Proactive and reactive flexibility: How does flexibility mediate the link between supply chain information integration and performance?

Abstract

To maintain competitiveness, businesses need to upgrade their operational performance and financial performance more efficiently and effectively in order to control uncertainty and costs. The purposes of the study are to (1) investigate the relationship between three dimensions, namely integration, flexibility, and performance; and (2) examine the mediating effects of supply chain flexibility. This research collected annual reports from the Indonesian basic and chemical industry from 2014 to 2017. Content analysis was used to extract information from companies’ annual reports, and hierarchical analysis examined the hypotheses. The results show that external information integration positively influences both reactive and proactive flexibility. Furthermore, proactive flexibility significantly affects financial performance and operational performance. Moreover, both reactive and proactive flexibility have positive mediating effects on the connection between external information integration and operational performance. Lastly, reactive flexibility positively mediates external information integration’s effect on financial performance. As the market has been becoming more competitive, this study provides important insights for decision-makers. This study contributes to the knowledge of the Indonesian basic and chemical supply chain by considering both financial and operational performance, especially as these performance indexes measure different dimensions.