply chain
(Arshinder et al., 2008). Process coordination practices,
such as supplier involvement in buyers’ design and
production, can help suppliers to better understand the
market environment and respond to changes quickly.
Substantive literature has identified supplier integration,
internal integration and customer integration as three
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68 J.H.Y. Yeung et al. / Int. J. Production Economics 120 (2009) 66–78
major types of supply chain integration (e.g. Narasimhan
and Kim, 2002; Droge et al., 2004; Koufteros et al.,
2005; Zhao et al., 2006b). Supplier relationship plays an
important role in supply chains (Liker and Choi, 2004),
and supplier integration is highly related to internal
integration (e.g. Stank et al., 2001a; Ward and Zhou,
2006). Moreover, Bowersox and Morash (1989) proposed
that the migration path of supply chain integration should
be extended from the integration of internal processes to
external integration with suppliers. In this study, we focus
on internal and supplier integration.
Internal integration is ‘‘the degree to which firms are
able to integrate and collaborate across traditional func-
tional boundaries to provide better customer service’’
(Chen and Paulraj, 2004, p. 142). Yet, such definition could
be further detailed by considering organizational prac-
tices, procedures, and behaviors. In our research, internal
integration is defined as ‘‘the degree to which a firm can
structure its organizational strategies, practices, proce-
dures and behaviors into collaborative, synchronized and
manageable processes in order to fulfill customer require-
ments.’’ (Zhao et al., 2006b). The information sharing
theme of internal integration is operationalized as the
usage of interdepartmental meetings and real-time con-
nection among internal functions, whereas process co-
ordination is operationalized as the application of cross-
functional teams in internal processes, such as product
design and process improvement.
The concept of integrating with external parties
(i.e. suppliers) has attracted considerable attention
(Martinez-Olvera, 2008). Supplier integration refers to
‘‘the degree to which a firm can partner with its key
supply chain members (suppliers) to structure their inter-
organizational strategies, practices, procedures and beha-
viors into collaborative, synchronized and manageable
processes in order to fulfill customer requirements.’’ (Zhao
et al., 2006b). Supplier integration favors the use of a
supply chain optimization approach to reduce the supply
chain base through intensive information sharing, suppli-
er involvement and supplier development, based on
the rationale that collaborating with key suppliers can
improve the operational efficiency and responsiveness of
the entire supply chain. The information sharing theme of
supplier integration is operationalized as sharing produc-
tion information such as production plans, demand
forecasts and inventory levels among manufacturers and
suppliers. The process coordination theme refers to
involving suppliers’ activities into manufacturers’ internal
processes, such as purchasing and design.
2.2. Trust and supply chain integration
Supply chain integration is easier said than done. In
particular, the absence of relationship management
mechanisms might hinder the activities related to it, and
cause problems of free riding, hold-ups, and leakages,
which lead to less satisfactory supply chain performance
or even supply chain defection (McCarter and Northcraft,
2007). Therefore, understanding how to manage relation-
ships through trust and use of power is important in the
discourse of supply chain integration.
Trust is ‘‘the extent to which a firm believes that its
exchange partner is honest and/or benevolent’’ (Geyskens
et al., 1998). Many studies (e.g. Bachmann, 2001;
Gambetta, 1988; Kumar, 1996; Lee and Billington, 1992;
Spekman et al., 1998) argued trust is a useful lubricant or a
fundamental ingredient in maintaining cooperation and in
avoiding conflicts. Trust can reduce perceived relational
risk by increasing confidence in a trustee’s good intention
(Das and Teng, 1998), and is based on a rationale that
increasing confidence will facilitate deeper commitment
between partners. Furthermore, trust can significantly
contribute to the long-term stability of a supply chain
(Handfield and Bechtel, 2002; Kwon and Suh, 2005).
Understanding of trust has become a top priority in
upholding relationships among supply chain partners.
Trust at the organizational level is regarded as a salient
factor for success of inter-organizational relationships
(Jeffries and Reed, 2000). Organizational trust can be
categorized into intra- and inter- organizational trust.
Inter-organizational trust refers to the extent to which
organizational members have a collectively held trust
orientation towards the partner firm (Zaheer et al., 1998).
In this regard, the propensity to trust (willingness to relay
upon others) depends on varying qualities of trustworthi-
ness such as reliability, competence, benevolence,
and integrity or honesty (e.g. Brashear et al., 2003; Mayer
et al., 1995; Sako, 1992). A reinforcing loop exists in
that intra-organizational trust helps to improve inter-
organizational trust (Burt et al., 2003), which in turn
reinforces intra-organizational trust through organiza-
tional learning. Previous research identifies four types
of inter-organizational trust: competence trust (Barber,
1983; Cook and Wall, 1980; Sako, 1992), contractual
trust. (Boersma et al., 2003; Sako, 1992), calculative
trust (Doney and Cannon, 1997; Brashear et al., 2003),
and goodwill trust (Sako, 1992; Boersma et al., 2003).
As the various dimensions of trust are not the focus of this
study, we only adopt the general conceptualization of
trust.
Although the issue of trust within the supply chain has
not been studied until recently, the concept of trust has
drawn considerable attention in management (e.g., Doney
et al., 1998; Kramer and Tyler, 1995), marketing channels
(Kumar, 1996; Andaleeb, 1996), international cooperative
alliances (Johnson et al., 1996) and joint ventures (Inkpen
and Currall, 1998), and other disciplines (e.g., Child and
Mollering, 2003). Trust plays an important role in
reducing transaction costs in inter-organizational rela-
tionships from the perspective of TCT (Li et al., 2007). TCT
takes an economic perspective on how to minimize
transaction costs, which are mainly coordination costs
and transaction risks (Clemons et al., 1993). Transaction
costs are mainly related to specific investment, uncer-
tainty, and opportunism. Specific investment refers to the
assets that support a given transaction, with little
value outside the exchange relationship (Grover and
Malhotra, 2003). The integrated supply chain, in contrast
to the transaction-based supply chain, calls for a higher
level of specific investments, including the systems for
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information sharing and the people for process coordina-
tion to reduce transactional uncertainties and opportu-
nism.
Firms face a dilemma when deciding whether to invest
in a supply chain relationship. On one hand, if there is no
trust between suppliers and buyers, the buyers’ invest-
ments in supply chain specific assets bind them to the
relationship because they are susceptible to great switch-
ing costs, and potential suppliers’ opportunistic behaviors.
On the other hand, with a high level of trust between
suppliers and buyers, both parties contribute relatively
high levels of inputs to the relational bonds and there
is common belief of effectiveness of future relational
exchange (Wetzels et al., 1998). Because trust is a mutual
willingness to be vulnerable to each other and reflects a
mutual expectation of cooperation (Malhotra and Mur-
nighan, 2002), a higher level of trust can solve this
dilemma and enable cooperation. As such, trust can
reduce the perception of risk associated with uncertain-
ties and opportunistic behaviors, and thus increase
partners’ confidence in the effectiveness of future rela-
tional exchange, motivating the exchange partners to
commit to the relationship and make specific investments
within the company and the supply chain (Ojala and
Hallikas, 2006). As a result, the company with a high level
of trust will be more likely to conduct internal integration
and supplier integration. With trust, the company will be
more likely to share information and work together to
coordinate their processes from the inside of the company
to the whole supply chain. Therefore, we propose the
following hypotheses (Fig. 1):
H1. Buyers’ trust has a positive influence on internal
integration.
H2. Buyers’ trust has a positive influence on supplier
integration.
2.3. Power and supply chain integration
Cox (2001) illustrated that power is at the heart of
trans-organizational relationships. Power is one channel
member’s ability to influence the behavior and decision of
other members (Beier and Stern, 1969; Gaski, 1984).
French and Raven (1959) identified five kinds of power:
expert power, reference power, legitimate power, reward
Internal
Trust H1
integration
H2
H4
Trust * Power
H5
Supplier
Power H3 integration
Fig. 1. Conceptual model.
69
power, and coercive power. Based on this classification,
several dichotomies of these five types of power appeared.
For example, the first three types of power were identified
as non-economic power by Etgar (1978) and as non-
contingent power by John (1984), while the last two types
of power were viewed as economic power by Etgar (1978)
and as contingent power by John (1984). The first two
types of power and traditional legitimate power were
classified as un-weighted power by Brown and Frazier
(1978) and as non-mediated power by Brown et al. (1995);
while the last two types of power and legal legitimate
power were classified as weighted power by Brown and
Frazier (1978) and as mediated power by Brown et al.
(1995). Kasulis et al. (1979) classified the information
power (similar to expert power), referent power, and
traditional legitimate power as indirect power, but the last
two and legal legitimate power as direct power. Johnson
et al. (1993) classified referent, legitimate, and coercive
power as authoritative power, while expert power,
information power, and reward power as nurturing power.
Molm (1997) classified these types of power into coercive
and non-coercive power, with the first four considered
non-coercive because they provide or withhold rewards in
promoting desired behaviors. Coercive power refers to the
organization’s ability to exert influence on its trading
partners based on the exercise of force (French and Raven,
1959), with the intention of controlling negative outcomes
relative to each other, either through punishment or
threat (Molm, 1997). In our research, we focus on coercive/
non-coercive power for two reasons: (1) in the Chinese
high power distance culture, coercive power is more likely
to be used to influence others (Kale and McIntyre, 1991);
(2) non-coercive power has similar effects on relationship
management as trust (Ireland and Webb, 2007).
Van der Vaart and Van Donk (2008) called for
incorporating power in supply chain integration research.
Integration behaviors require suppliers’ resource contri-
bution. For example, buyers need suppliers’ information
about production and inventory to schedule and synchro-
nize their own production. Those information resources
are scarce and valuable to buyers, and essential for
the effectiveness and efficiency of supplier integration.
The involvement of suppliers in design or procurement
processes calls for suppliers’ human resources and time
resources. All these resources are mainly controlled by
suppliers, and this fact gives them power in the suppli-
er–buyer relationship according to the RDT (Pfeffer and
Salancik, 1978). RDT views firms as interdependent
entities because one company does not entirely control
all of the conditions necessary for its achievement of an
action or a desired outcome (Sheu et al., 2006). Firms
require resources from the external environment to
survive and develop, and as such become interdependent
with their transactional partners. From this perspective,
RDT omits the role of trust in the inter-organizational
relationship, and linkages among organizations are in-
stead viewed as power relations (Ireland and Webb,
2007). Suppliers will use their power to either increase
the integration between themselves and their buyers, or
to enhance buyer dependence on them. In RDT, organiza-
tions are treated as coalitions that will alter their
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70 J.H.Y. Yeung et al. / Int. J. Production Economics 120 (2009) 66–78
behaviors as to acquire and maintain needed external
resources (Ulrich and Barney, 1984). Firms that lack
control of scarce resources will try to acquire these in
several ways, such as mergers and acquisitions, diversifi-
cation, and board interlocks (Pfeffer and Salancik, 1978).
However, according to RDT, buyers will try to reduce the
dependence on the suppliers that make suppliers more
powerful and will be less likely to integrate with suppliers,
in order to enhance their power influence on suppliers.
In terms of coercive power, considered a negatively
oriented power base, substantive literature has found that
coercive power led to a worse cooperative relationship
(e.g. Brown et al., 1995; Maloni and Benton, 2000; Benton
and Maloni, 2005). When suppliers use coercive power
to influence buyers, the buyers may calculatively and
opportunistically react to avoid punishments. This reac-
tion will hinder buyers in investing or sharing information
in their relationships with suppliers. Process coordination
is also hard to achieve as a result of potential opportu-
nistic buyer behavior. As such, suppliers’ use of coercive
power will hinder supplier integration.
Yet, we propose that suppliers cannot use their power
to directly affect internal integration behavior. The reason
for this stems from the fact that RDT predicts that power
comes from the control of resources. Since the majority of
resources needed for internal integration are controlled by
the buyers themselves, suppliers do not have the power to
affect the buyers’ internal decisions. From this perspec-
tive, we argue that suppliers will use their power to
facilitate supply chain integration, but only through
supplier integration. Therefore, we propose the following
hypothesis:
H3. Suppliers’ use of coercive power has a negative influence
on supplier integration.
2.4. Interaction of trust and power and its effect on supply
chain integration
Power and trust are two means through which supply
chain partners build and manage their relationships.
Bachmann (2001) stated that both power and trust play
crucial roles in shaping inter-organizational relationships.
They are complementary components of social behavior,
because of the ability of one to substitute for the other,
and they exist simultaneously in supply chain relation-
ships. However, other literature reports power and trust
as independent, rather than interdependent constructs
(e.g. Crook and Combs, 2007; Johnston et al., 2004).
Recently, research efforts are beginning to address the
interaction effects of power and trust in supply chain
relationship. For example, Ireland and Webb (2007)
discuss four strategies (identifying an authority, generat-
ing a common supply chain identity, utilizing boundary
spanning ties, and providing procedural and interactive
justice) that firms can use to balance trust and power in a
supply chain. They further point out that all four are
necessary components for achieving competitiveness
within socioeconomic relations. McCarter and Northcraft
(2007) view the decision as to whether or not invest in
supply chain integration as a social dilemma. They argue
that the supply chain alliance will fail without investment
of information and resources, and propose that the
presence of trust and power (in the form of punishment
for defection) in the supply chain increases the probability
of a firms’ investment in a supply chain alliance. However,
both previous conceptual papers do not test the interac-
tion effects of power and trust empirically. While both
papers argue the main effect of power and trust in SCM,
they fail to pay attention to the potential interaction effect
on supply chain integration practices.
Following the line of reasoning of RDT, we posited that
power should not affect internal integration directly, but
rather may have an indirect effect when trust is present.
Such a posited interaction effect stems from the argument
that a higher level of trust will motivate supply chain
partners to invest in supply chain integration. This results
in investment in specific assets that can be viewed as a
commitment to the relationship. Buyers believe that
suppliers will not take advantage of them through
opportunistic behaviors. Under such conditions when
suppliers push buyers to integrate their processes through
the use of coercive power, it will be viewed as a suggestion
that benefits all parties, and buyers will be happy to take
action. Although suppliers use coercive power to influence
buyers, the latter are expected to favor the internal
integration decision because organizational studies have
shown that there is a mitigating effect of trust on people’s
reactions to unfavorable exchange outcomes (Brockner,
2002) and psychological contract breaches in social
exchanges (Morrison and Robinson, 1997). As a result,
the use of coercive power will be looked upon as a driver
for internal integration in the trust-based relationship.
However, if buyers do not trust suppliers, the suppliers’
use of coercive power on buyers’ internal decisions will be
viewed as attempts for future opportunistic behaviors.
This will actually damage the relationship and decrease
the buyers’ intension and effort to internally integrate.
Therefore, we propose the following hypotheses:
H4. There is an interaction effect of use of coercive power
and trust on internal integration. In particular:
H4a. When there is a higher level of buyers’ trust, the
suppliers’ use of coercive power will increase internal
integration.
H4b. When there is a lower level of buyers’ trust, the
supplier’s use of coercive power will decrease internal
integration.
Because of potential conflicts of interest among supply
chain partners, trust might be subjected to high risks, and
become inevitably fragile and subject to betrayal and
break down without a chance to restore quickly (Lane and
Bachmann, 1997). Such erosion of trust can be exacer-
bated by the suppliers’ use of coercive power. Such belief
is grounded in RDTs argument that power derives from
resource dependence. As such, suppliers may ask buyers
to take integration actions to increase their dependence
on them. Yet, buyers might not be enticed to engage in
such integration efforts just as a result of power in the
relationship. Some researchers believe that frequent use
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J.H.Y. Yeung et al. / Int. J. Production Economics 120 (2009) 66–78
of coercive power might damage the relational norms and
cooperation, thereby increasing conflict, and ultimately
decreasing some firms’ willingness to participate (Frazier
and Summers, 1986). Yet, this negative effect can also be
balanced by developing trust. Such belief is grounded in
TCTs argument that organizations will try to avoid
partners’ opportunism. If buyers do not establish trust
suppliers, suppliers’ request for integration might be
viewed as an attempt to pursue opportunistic behaviors,
and buyers will try their best to prevent such actions. This
will damage the supplier integration. Following a similar
logic of H4, we propose the following hypothesis:
H5. There is an interaction effect of use of coercive power
and trust on supplier integration. In particular:
H5a. When there is a higher level of buyers’ trust, the
suppliers’ use of coercive power will increase supplier
integration.
H5b. When there is a lower level of buyers’ trust, the
supplier’s use of coercive power will decrease supplier
integration.
Fig. 1 illustrates the conceptual model of the hypothe-
sized relationships between respectively trust, power, and
their interaction on internal and supplier integration.
3. Research methodology
3.1. Sampling and data collection
China is becoming a strong global manufacturing base,
and its manufacturers play an important role in many
supply chains, and as such provide a good opportunity for
supply chain research (Zhao et al., 2006a). Data were
collected from five cities in China: Chongqing, Guangzhou,
Hong Kong, Shanghai and Tianjin. They represent industry
centers of Western China, Pearl River delta, Yangtse River
delta and Bo Hai region, and are representative of the
Chinese economic development with varying degrees of
market economy.
The Yellow Pages of China Telecom in each of the four
selected cities in mainland China were used, in combina-
tion with the Directory of the Chinese Manufacturers
Association in Hong Kong, as the sampling frame to obtain
a representative sample of manufacturing companies.
These companies represent a wide variety of industries,
including food, beverage, alcohol, and cigarettes; chemi-
cals and petrochemicals; wood and furniture; pharma-
ceutical and medical supplies; building materials; rubber
and plastics; metal, mechanical, and engineering; electro-
nics and electrical; textiles and apparel; toys; jewelry; arts
and crafts; and publishing and printing. Firstly, selected
companies were randomly called to identify the contact
information of key informants, which included the supply
chain manager, CEO, president and vice president in
charge of sales and marketing. Subsequently, question-
naires were sent out to them. Several methods were
deployed to encourage response rate, such as a cover letter
highlighting the objectives and potential contributions of
the study, self addressed and stamped envelopes, entitle-
71
ment to a summary report of the study, a small
participation incentive gift and follow-up calls. If re-
sponses exhibited excessive missing data, respondents
were contacted by phone for further clarification. Out of
the 4569 companies contacted, a total of 1356 agreed to
receive the questionnaire. After several follow-up calls,
617 usable questionnaires were received. Eight cases were
deleted because of missing values. The overall response
rate, based on the number of companies contacted via
telephone, was 13.3%, but increased to 44.9% based on the
number of questionnaire distributed, which is comparable
to, or better than, the response rates of previous similar
studies (e.g. Stank et al., 2001a; Frohlich and Westbrook,
2001).
We evaluated non-response bias by comparing the
early and late replies to all variables using a t-test
(Handfield and Bechtel, 2002; Stank et al., 2001b). No
significant differences were found, which suggests non-
response bias is not considered an issue in this study.
Furthermore, we used Harman’s one-factor test of com-
mon method bias on the power, trust, internal integration,
and supplier integration variables (Hochwarter et al.,
2004; Podsakoff et al., 2003), identifying several distinct
factors among all variables, which indicates that common
method variance bias was not a problem.
3.2. Questionnaire design
The questionnaire included questions about the demo-
graphic profile of the company and questions relating to
power, trust, and supply chain integration. An English
version of the questionnaire was first developed. Then,
with the aid of operations management professors in
mainland China and Hong Kong, the translation back-
translation method was used to develop a Chinese
version. In mainland China, the Chinese version of the
questionnaire was used, whereas in Hong Kong a bilingual
version was used. The questionnaire was pre-tested using
a sample of fifteen companies, resulting in final additional
modifications and clarifications.
To ensure reliable and valid measures of the constructs,
an intensive study of the literature was conducted to
identify valid measures for related constructs. Trust between
supplier and buyer is measured by two general items
adapted from Morgan and Hunt (1994) (Geyskens et al.,
1998). The measures for coercive power were adopted from
Brown et al. (1995). The internal integration scale was
adapted from Narasimhan and Kim (2002) and the supplier
integration scale was largely derived from Narasimhan and
Kim (2002) and Morash and Clinton (1998). In addition to
adapting and modifying instruments from the existing
literature, we also added new measures based on interviews
with executives and the pre-test results. All items were
measured on a seven-point Likert scale. The measurement
items for the major constructs are listed in the Appendix.
3.3. Construct development
The common method of ensuring content validity of
constructs used in our study is to select appropriate
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72 J.H.Y. Yeung et al. / Int. J. Production Economics 120 (2009) 66–78

measurement items from an extensive literature review, Table 2

and have those items evaluated by practitioners and Reliability analysis
knowledgeable researchers (Li et al., 2005). In our
Construct Number of items Cronbach’s alpha
research, most of the items used were extracted from
previous literature, and during the questionnaire design Internal integration 6 0.905
and pilot test stage, professors and practitioners assisted Supplier integration 8 0.946
in further improvement of the items. As such, content Power 4 0.943
Trust 2 N/A
validity is ensured.
As suggested by Narasimhan and Jayaram (1998), an
exploratory factor analysis (EFA) for each construct is high and significant, indicating that reliability is also
conducted to ensure the unidimensionality of the scales. ensured for the trust construct.
The indicator items are deleted if they load on more than Confirmatory factor analysis (CFA), which is superior to
two factors, or their factor loadings are smaller than 0.5 the traditional multi-trait-multi-method matrix method,
(Johnson and Wichern, 1998). Moreover, items that do not was used to assess convergent validity (O’Leary-Kelly and
load on the factor they intend to measure, but instead on Vokurka, 1998). A CFA model was constructed in which
factors they did not intend to measure, should also each item was linked to its corresponding construct, and
be deleted (Chen and Paulraj, 2004). Table 1 shows the covariances among those constructs were freely
that measurement items all had strong loadings on the estimated. The model fit indices are as follows: w2
construct they were supposed to measure, but lower (164) ¼ 824.82 (w2/d.f. ¼ 5.0), non-normed fit index
loadings on constructs they were not supposed to (NNFI) ¼ 0.96, comparative fit index (CFI) ¼ 0.96, and root
measure, thereby indicating unidimensionality. mean square error of approximation (RMSEA ¼ 0.08).
Cronbach’s alpha is used to evaluate construct relia- These indices indicate that the model is acceptable (Hu
bility (Flynn et al., 1990), with the threshold value of 0.60 and Bentler, 1999). Furthermore, a construct with either
recommended by Nunnally (1978) and Flynn et al. (1990). loadings of indicators of at least 0.5, a significant t-value
All constructs in this study are higher than the recom- (t42.0), or both, is considered to have convergent validity
mended threshold value, and reliability of these con- (Chau, 1997; Fornell and Larcker, 1981). The smallest
structs is ensured (Table 2), except for the trust construct, loading in the CFA model is 0.70, and the smallest t-value
which is measured by only two items and for which a is 8.13. Therefore, our research demonstrates that the
Cronbach alpha would be meaningless (Mentzer and Flint, constructs have convergent validity.
1997). The correlation between these two items of trust is Finally, discriminant validity is demonstrated by con-
structing a constrained CFA model for each possible pair of
latent constructs, in which the correlations between the
Table 1
paired constructs are fixed to 1.0. This model is subse-
Exploratory factor analysis of power, trust, and integration quently compared to the original unconstrained model,
in which the correlations among constructs are freely
Itema Factor loading estimated. A significant difference of the Chi-square
statistics between the fixed and unconstrained models
Supplier Internal Power Trust
integration integration would indicate high discriminant validity (Chen and
Paulraj, 2004; Fornell and Larcker, 1981). In our research,
POW1 0.142 0.007 0.888 0.001 all the differences are significant at 0.05 level, and
POW2 0.142 0.010 0.939 0.007
discriminant validity is ensured.
POW3 0.157 0.002 0.901 0.000
POW4 0.159 0.001 0.918 0.036
TRU1 0.123 0.079 0.001 0.909
TRU2 0.174 0.138 0.036 0.881 4. Analysis and results
INI1 0.205 0.765 0.017 0.056
INI2 0.175 0.797 0.008 0.041 Tabachnick and Fidell (2001) suggest that multivariate
INI3 0.159 0.818 0.001 0.041
analysis of variance (MANOVA) should be used in such
INI4 0.199 0.865 0.050 0.063
INI5 0.208 0.834 0.013 0.061 cases where dependent variables (DVs) are moderately
INI6 0.167 0.726 0.085 0.243 correlated. Supply chain theories suggest that internal
SPI1 0.729 0.205 0.164 0.022 integration and supplier integration are correlated and the
SPI2 0.757 0.155 0.154 0.028 Pearson correlation between internal integration and
SPI3 0.878 0.185 0.101 0.064
SPI4 0.862 0.194 0.119 0.081
supplier integration is 0.427 (p ¼ 0.000), calling for a
SPI5 0.872 0.162 0.099 0.063 MANOVA statistical approach.
SPI6 0.877 0.169 0.080 0.099 Key assumptions of MANOVA are independence of
SPI7 0.773 0.171 0.054 0.187 observations, homogeneity of variances and covariances,
SPI8 0.832 0.188 0.131 0.057
and normality of dependent measures (Hair et al., 1998).
Eigenvalue 7.694 3.578 2.138 1.522
In our research, because firms were randomly selected in
each area, and each firm completed the surveys indepen-
Total variance 75.560%
explained dently, the observations can be considered independent.
Box’s M test for homogeneity dispersion matrices pro-
a
Note: A description of the items used is listed in Appendix. duces F (9, 1234701) ¼ 1.254 (p ¼ 0.256), confirming
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J.H.Y. Yeung et al. / Int. J. Production Economics 120 (2009) 66–78 73

homogeneity of variance–covariance metrics. Normality Trust

of dependent measures is tested using the Kolmogor- Low High
ov–Smirnov tests, with both internal integration and
supplier integration meeting the normality assumption
at a 1% alpha level. The skewness and kurtosis of the two High Power-based Close-relationship

DVs are also between 1 and 1. As such, the normality
assumption of dependent measures is met in our study.
Prior to conducting the MANOVA analysis to explore
the main and interaction effects of trust and power on
supply chain integration, a cluster analysis is performed
to extract level of trust and power between supplier
and buyer into high and low groups. Subsequent to
the MANOVA analysis, a univariate analysis of variance
(ANOVA) and Roy–Bargmann stepdown analysis are
conducted to investigate the impact of trust and power
on internal and supplier integration separately. Finally, the
marginal means of internal and supplier integration
across the different groups is compared to explore the
nature of the interaction effect of trust and power.
A two-step cluster analysis proposed by Frohlich and
Dixon (2001) is used to classify the sample into high and
low levels of trust and power. The result of hierarchical
cluster analysis suggests that when trust is used as taxon,
two different groups can be identified from the sample.
Subsequently, K-mean cluster analysis is used. This
approach is repeated for power as a taxon, and the results
are shown in Table 3. We also find that supply chain
partners in general will use a higher level of trust
(mean ¼ 5.04; s.d. ¼ 1.08) than power (mean ¼ 2.87;
s.d. ¼ 1.44), and more firms rely on trust (372) than power
(208) in managing their supply chain relationship.
Using power and trust as two dimensions, a matrix
representing the trust-power relationship between sup-
plier and buyer is illustrated in Fig. 2. A high level of trust
and power indicate that buyer and supplier are closely
related. On the other side of the spectrum, a low level of
trust and power indicates a loose relationship. Low trust
and high power shows that the supply chain is power
based. When the supply chain relationship is predomi-
nantly based on trust, it has a high score on trust, but
scores low on power. In this study, 117 companies have a
close relationship with their suppliers, 146 companies
develop a loose relationship with their suppliers, 255
companies are in trust-based supply chains, and 91
companies are in power-based supply chains. The largest
ratio of variance difference is about 1.5:1 (trust-based
versus close relationship on supplier integration), which is
much smaller than the suggested criteria (10:1). Thus, the
discrepancy in sample sizes does not invalidate use of
MANOVA (Tabachnick and Fidell, 2001).
Table 3
Results of cluster analysis
Cluster
High Low F-value
Trust 5.72 3.97 1020.629 (p ¼ 0.000)
Number of cases 372 237
Power 4.51 2.01 1238.323 (p ¼ 0.000)
Number of cases 208 401
Power
Low Loose-relationship Trust-based
Fig. 2. Supply chain trust–power matrix.
Table 4
MANOVA results
Wilks l F-value Sig. Partial eta Observed
squared power
Trust 0.914 28.505 0.000 0.086 1.000
Power 0.932 21.938 0.000 0.068 1.000
Trust*power 0.978 6.747 0.001 0.022 0.917
Next, a 2  2 between-subject MANOVA was performed
on two DVs: internal integration and supplier integration.
Independent variables (IVs) are trust (low and high) and
power (low and high). The results are show in Table 4.
Since there are only two levels of between-subjects IVs,
four similar commonly used criteria, namely Wilk’s
lambda, Pillai’s trace, Hotelling’s trace and Roy’s largest
root can be used, and we only report Wilk’s lambda in
our research. This criterion reveals that the combined
DVs were significantly affected by trust, power and
their interaction. Partial eta squared is similar to R2 in
regression analysis, and can be interpreted as the amount
of variance in the dependent variables that is explained by
the IVs. That is, 8.6% of difference in supply chain
integration can be explained by the differences in trust,
6.8% by the use of power, and another 2.2% because of the
interaction of power and trust. The observed power
suggests the generalizability of results to other samples.
After finding significant main and interaction effects in
MANOVA, it is paramount to find out which DVs are
affected. Here, univariate ANOVAs are used to investigate
the effects of power, trust and their interaction on internal
and supplier integration separately. Results are shown in
Table 5, showing that supplier integration is significantly
affected by trust, power, and their interaction, while
internal integration is only affected by trust and the
interaction effect, with the main effect of power showing
up non-significant (p ¼ 0.952).
Furthermore, Tabachnick and Fidell (2001) point out
that results of a univariate ANOVA might be biased when
the DVs are correlated with each other, calling for a
Roy–Bargmann stepdown analysis (Tabachnick and Fidell,
2001), with both results of the univariate F and stepdown
F to be compared before drawing final conclusions. This
procedure consists of internal integration first being
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74 J.H.Y. Yeung et al. / Int. J. Production Economics 120 (2009) 66–78

Table 5 Marginal means comparisons show that the supply

Univariate ANOVA results chain with a higher level of trust showed greater internal
integration (mean ¼ 4.426, std.error ¼ 0.082), than those
Independent Dependent Univariate Sig. Partial eta
variable variable F squared with lower trust (mean ¼ 3.693, std.error ¼ 0.098). Simi-
larly, supply chains with higher trust had more positive
Trust Supplier 46.235 0.000 0.071 attitudes toward supplier integration (mean ¼ 3.610,
integration std.error ¼ 0.074), than those that scored lower on trust
Internal 33.000 0.000 0.052
integration
(mean ¼ 3.051, std.error ¼ 0.089).
We could also observe that supply chains scoring high
Power Supplier 36.602 0.000 0.057 in power had similar internal integration (mean ¼ 4.056,
integration
Internal 0.004 0.952 0.000
std.error ¼ 0.102), as compared to those scoring low in
integration power (mean ¼ 4.063, std.error ¼ 0.076). Yet, taking the
differences due to internal integration already into
Interaction Supplier 7.561 0.006 0.012
account, supply chains with higher power also achieve a
integration
Internal 11.140 0.001 0.018 higher level of supplier integration (mean ¼ 3.708,
integration std.error ¼ 0.092), than those scoring lower in power
(mean ¼ 2.953, std.error ¼ 0.063). All tested differences
in main effect are significant at the 5% significance level.
The estimated marginal means of the interaction effect
Table 6 between trust and power are listed in Table 7.
Roy–Bargmann stepdown analysis At the 5% significance level, the close relationship
group achieves significant higher levels of both internal
Independent Dependent Stepdown Sig. Partial eta
variable variable F squared and supplier integration than the other three groups. The
trust-based supply chain shows a higher level of internal
Trust Supplier 22.819 0.000 0.036 integration than power based and loose relationship
integration arrangements. It also achieves greater supplier integration
Internal 33.000 0.000 0.052
integration
than the loose relationship case, but not significantly
different from the power-based group for supplier
Power Supplier 43.872 0.000 0.068 integration. Comparing with loose relationship groups,
integration
Internal 0.004 0.952 0.000
power-based supply chains possess a higher level of
integration supplier integration, but lower level of internal integra-
tion.
Interaction Supplier 2.330 0.127 0.004
In summary, we firstly found that use of power and
integration
Internal 23.950 0.001 0.018 trust has significant main and interaction effects on
integration supply chain integration. Then, univariate ANOVA, step-
down F and mean comparison revealed that a higher level
of trust is associated with higher levels of internal
integration and supplier integration, so, H1 and H2 are
tested in ANOVA, with supplier integration being tested supported. The univariate ANOVA and stepdown F showed
by analysis of covariance (ANCOVA) with internal integra- that power only has a significant effect on supplier
tion as covariate. Such procedure is called for as internal integration. Mean comparisons also confirmed that power
integration may have a positive influence on supplier only positively related to supplier integration. It was
integration (Zhao et al., 2006b) and Kim (2007) also shown that the relationship between power and supplier
suggests that internal integration is a precursor stage of integration is positive, hence H3 is rejected. As to the
external integration. Table 6 shows the result of this interaction effect on internal integration, both univariate
analysis. Homogeneity of regression was achieved for the ANOVA and stepdown F suggested a significant effect.
components of the stepdown analysis. The unstandar- Further analysis showed that the close relationship group
dized regression coefficient of the covariate is 0.390 had a significantly higher level of internal integration than
(t ¼ 10.745, p ¼ 0.000), showing that internal integration the trust-based group, and the loose relationship group
significantly adjusts supplier integration. showed a higher level of internal integration than the
Comparing the result of the univariate ANOVA with the power-based group (at the 0.05 significance level). There-
stepdown analysis, we notice that the major difference is fore, H4a and H4b are supported. Univariate ANOVA and
the interaction effect on supplier integration, which shows stepdown F showed different results on supplier integra-
up as a significant F-value in the univariate analysis tion. However, the marginal means comparison showed
(p ¼ 0.006), but insignificant (p ¼ 0.127) in the stepdown that the close relationship group reached a higher level of
analysis. This is because the variances shared between supplier integration as compared to the trust-based and
supplier integration and the interaction are already power-based groups, with the loose relationship group
accounted for through overlapping variances with internal showing the lowest level of supplier integration among
integration. Yet, both the univariate ANOVA and stepdown the four groups (at the 0.05 significance level). As such, H5
F show a significant interaction effect of trust and power is partially supported, with H5a supported, and H5b not
on internal integration. supported.
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J.H.Y. Yeung et al. / Int. J. Production Economics 120 (2009) 66–78
Table 7
Estimated marginal means for the trust–power interaction effect
Trust–power interaction Dependent variable
Close relationship Supplier integration
Internal integration
Trust based Supplier integration
Internal integration
Power based Supplier integration
Internal integration
Loose relationship Supplier integration
Internal integration
5. Discussion and managerial implications
We found significant main and interaction effects of
power and trust on supply chain integration. The findings
suggest that using power and trust to manage relationships
can improve supply chain integration. The roles of power
and trust are not independent, and managers should
combine these two methods to achieve better integration.
Companies adopting trust as a relationship manage-
ment mechanism can achieve higher internal and supplier
integration. However, suppliers’ use of coercive power can
only contribute to supplier integration. This finding shows
that if companies want to improve supplier integration,
they can use either trust or power. Yet, if the focus is on
internal integration, they must build a climate of trust.
Furthermore, internal integration mainly concerns the
integration of employees, information flow and processes
from different functions within a company. Suppliers have
limited influence on internal integration because their
resources are not scarce and valuable to the internal
processes. As such, a moderately higher level of trust
suffices to motivate buyers to commit to the relationship.
However, supplier integration is different. It needs not
only operational information sharing with suppliers, but
also process coordination, such as involving suppliers in
production and design stages. Those investments are
inherently highly relational and cannot be shared by
other supply chain partners. As such, trust is very
important in motivating buyers to join such a partnership.
On the other hand, supplier integration cannot succeed
without suppliers’ contribution of capability and knowl-
edge. From this perspective, suppliers’ resources are vital
to the effectiveness and efficiency of supplier integration.
These arguments may explain as to why the supplier’s use
of power, which is based on its resources, is an important
factor in supplier integration.
Analysis of the interaction effects of trust and power
also suggest that companies should pay attention to
internal integration if they want to achieve a high level
of supplier integration, and use power and trust in
combination to improve both internal and supplier
integration concurrently. Through comparison of marginal
means of four power–trust combinations, we found that
75
Mean S.E. 95% confidence interval
Lower Upper
4.076 0.123 3.835 4.317
4.653 0.136 4.369 4.902
3.145 0.082 2.938 3.306
4.217 0.092 4.037 4.397
3.341 0.139 3.067 3.614
3.476 0.154 3.174 3.778
2.761 0.109 2.547 2.974
3.910 0.121 3.672 4.148
when the trust level is high, use of power will result in a
higher level of internal integration. But, suppliers’ use of
coercive power cannot improve buyers’ internal integra-
tion without buyers’ trust with suppliers because power
cannot influence internal integration directly. Conversely,
when buyers do not establish trust with suppliers,
suppliers’ use of power actually damages internal integra-
tion. This finding reveals that, although power has
no direct effect on internal integration, it might manifest
itself through the interaction with trust. As such,
supply chains should build a climate of trust before relying
on power. If there is no trust, suppliers should be careful to
use power to influence buyers’ internal integration.
Furthermore, if buyers establish trust with suppliers, they
will not see suppliers’ requests in a negative light because
they believe that such suggested actions will benefit the
supply chain as a whole, and will commit to internal
integration. Yet, when buyers do not establish trust with
suppliers, use of power by suppliers will be viewed as an
unfriendly behavior, and so, buyers will not make an effort
to integrate their internal functions and processes.
In terms of supplier integration, suppliers’ use of
coercive power is always helpful to enhance buyers’
supplier integration, even when buyers do not establish
trust with suppliers. This finding provides a significant
new insight for companies conducting business in China.
Contradictory to western literature suggesting that the
use of coercive power will lead to worse cooperation, our
study recommends suppliers to use coercive power to
enhance buyers’ supplier integration. The reason for this
may be that in the Chinese high power distance culture,
the more powerful suppliers that own important re-
sources are expected to use coercive power to influence
the less powerful buyers, and buyers are likely to be
influenced by the powerful suppliers.
In summary, use of power and trust in combination
will influence supply chain integration. Buyers should
establish trust with suppliers to pursue internal and
supplier integration, and suppliers should use power to
enhance buyers’ supplier integration. Only when buyers
establish a strong trust relationship with suppliers, can
suppliers use coercive power to increase buyers’ internal
integration, which may lead to supplier integration.
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76 J.H.Y. Yeung et al. / Int. J. Production Economics 120 (2009) 66–78
6. Conclusions and future research
In this paper, we explored the role of trust and coercive
power in internal and supplier integration, based on a
sample of Chinese supply chains. Trust significantly
influenced both internal integration and supplier integra-
tion, while coercive power only directly affected supplier
integration. We also found that when buyers establish
trust with suppliers, suppliers’ use of coercive power will
enhance internal integration, while if trust is absent, use
of power actually damages integration practices. Trust and
power always improve supplier integration in Chinese
supply chains.
Theoretically, our research contributes to a better
understanding of supply chain integration by addressing
power and trust as two interdependent, rather than
independent, relational management mechanisms for
integration. We focus on both main and interaction
effects, which is omitted by the majority of previous
studies. Moreover, we also contribute to the power
literature by providing evidence that a high coercive
power position does not necessarily impair cooperation
behaviors, and that the potential negative effects of
coercive power can be balanced by the development
of trust in the relationship. In contrast to popular belief
in western cultures that coercive power leads to worse
cooperation, our findings show that coercive power
improves supplier integration in the Chinese high power
distance culture, and hence contributes to the knowledge
base of power and culture. Our research also yields some
practical insights for managers concerning the improve-
ment of supply chain integration through managing
relationships with supply chain partners. To improve
internal integration, buyers should first build a good trust
relationship with suppliers. Using this as a basis, suppli-
ers’ use of power will enhance the buyer’s effort in
internal integration. If such trust cannot be established,
suppliers should be careful to use coercive power because
it will damage internal integration practices. On the other
hand, if supply chain participants want to improve
supplier integration, they should use a high level of power
and trust concurrently to manage the relationship.
This study also has several limitations which open up
venues for further research. The first possible extension of
our research is a longitudinal study. We argued that trust
and power will facilitate integration based on the cross-
sectional data collected in China. Longitudinal evidence is
needed to further explore how trust and power interact
with each other over time, as well as the interdependence
of supply chain relationships and supply integration.
A second limitation relates to the fact that our research
deployed a specific type of power (coercive power) and
general trust measured by only two items. The literature
reports many different kinds of trust (e.g. goodwill trust,
competence trust, contractual trust, and calculative trust)
and power (e.g. reward power, expert power, legitimate
power, and referent power). Future studies may address
the impact of these different kinds of trust and power on
supply chain integration. In particular, for varying types of
power or trust, the effects of coercive power and trust may
differ as well. A third limitation relates to the fact that the
supply chain was viewed as a buyer–supplier dyad.
However, as customers play an increasingly important
role in SCM, many firms share information with custo-
mers, or even involve customers into the product design
and production processes. This leads to the emerging view
of the supply chain as a supplier–manufacturer–customer
triad, and future studies could explore how the relation-
ships with customers influence supply chain integration
practices. Finally, the relationships between trust, power,
and integration may be different for companies in
different industries or different regions with different
cultures. Future studies can investigate the conceptual
model in different industries or different cultures.
Appendix. List of construct measurement items
Coercive power (adapted from Brown et al., 1995)
POW1: The major supplier’s personnel would somehow get back at us if
we did not do as they asked and they would have found out
POW2: The major supplier often hinted that they would take certain
actions that would reduce our profits if we did not go along with their
requests
POW3: The major supplier might have withdrawn certain needed
services from us if we did not go along with them
POW4: If our company did not agree to their suggestions, the major
supplier could have made things more difficult for us
Trust (adapted from Morgan and Hunt, 1994)
TRU1: In our relationship, my major supplier can be counted on to do
what is right
TRU2: There is a high level of trust between us and our major supplier
Internal integration (adapted from Narasimhan and
Kim, 2002)
INI1: Integrative inventory management
INI2: Real-time searching of level of inventory
INI3: The utilization of periodic interdepartmental meetings among
internal functions
INI4: The use of cross-functional teams in process improvement
INI5: The use of cross-functional teams in new product development
INI6: Real-time integration and connection among all internal functions
from raw material management through production, shipping, and sales
Supplier integration (adapted from Narasimhan and
Kim, 2002; Morash and Clinton, 1998)
SPI1: The participation level of our major supplier in the process of
procurement and production
SPI2: The participation level of our major supplier in the design stage
SPI3: Our major supplier shares their production schedule with us
SPI4: Our major supplier shares their production capacity with us
SPI5: Our major supplier shares available inventory with us
SPI6: We share our production plan with our major supplier
SPI7: We share our demand forecast with our major supplier
SPI8: We share our inventory level with our major supplier
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