Agricultural Supply Chain Internal Integration

TOPIC 12 - STAGE 3 - MICRO Supply chain integration arises as one of the responses to cope with environmental changes. It allows relationships among parts, encouraging collaborative work in order to improve the joint... [ view full abstract ]

TOPIC 12 - STAGE 3 - MICRO
Supply chain integration arises as one of the responses to cope with environmental changes. It allows relationships among parts, encouraging collaborative work in order to improve the joint performance. Although there is three main subdimension to define supply chain integration (internal, with suppliers and with customers), the former is one of the most important.
Internal integration has been considered as degree to which a firm structures their internal practices, processes and strategies. Its importance is due to its ability to prepare firms to external integration, that is to say, external integration are based upon on it. Thereby, we can expect that the higher the internal integration, the greater the external integration (both with suppliers and customers).
These processes can be identified in horticulture in Almería because their markets of origin are characterized by coexistence of associated and non-associated agents that carry out different integration practices, depending on their own nature. On the one hand, we find cooperatives, which are integrated with their suppliers due to their own nature. On the other hand, we find auctions, which have not developed that kind of relationship, among other reasons, because they are not legally bound with suppliers.
Hypothetically, this situation makes that cooperatives have better performance than auctions because they are more integrated with their suppliers. Therefore, it can be demonstrated that internal integration has a moderating effect over the relationship among external integration and performance. This is because it depends on the management model of the firm. Thus, internal integration activities have a better effect in the case of cooperatives because it helps to strengthen and close relationships with their suppliers. On the contrary, auctions have no permanent relationships with their suppliers, so this effect tends to be lesser.

The authors acknowledge the financial support from the project P11-SEJ-7085 awarded by the Council of Economy, Innovation and Science of the Junta de Andalucía, Spain.